AutoZone’s Road to Wowing the Customer
AutoZone’s retailing philosophy is “to never say no to a customer,” according to Ken Brame, senior VP and CIO. A robust selling tool is educating store-level associates about merchandise, and empowering them to move beyond a mere “salesperson” status to become auto-parts solution providers.
Memphis, Tenn.-based AutoZone is a $6 billion specialty retailer that sells automotive parts and accessories. It relies on its 50,000 employees to service customers in 4,000 company-owned stores that operate across 48 states.
AutoZone does have its share of challenges, and one of its biggest issues is how to stand out in a competitive marketplace. “Auto-parts retailers are not like other specialty retailers like apparel companies. If a store doesn’t have a shirt in the right color, the consumer can choose another color,” Brame explained during the ERI eXchange, sponsored by the now-defunct Retail Systems Alert Group, in June. “If we don’t have the right part, shoppers go elsewhere.”
AutoZone also realizes it cannot compete on price or market saturation alone. “It is hard to differentiate yourself in this segment,” he said during the session, “Creating the ‘Wow!’ Customer Experience.” “The one place we can really shine is through our customer service and trustworthy advice.”
Each store can stock an average of 20,000 parts. If the one part a shopper needs is not in stock at a store, there is always a chance that it may exist elsewhere in AutoZone’s retail network, including in its special-orders or salvage divisions.
“It is up to our employee base to answer this question for our shoppers,” Brame said.
“We conduct a lot of training to fulfill this goal, but we need to ensure that they have the right answers for our shoppers every time,” he said. “This is a difficult task with such a high turnover rate in the retail industry.”
Fifteen years ago the retailer introduced a product-lookup system to assist associates in this task. However, the “green-screen,” keyboard-based system was text-based and required users to access several screens to locate information.
By transitioning to a more robust system, “We are in a better position to make our employees auto-parts pros,” he explained.
AutoZone’s new-generation solution, called Z-net, is based on the C++ programming language. The application features an electronic catalog of all inventory as well as product images and descriptions.
“We chose C++ over Java because we run thin-clients across our enterprise,” Brame explained. “Thin-clients are more cost-effective than running individual PCs at store-level, and we also don’t have to run browsers to fuel the units. This is a significant cost savings.”
All data is delivered to units via a VSAT (Very Small Aperture Satellite Terminal) and broadband network combination.
Users can locate parts based on the shopper’s car’s issue year, make, model and engine type. Associates navigate the system with either a mouse or key-strokes.
Z-net also features an expanded search functionality that enables associates to locate a part—regardless of whether it resides in the store, at another location, or if it has to be specially ordered—in real time.
Once the part is located, the system delivers images of the part, as well as a description, and information or hints that the shopper can use to make the repair. It also pushes images and information on complementary items that enable the associate to cross-sell.
These details are all stored in a SQL database, while images reside on corporate servers and can be downloaded on-demand.
“It gives our associates confidence to do their job,” he explained.
AutoZone’s IT staff created the solution, and the team is still making enhancements. “Approximately 10 team members developed the solution and about five members created the content,” he said. “Between three and four members are dedicated to creating new releases.”
All employees are also required to master a CBT (computer-based training) program that teaches them how to use the solution. AutoZone updates this training as new components are added.
The entire project was a $20 million investment for the company, with $2 million dedicated to software.
AutoZone beta-tested the solution in a limited number of stores over several months, and it was rolled out to approximately 3,800 locations between November and December 2006.
While the solution has not been in place long, Brame expects Z-net to “increase sales as well as the average number of parts purchased during a transaction.”
In the meantime, the company is evaluating a return on investment for the project. “We expected a three-year ROI, but we are already seeing a strong impact,” he said.
For example, by the end of the first quarter of 2007, “We calculated that we already paid for the system’s software development,” he said. “If we stay on track, that will help us speed up our overall ROI projection.”
AutoZone is also evaluating how to expand the system beyond its four walls. “Eventually we would like to put a self-service spin on the solution,” Brame explained.
“We want to provide a seamless experience between the store and online. We are not there yet, but Z-net is a good first step,” he said.
“Today, Z-net gives associates the knowledge they need to sell merchandise, and eventually it will be a research tool for our shoppers as they visit our Web site,” Brame said. “Both deployments augment our efforts to create a ‘Wow’ customer experience.”
Winn-Dixie team honored for turnaround
JACKSONVILLE, Fla. The team that lead Winn-Dixie Stores’ successful turnaround initiative is being honored by the Turnaround Management Association for the best ‘Mega Company Turnaround’ for 2007. Comprised of financial experts from The Blackstone Group, Skadden, Arps, Slate, Meagher & Flom and Smith Hulsey & Busey, the team helped Winn-Dixie regain the market share and profits it started to lose in the mid 1990s and early 2000s to competitors Publix and Wal-Mart.
Winn-Dixie filed for Chapter 11 bankruptcy in early 2005 after reporting year-to-date losses of $552.8 million or $3.93 per share of common stock and a decline of 4.9% in identical-store sales in its second fiscal quarter over the same period in 2004.
Despite the difficulty of achieving a succesful turnaround, Winn-Dixie began its reorganization effort, while still continuing to operate its core business and preserving jobs. According to the Turnaround Management Association, it created new common stock for five classes of unsecured creditors, with recoveries ranging from about 96% to 53%. The company emerged from bankruptcy on Nov. 21, 2006.
For its fiscal year ended June 27, Winn-Dixie reported adjusted EBITDA of $85.9 million compared to a loss of $27.8 million last year and an identical-store sales increase of 1.6%
Sears ends deal with maternity retailer
PHILADELPHIA Sears and Mothers Work, the world’s leading maternity apparel retailer, will not be renewing their agreement, Mothers Work announced today. Under their current agreement, Mothers Works operates the maternity apparel department in 502 Sears stores through the sale of its Two Hearts Maternity branded merchandise.
Mothers Work said it expects its partnership with Sears to end on June 20, 2008, when it current deal with the company is expected to expire.
Rebecca Matthias, president and ceo of Mothers Work, noted, “While we are disappointed about the end of our relationship with Sears, we feel the decision not to proceed with a renewal is in the best interest of our stockholders since we were unable to reach terms on a renewal which would be favorable for Mothers Work and our stockholders. “