The largest wholly-owned auto parts retailer in Southern Africa, AutoZone has not settled, set to fundamentally reinvent its operational and productive portfolio to the benefit of all during 2019.
THE AUTOMOTIVE A TO Z
A strategic and catalytic segment of the South African economy, the automotive sector has become a mainstay of national industry, accounting for just shy of seven percent of GDP.
Standing aside from a continent that is home to just 44 vehicles per 1,000 inhabitants, four times less than the global average of 180 according to Deloitte, this market has continued to prevail in South Africa, remaining the country’s sole manufacturing sector to have expanded while others have shrunk.
“Many have prospered under these circumstances and we are now seeing a lot of market consolidation, with rapid growth taking place in both the retail and supplier spaces,” explains Lesego Moagi, Marketing Executive at AutoZone. “A number of mergers in the industry are underway, and change is something that we see happening at a pace never seen before.”
Setting the scene, Moagi goes on to reveal that the situation is no different for AutoZone itself, a company that remains the largest wholly-owned distributor of auto parts, spares and car accessories across Southern Africa.
“Let me paint a picture of what our company is looking at right now,” he continues. “We’re arguably the most typical example of an automotive business having been the subject of rapid growth, and now we’re reinforcing our position.
“What this has resulted in is the implementation of extensive structural and strategic changes within AutoZone. However, this combined with other events out of our control such as economic shifts, supplier changes, product and range proliferation and the need to adjust our internal focus, it’s a transitional period to say the least.”
The hectic nature of these adjustments aside, the benefits that this strategic overhaul is set to bring to the business are not to be underestimated, providing the company with a platform from which it can accelerate its own consolidation throughout the coming months.
“In essence, what we’re trying to do is leverage our core, existing infrastructure and scale that in order to become South Africa’s leading vehicle care solutions partner,” adds Moagi.
THE FULL SERVICE
This immediate infrastructure is already substantial, AutoZone priding itself on an esteemed record of providing high-quality products and services that allowed it to establish a broad, loyal client base of engineers, auto-spares retailers, mechanics, workshops, fitment centres and retail car owners located across Sub-Saharan Africa.
Positioned as a one-stop shop with extensive coverage of South Africa, the firm supplies vehicle parts, spares and accessories for almost any vehicle make or model, from brake pads and gaskets to engine parts, oil pumps and other heavy-duty articles.
“We primarily cover the passenger and light commercial vehicle markets,” explains Moagi. “Working with close to 700 world-class suppliers, we’re able to source and sell approximately 75,000 parts across our 250 branches and additional franchisee member-owned outlets.
“Our competitors are predominantly independently owned spare shops or specialist stores, whereas AutoZone uses scale and a centralised operating model to reap efficiencies and leverage on economies of scale whereby, ultimately, our customers can expect consistent levels of quality branded product availability and associated services.”
However, having somewhat maximised potential by leveraging these existing approaches, the company is looking to raise the stakes and enter a new, more prosperous era by differentiating and diversifying both its service and product offerings.
AN OPERATIONAL OVERHAUL
This has culminated in the identification and development of a three-pronged master plan that will allow AutoZone to enhance its market capitalisation and become more customer-centric.
Moagi reveals: “Firstly, we want to grow the core business, an ambition that our team hopes to achieve through focusing on category optimisation, supplying consumers with both the right products and the right mixture of products.”
Embodying the group’s ‘good-better-best’ principle, AutoZone is effectively providing its customers with more options when looking at what they would like to buy. “We’re offering not only greater choice, but also a better range of high-quality products,” the Marketing Executive adds.
The second point of note is the firm’s recent sales channel strategy, splitting its business into three core, defined divisions comprised of wholesale and retail arms and a professional services business that will service key accounts such as workshops, fitment centres and provide fleet management to private businesses.
Now targeting a clear and distinct audience across each of these channels with limited overlap, AutoZone has already been reaping the rewards, no longer using the same operating model to cater to each of these segments.
“We’ve been able to replace challenges and discrepancies with more efficient and effective operations, evident across our wholesale business, for example,” explains Moagi. “In the past there would be precautions when it came to serving independent spare shops with these companies being a major competitor on the retail side.
“We would have to weigh up the potential impact of our wholesale operations against our retail operations, something that regularly stood as a source of conflict.
“Now, however, these two divisions are standalone businesses and individually act in the best interests of their individual target markets, an approach that we believe will allow us to maximise opportunity across all segments.”
Similarly, Autozone’s dedicated professional services team has expanded productivities for both the customers and business itself.
Moagi continues: “Before we were servicing all customers using our retail stores as a base, but now we’re dedicating a key account manager to each of our key clients that act as a national port of call for anything on a national scale, rather than our clientele attempting to navigate different stores around
the country.
“It reduces complexity on both ends, for us and our customers, ultimately making business easier.”
PREPARED FOR PROGRESS
Alongside the successful expansion of its product range and restructuring processes, the company’s third and final strategic focus is centred on expanding its in-house portfolio.
Having had own-brand products for many years, Moagi and his team are keen to grow this segment of the business, hoping to ramp up the production of reputable and reliable products for its clientele.
“Very simply, we’re improving the way that we work, finding better efficiencies across the board of our business, from how we get products in and move these around through our distribution networks channels to how these are marketed and how we individually serve our customers as the end-users,” the Marketing Executive reveals.
Leveraging this three-pronged plan centred around growing the core, consolidating the firm’s trio of channels and bolstering its own-brand portfolio, AutoZone is expected to redefine itself as an innovative, proactive player within the market during the next two to three financial years.
“If we get these things right,” Moagi reveals, “then no doubt we will successfully be readied for extensive organic growth.”
Beyond this, however, the business is also making plans for the longer term. According to McKinsey Global Institute, for example, the ecommerce market in Africa’s leading economies is set to be worth $75 billion by 2025, a rising trend that AutoZone is eyeing.
“We’re already investigating this sphere,” Moagi reveals. “It’s something that’s going to accelerate later in the year, and we’re hoping to have a fully-fledged ecommerce platform in play before 2020 hits.”
The coming months set to be defined by innovation and adaptation, Moagi and the AutoZone team remain motivated with the monumental yet invigorating task at hand, preparing to embrace the major self-induced changes coming the company’s way.
Moagi concludes: “All these things, combined with a refined corporate identity, store design and more that will come with the company’s upcoming rebranding sequence, we’re expecting the coming 12 months to be one of the most transformative yet positive experiences in the business’s entire history.
“It’s certainly exciting times ahead.”
