Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, January 1, 1994 TAG: 9312310130
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: Knight-Ridder/Tribune
DATELINE: LENGTH: Medium
Large stores offer better prices and product mix, both keys for the success in the industry, said William A. Julian, vice president of equity research at Mabon Securities in New York.
Julian said higher profit margins in megastores are a key to attracting retail chains willing to make the shift.
"Traditional auto-parts stores carry more automotive accessories, whose profit margins are normally 10 percent less than the hard parts like engines and alternators being carried more and more in megastores," he said.
Discount Auto Parts of Lakeland, Fla., is interested in building mini-depot stores of about 8,000 square feet and 20,000-square-foot depot stores. There, hard parts account for 75 percent or more of the total inventory. Hard parts are less than 65 percent in its standard stores, which are typically 5,200 square feet, he said.
Julian predicted Discount Auto Parts' standard stores eventually will be phased out.
The Philadelphia-based Pep Boys takes a slightly different approach.
Its new "warehouse" stores are stripped of carpets and other niceties to "create a perception of values," Julian said. In the chain's regular stores, nice carpets and low ceilings with good lighting are common.
The stripped-down shopping environment will not hurt the retailer because 85 percent of the auto-parts buyers are male, Julian said,.
In fact, he said, Pep Boys' warehouse stores and Discount Auto Parts' depot stores typically turn a profit within five months of opening.
For a traditional auto parts retail store, that takes at least one year, he said.
The largest chains all are scrambling to build larger stores, he said, and that is going to put a lot of pressure on smaller chains.
"It takes a lot of money to build a large space and inventory in a megastore," he said. "I think mom-and-pop stores are going to be hurt."
by CNB