AutoZone Embracing the DIFM Market

Why Acquire Pep Boys?

  • Acquisition of Pep Boys fits the market position, internal and external drivers of the company, and target market.
  • The strategy will improve AutoZone by increasing their market share, expanding their target market, and positioning them to compete in the DFIM segment.
  • The strategy provides sustainable competitive advantage for AutoZone by positioning them to compete in the growing DFIM segment.

Without Strategy

With Strategy

Internal Assessment

  • Strengths
  1. AutoZone’s extensive portfolio of products and services increases brand name and customer loyalty.
  2. AutoZone gained 16.6% market share focusing on the DIY market and parts availability
  3. Efficient distribution system allows AutoZone to meet market demand for parts
  • Weakness
  1. AutoZone offers few services for customers missing the Do It For Me (DIFM) market
  2. Low inventory turnover: Autozone keeps a large amount of inventory on hand to provide for customer demand

External Assessment

  • Opportunities
  1. US GDP is growing, leaving more disposable income
  2. Increased disposable income has increased the demand for DIFM services
  3. Baby boomers are not repairing cars as often
  4. Millennials show a demand for DIFM services
  • Threats
  1. An increase in the technology used in newer vehicles has prevented most DIY projects, causing customers to turn to dealers and auto repair shops instead.
  2. Increased disposable income is leading to an increase in new car sales, decreasing the demand for auto parts.
  3. Electric car sales have increased 37.1% and are also too complicated for DIY, decreasing demand for auto parts.

Strategy Formation

  • Aggressive position
  • Automotive aftermarket is at a mature stage
  • Market shift towards DIFM
  • Increase customer service
SPACE Matrix

Strategy Implementation

  • 3 months: researching organizational structure, culture, customer base, current strategies and risk
  • After 3 months: Begin acquisition
  • Make 100 day plan based on research
  • Begin training on quarterly basis

Financial Benefits

New
Old
Old
New

Conclusion

  • Embrace the DIFM market
  • Increase financial position
  • Increase market share

Works Cited

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