O'Reilly Automotive Expands Loyalty Program Chainwide in Q4

O'Reilly Automotive will roll out a new loyalty program aimed at its DIY (Do It Yourself) customers chainwide by the beginning of Q4 as it seeks to open up more direct communication and promotional opportunities with these shoppers.

The 4,000-plus store retailer began the loyalty program pilot at the beginning of Q2 and had originally planned to go chainwide at the end of the quarter. While the pilot's results were positive enough to warrant a chainwide rollout, it also pointed out areas for improvement that will require some additional work and delay the full-scale deployment until later this year.

"We're excited about the opportunities the loyalty program presents to target promotions to our customers, create initiatives to capture a larger percentage of our customers' business and accumulate customer purchase histories to direct our marketing efforts," said O'Reilly CEO Greg Henslee during a recent conference call. "The pilot has identified some opportunities to enhance the program to make it even more customer-friendly. We are aggressively working through these enhancements and now expect to roll out the loyalty program to the full chain at the beginning of the fourth quarter, versus our initial end of second quarter target date."

In addition to boosting its share of wallet among DIY customers, O'Reilly will use the loyalty program to learn more about their characteristics and shopping habits. "A heavy DIY-er would visit our stores more than four times a year, and average would be maybe two or three times a year," said Henslee. "As we start gathering data from the deployment of our loyalty program across our company, we'll have a lot better idea as to how our customers behave."

Henslee noted that surveys have indicated O'Reilly shares some customers with its competitors and that convenience may be an important factor in a shopper's purchase decision. "The loyalty card program is a way for us to market directly to those customers and try to gain a bigger share of their wallet," he noted. Such marketing could include providing information on specific repairs the customer is engaged in or actions they should take based on the age of the customer's vehicle. "It just gives us the ability to have a tighter relationship with our customers in a kind of a digital way, and we plan to leverage that once it's deployed," said Henslee.

O'Reilly is also using technology to enhance the sales process once customers are in the store with improvements to its O'Cat electronic parts catalog. "It gives us a platform on which to communicate with our Team Members on a by-part basis," said Henslee. Enhanced capabilities allow the store associate to rotate pictures of parts and display multiple sides, allowing for more accurate visual comparisons.

"We now have the ability to make sure that our Team Members have on their computer screens what they really need to sell a part, and we're leveraging that to make sure that we just do a better job at point of sale," said Henslee. "This comes into play both on the professional side and the retail side, but it's really strong on the retail side where the customers maybe aren't quite as informed on auto repairs as our professional customers are."

For those professional customers, O'Reilly has been rolling out a redesigned proprietary business-to-business platform named First Call Online since Q1. "The enhancements of our platform were designed to give our professional shops access to enriched product content and images with more effective search and identification features," explained executive vice president of store operations and sales Jeff Shaw. "Customer adoption has been strong in the first phase of the rollout, and the redesigned system is meeting and exceeding the goal of providing a tool for our customers to improve their efficiency in locating and ordering parts and moving vehicles through their base."

O'Reilly had a strong second quarter overall with sales of $1.71 billion, a 10% increase over the same period the previous year. Comparable store sales increased 6.5% during Q2. The chain is on a growth path: "We are on track to meet our goal of 190 net, new stores in 2013 with the opening of 111 net, new stores across 30 states in the first half of the year," said Henslee in a statement.

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