UAP Inc. officially launched the NAPA identity in Canada at its National Business Conference in Toronto, Ont.
The NAPA store conversion process will include rebranding of products and converting stores. The process is expected to take three years to complete and will start immediately.
The store conversion program will be governed by tight rules on appearance and will be served by a single sign supplier for both inside and outside signs. The goal is for 123 stores, some 21% of the network, to be converted in 2002.
UAP Inc. president and CEO Larry Samuelson made the announcement at Toronto’s Royal York Hotel to more than 1,000 associates, corporate personnel, suppliers and U.S.-based NAPA and Genuine Parts Company executives and said that this year promises to be one of the most important for the organization.
“This meeting is really the beginning of our future together. The aftermarket has changed a great deal over the past 10 years. It is a very different business than when I began 27 years ago. All businesses and all organizations need to reinvent themselves,” said Samuelson, who spent all but the last few years in the U.S. aftermarket.
“I have never been as excited about a new sales year as I am about this one. In my many years of visiting customers, we have not always agreed on everything, but we have always agreed on one thing: that your business must make more money each year.”
UAP’s relationship with NAPA goes back to nearly the beginning. Both companies have their roots in the 1920s. Suggestions of mergers can be traced back to the 1970s, with the share purchase partnership finally occurring in the late 1980s, with the creation of the UAP/NAPA Western Partnership and a 20% holding in UAP Inc. being sold to Genuine Parts Company (GPC). GPC completed its purchase of the remaining shares of UAP in 1999. UAP Inc. has annual revenues of more than $700 million and operates more than 600 wholesaler outlets across the country, of which some 180 are company-owned. GPC is the largest shareholder within the NAPA organization and operates 5,800 stores in the U.S., approximately 800 of which are company-owned. GPC has annual revenues of $8.3 billion U.S., of which 51% is from its automotive business. Other business units are in the industrial, office products and electrical/electronics sectors.
Before embarking on any detailed description of the changes, Samuelson laid out some of the Canadian aftermarket’s challenges.
By the middle of last year, the economy in Canada had already begun to soften, he said, a situation worsening in the post-September 11 market. He reminded attendees that the aftermarket’s prime vehicles are in the six- to twelve-year-old range, but said that this traditional target market is not expected to grow, and that the average vehicle age, at 8.3 years, was expected to remain the same for the next few years.
“Our target market is the six- to 12-year-old vehicle. Vehicles younger have traditionally been captive of the dealer; older vehicles have been left to the retailer. Our total target market has not changed, but the number of vehicles 13 years and older is expected to continue to grow. This is a real opportunity.”
Samuelson said that the traditional jobber has all but driven away the DIY business, leaving some 65% of the DIY market share for Canadian Tire.
“We can make a real case that retail cash business has been given by default to Canadian Tire. The traditional parts store has behaved as if they didn’t want this business,” said Samuelson. “The aftermarket is still an almost $15 billion sales opportunity, and parts sales represent almost $9 billion. UAP and its customers have only 8% of this.”
The DIY business in Canada is $2.5 billion, according to Dennis DesRosiers. DesRosiers said that the organization could see great benefits from the changes if they can integrate the programs effectively. “If they can get it firing on all cylinders, so to speak,” said DesRosiers.
“Tremendous opportunities are here for all of us. No organization has the luxury of standing still. We must collectively capitalize on the opportunity, and we are going to give you the tools to do so,” said Samuelson.
Among the tools that will be at the forefront of the change are a new NAPA store appearance program, accompanying NAPA training programs, and an emphasis on retail locations.
According to Simon Weller, vice-president marketing, auto parts division, UAP Inc., the comprehensive rebranding initiative was shown in U.S. tests to increase retail sales by as much as 25% and wholesale business by 10%.
“This operation is much more than a sign change; it’s new products and programs and new informational technology,” said Weller. “It’s a brand-new way to go to market. It can provide you with increased profits that can enable you to grow market share.”
According to UAP associates and managers, complete store conversions are estimated to cost in the neighborhood of $50,000, with the cost of the TAMS computer system in addition to this. Exterior signage alone has been said to be in the $6,000 to $8,000 dollar range.
There is, however, more to the program than just a sign change, Weller pointed out. “People are often judged by what they look like rather than who they are. If we are going to be the leader, we need an image adjustment. Before we paint our buildings and put new signs up, we need to address the inside. NAPA stores must project an image we are proud of.
“Our employees must look professional. The way our stores look, the way our products look, the way our employees look are all part of the NAPA brand. Investing in your store and your people is investing in your future.”
The program, which encompasses a full complement of retail and wholesale programs, communications and training thrusts, will begin to be implemented immediately.
Location, employee training, image, exterior identification, communication, business hours, and inventory will all be the subject of attention.
“The essential keys to success have enabled U.S. test sites to increase retail sales 25% and wholesale sales 10% in less than one year,” said Weller. “Our American counterparts are doing it today; it’s just a common sense approach.”
Weller outlined many of the programs, which focused on training in order to allow parts store owners and their staff to understand the need for the changes, as well as to improve the profitability of those stores.
One of the main thrusts of the conversion program, perhaps the key point, is retail friendliness.
“Is your store easily accessible to customers? Don’t make it hard to find. Is it in a high traffic area? Where are the people shopping?
“Could you serve your wholesale customers just as well if you were to move? The goal is to gain new cash business while at the same time increasing your wholesale business. The goal is to make your store the destination for retail business,” said Weller. “This is a $2 billion retail market; to not be there is not a good business decision.”