Store Management

1. Store Management March 2008

2. Advance Auto Parts • Aftermarket Automotive Parts and Accessories Retailer • 3200+ Stores in 40 States and Puerto Rico • Projected over $5 Billion in Sales for Fiscal 2008 • Approx $3.9 Billion Retail • Approx $1.1 Billion Commercial Sales • Over 45,000 Team Members • 7 Distribution Centers

3. Store Management Key Area’s of Concentration • People • Process • Product • Promotion/Presentation • P&L Statement (Operating Statement)

4. People • Selection • Onboarding • Communication/Engagement • Training/Development

5. Making The “Right” People Decisions Selection • Needs Assessment • Determine Position or Positions needed • Identify Specific Skill Set Required • Assess Internal Candidates • Identify Recruiting Support for External Candidates • Interviewing • What you can or can not say • Federal Guidelines to be aware of: • HIPPA • ADA • EEOC

6. Making the “Right” People Decision Onboarding: • Most companies put the new employee through a process that resembles “drinking water from a fire hose”. • Every person will assimilate information at their own rate • The first week is one of the most critical times for all new employees • Set Expectations of Employee • Communicate what they should expect of the Company • Create a warm welcoming environment

7. NHOST New Hire Onboard Store TrainingValidation Project High New Team Member with Training New Team Member without Training $$ Standard of Performance Levels of Performance $$ Low Time

8. NHOST Validation Project At Nine Weeks…. Sales per labor hour • NHOST Team Members averaged $100 sales per labor hour • Non-NHOST Team Members averaged only $80 sales per labor hour Customer Average • NHOST Team Members had an $18 Customer Average • Non-NHOST Team Members had a $16 Customer Average Customer Count • NHOST Team Members averaged 200 transactions • Non-NHOST Team Members averaged 100 transactions

9. Communication “Good Communication leads to better understanding and mutual confidence” Six Steps of Effective Communication • Plan it • Keep it simple • Be Consistent • Communicate with urgency • Remember WIIFM • Be supportive, encourage, thank

10. Communication/Engagement • Store/Department Team Meetings • Management Staff Meetings • Communication Centers (Bulletin Boards) • Email blast updates • 1:1 Meetings • Informational Meetings • Coaching Sessions • Counseling/Disciplinary Meeting • 1st sessions should always be corrective & developmental • Correct/instruct on process • Validate understanding • Behavior Change

11. Importance of Monthly Store Sales Meetings • Sales • Profits • Opportunities • Upcoming Promotions/Events • Team Recognition • SPIFs – Team Sales Incentives • Show Appreciation - Thank Them! • Listen and Ask Questions! • An Informed Team is an Engaged Team

12. Communications Timeline Day Week Month • Complete MPT To Do List • Update Communications Center • Weekly Store Staff Meetings • Sales Goals • Hot Topics • Game Plan • Planning Calendar • Team Member Schedule • Sales Goals • Store Team Sales Meeting • Campaigns / Contests • FrontRunner-Quarterly Publication • Sales Goals

13. Benefits of Training WIIFM • Better performing Team Members • Better Customer Service • Better Team Retention • Better Sales Training Creates Leverage! You should considerTraining an investment, your return is improved effectiveness, efficiencies and performance!

14. How to Train..... Formula to presenting Training Content: • Tell them • Show them • Watch them do it • Let them do it on their own • Follow through days later • If they did it right---give them praise and recognition • If they did it wrong---repeat steps 3-5

15. Training Resources • Retail Academy • Product Information • Product Features and Benefits • On Line Learning Center • New E Learning System in 2008 • Interactive format • In Store Training Programs • Ops Training Class • Leadership Training • Tech Trainers • Automotive Systems Technical Skills Training • Automotive Systems Sales Training • Project Selling (the complete job) • Attachment (related item) Selling) “Would you like fries with your order”?

16. StoreNet Site Map / SOP Site Or use the SOP Hot Key Click here to access the SOP Site

17. Process Management Management Planning and Training (MPT)

18. Store Process Management • Planning • Forecasting • Work Flow Management • Scheduling

19. Mission of MPT To provide Store Management with the proper tools and reporting to manage labor to its maximum yield, not its lowest cost while driving sales.

20. Plan for Staff Meeting Delivery Clean Oil Recovery Tank Sweep The Floor Plan-o-Grams DM Meetings Clean the Bathrooms Store Meetings DIFM Sales Plan for Store Meeting Pick up the Parking lot Process PDQ Returns Clean Battery Rack Restock Register Bags Cycle Counts Clean Test Equipment ASN Stocking DIY Sales Reload Cash Register Tape Store to Store Transfers Staff Meetings Clean and Organize Manager's Office Area Price Changes Clean & Organize Parts Counter Update Quota Board Take Deposit to the Bank

21. MPT….Driving Sales Drive sales by planning to….. • Have the Right Person • In the Right Place • At the Right Time • Doing the Right Things • You will serve your customers better! • You will increase your sales!

22. Seven Steps to MPT Plan

23. Scheduling to Sell Work Flow Management • Forecast Sales Expectation • Forecast of Payroll Dollars/Percent • Project Peak Selling Periods • Schedule to support Peak Sales Periods • Schedule to complete non-selling task • Planogram updates • Stock Put away • Maintenance

24. Store Manager “What Matters Most”

25. Store Manager “What Matters Most”

26. Daily To-Do List

27. 6. Team Member Scheduling

28. Product Management Basics • Inventory Basics • Maxi Adjustments • Cycle Counts • Reverse Logistics • Planograms • Back Stock (overstock) • PDQ Program • Daily / Weekly Duties

29. Inventory Basics Managing your store’s inventory is really about managing different facets of the inventory process • Proper Stock Levels and Variety • Too little merchandise means we miss sales • Too much merchandise means we waste inventory dollars on product we don’t need • Every Store has a different “selling mix” • Generally speaking 20% of your inventory produces 80% of your sales. • Stock levels are driven by On Hand quantity and a Maxi quantity

30. On Hand Integrity • Ways On Hand integrity is compromised: • Cycle Count inaccuracy • Refunds processed incorrectly • Ringing multiple quantities incorrectly • Overring (Post Voids not processed) • POS Exchanges / Defect Exchanges processed incorrectly • Theft • Shipping errors

31. Maxi Adjustments • Maxi is the amount of inventory needed to support sales until the next DC shipment arrives • A Maxi that is too low will not support sales • A Maxi that is too high will lead to excessive backstock • Request a new maxi through the Inventory Adjustment menu, or by using the RF Scanner • Maxis are calculated based on last 4 weeks sales except for bulk chemicals & batteries which use a 2-3 week supply • If lost sales are recorded properly using F10 "Lost Sale" function, Inventory Management will adjust maxis accordingly

32. Cycle Counts • Cycle Count Basics: • Cycle counts are mini inventories, and if done properly, are the best way to maintain on hand integrity • Before cycle counting, make sure merchandise is fronted, faced and in proper location • Complete by the weekly due date • We schedule approximately 1200 – 2000 pieces per week • Count items in multiple locations • back room, endcaps, wing panels, and backstock • Confirming a cycle count without actually counting the merchandise (F8’ing) is considered fraud

33. Reverse Logistics(Distribution Center Returns) The process of returning cores, defects and new saleable merchandise to the DC, PDQ, or Master PDQ to ensure proper credit.

34. Reverse Logistics(Distribution Center Returns) The process of returning cores, defects and new saleable merchandise to the DC, PDQ, or Master PDQ to ensure proper credit. You should think of Reverse Logistics as the Register at your backdoor!

35. Planogram Management

36. Planograms • The planogram includes the following: • A Cover Sheet: • Provides the purpose of the planogram • Provides notes on how to set the planogram • Provides what you need to do to complete it • A Contact Sheet: • Provides the person and phone numbers to call • Planogram: • Visual presentation of where and how to place the merchandise • Line Listing of the items, description, facings, and the minimum amount of merchandise

37. Back Stock (Overstock) • Back Stock Worked Daily • Run Back Stock Move Report • Work Backstock on Sales Floor • Back Stock Worked Weekly • Use Back Stock cart on Truck Day • Scan in Back Stock after stocking is complete • Organize Back Stock area with new items

38. PDQ Program(Special Order Program) • PDQ Program Maintained 100% Daily • All items awaiting pick up have slips attached • All items Paid (including Team Member purchases) unless for Commercial Account or for Warranty Replacement • PDQ Defective Item for Replacement use POS/Def Exchange Hot Key • PDQ Returns Sent Back Weekly • Returns assigned to Totes Daily using the Parts Not in Totes Report

39. Inventory Daily / Weekly Duties Day Week • Store Recovery • Review / assign totes • Receive ASNs • Review ATIs • Review Order Viewer / PDQ shelf • Process Store Use items • Complete Cycle Counts • Return to stock Cycle Count • Work Backstock • Review “Planning Calendar” on Store Net • Review “Game Plan” • Print manifests for weekly returns • Complete Planograms • Process outages / variances • Complete callbacks and overstock returns • Scan in new Backstock • Complete Cycle Counts (No F8’ing) • Confirm DC Truck ASN • Complete Maxi adjustments • Complete Price Change Front Tags • Place Store Supply Order (One order per week) • Place Add Order

40. The Advance Way to Manage Inventory

41. Store Presentation/PromotionDaily Store Inspection

42. Store Presentation/PromotionDaily Store Inspection Daily Outside “Store Inspection” • Use this process daily when walking the exterior of your store! • Green Areas and Landscaping • Parking Lot and Striping • Dumpster Area • Lighting • Sidewalks • Windows and Doors • Window Signage

43. Store Presentation/PromotionDaily Store Inspection Daily Inside “Store Inspection” • Use this process daily when walking the exterior of your store! • Consistency is the key! • 4 ft X 4 ft Section • Start with the Interior Walls • Then Sales Floor Aisles • Then Sales Floor End Caps and Wing Panels • Then Sales Floor Stack Out Displays • Then Parts Counter including the Register Displays • Then Parts Department End Caps • Finish with the Parts Department Aisles

44. 4-3-0 Parallel Merchandising 0 Feet (if there is not 4’ between stackouts) 4 Feet minimum between displays 3 Feet (to fixture)

45. Customer Convenience • Place where customers will need them: • Front Ad Display • Oil Rack • Chemical Wall • The more customers can carry, the more they buy! • EZ Cart customers spend about $40 on average

46. Store Display & Signage(Daily, Weekly, Monthly) • Ending promotional signs removed • New Monthly Ad Signs Displayed • POP (Point of Purchase) Signage updated • OSP (Off Shelf Display) Rotated • Stack-outs faced and filled • End Cap Displays faced and filled or Updated (Seasonal) • BOGO (Buy-one Get-one Free) Merchandise Displayed

47. Operating Statement Four Key Result Areas • Sales • Gross Margin • Expenses • Profits

48. Operating Statement Basics Budgets/Goals • Performance is measured as a % of Sales and % of Profits • Sales % to Budget • Comp Sales % • Profit % to Budget • Comp Profits % • Bonuses are often tied to Sales Performance

49. Operating Statement Basics Basis Point • A basis point is a financial term used to describe One one-hundredth of a percent • If a store’s payroll budget is 12.45% and the operating statement shows they ran a 12.25% they were 20 basis points under their budget

50. Operating Statement Basics Flow Through • Flow through is a term used to describe the profit you earn on the bottom line from incremental top line sales • For every dollar over budget in sales, 30% should drop directly to the bottom line