Here’s How Some Auto Parts Stores Have Stayed Alive In The Online Era: COTD

The landscape of auto parts stores is about to change. More than 700 Advance Auto Parts locations are about to disappear, removing an option for all kinds of wrenchers who need to get work done.

There are many explanations for this, and Matt Sexton’s additional insight about how these stores work is illuminating:

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I read this the other day, as you can imagine among us NAPA store owners it was of interest. I’m actually on a Teams call getting an update on it right now.

One thing to remember is that auto parts stores don’t subsist on DIY’ers doing work in their driveways. It’s nice, because there’s a bit more margin in that, but selling to the repair shops and fleets is where the bread and butter is. Advance acquired CarQuest a few years back to try to tap into that market a little better, I’m surprised this was not mentioned in the article (I do wonder how much that acquisition affected the balance sheet and led to the situation they’re in today). At our store probably 80% of our sales go out the back door. There’s a lot of volume there and it explains why O’Reilly’s in particular is after NAPA’s share of that market.

Auto parts is a fantastically competitive and complex business and there’s price pressure from all sides. Knowledgeable talent is at a premium. Margins are embarrassingly thin but everyone “can get it cheaper” somewhere else, and now the online retailers are strong as well. Sales are fairly soft in the industry right now, one theory I have is all the cars that weren’t sold in 2020 are not coming off-lease now nor out of OEM warranty (which is where the aftermarket comes in). Some folks disagree with my theory but we saw a bump a few years after Cash for Clunkers so there’s precedence. Between the Blue, Green, Orange and Red I’m not surprised one of the four is feeling the squeeze. Advance in particular has been so desperate for sales that they’ve been known to blitz areas at low margins, which has made things difficult at times.

Online retailers are a burden, to be sure, as evidenced by the number of folks here who say they’re willing to wait for parts. A shop that has to manage rack time doesn’t have this luxury, which is why it’s important to be successful in wholesale. You can combat the online guys buy having inventory, getting it to the shop faster, and providing good service. Personally I obviously feel an independently owned NAPA store is more likely to invest in these areas (in particular inventory), as they have their skin in the game. Your mileage may vary based on your local ownership though, and more NAPA’s are corporate owned now than ever before in my career, so it pays to know who runs yours.

TL;DR: From my perspective Advance was a retail-focused parts operation that tried to buy more wholesale market buy acquiring CarQuest and then didn’t know how to best use them, and amid a tough market is simply feeling the squeeze. I’m far from the smartest guy in the room though so take it for what it’s worth.

Yesterday, Jason wrote a Conspiracy Theory Thursday post about the loss of crotch vents and sperm counts. Lizardman in a human suit wasn’t entertained:

As a space lizard posing as a human, I find this decline in crotch vents and fertility very concerning. This is our future food supply!

I mean our future children. Disregard the food supply comment.

Finally, there’s Jason’s story about how four people allegedly committed insurance fraud by reporting bear attacks on their cars, but the bear was actually just a person in a bear suit. LTDScott replies:

I wonder how many times they got away with this in a Studebaker.

Pete jumping in here … I thought I’d go ahead and pop in a pic of a Studebaker Bearcat to cap LTDScott’s gag, but in looking for a pic I discovered Studebaker didn’t offer any Bear-named vehicles (though there were Hawks, of course, and one Weasel), and the Bearcat was an engine, not a car. You can see the mill inset in the ad below:

However – and I’m sure many of you are probably already poised to note this in the comments – there were indeed Bearcat automobiles; they just happened to be from Stutz, not Studebaker. Per Wikipedia, the first Stutz Bearcat (or “Bear Cat”) appeared in 1912. The model name continued through 1923 and was revived in 1931, then production ceased in 1934 and Stutz ultimately declared bankruptcy in 1937.

But this was not the end for Stutz, at least in name. The brand was revived in 1968 as Stutz Motor Car of America, and in 1979 the Bearcat returned with a, ahem, striking Virgil Exner design:

… which is a whole ‘nother story that would be a terrific tale for Mercedes to tell in her signature deep-dive style, don’t you agree?

Have a great weekend, everyone!