Into the Fast LaneBy Mel Duvall | Posted 2004-03-01 Email Print
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Digital displays may soon become signs of the times. But is Advance Auto Parts' five-year-old system of delivering messages by satellite hitting a speedbump?
Into the Fast Lane
Advance has been around since 1932, growing at a modest pace from its home base in Roanoke, Va. In 1998, the founding Taubman family sold its majority interest in the company to the investment firm of Freeman Spogli, which then embarked on a period of rapid expansion, opening hundreds of new outlets and snapping up competitors.
In 1998, Advance purchased Western Auto, nearly doubling in size to 1,500 stores and catapulting total revenues the next year to $2.2 billion from $1.2 billion. Advance subsequently made four more acquisitions of regional and national car-parts dealers over the next three years, raising its footprint to 2,500 stores.
While the rapid expansion was good for investorsthe company went from a $2.2 million loss in 1999 to a string of increasingly profitable years topping at a $125 million profit in 2003Advance faced a big challenge in amalgamating new employees and promoting brand recognition among consumers. "We ended up with a company with different sales strategies, different systems and different management philosophies," says Mike Fowler, director of the Advance Auto Parts Network. "We saw [the in-store network] as a great communications tool, a way to introduce new team members into the family.
"At the time, [the company] also thought it might be a way to make money on ad sales," he says.
The Advance network may eventually turn a profit thanks to ad sales, but the network hasn't hit pay dirt on that front yet. While Advance does sell ads to suppliers such as Halvoline Motor Oil and Bondo Filler, and lands occasional promos for upcoming movie releases, overall, advertisers have been slow to catch on to the concept.
It takes more effort to sell ads than Fowler and his one other full-time staff member can afford. Fowler says the network operates at a loss, but won't say how large that loss is.
Programming is delivered to stores via a six-meter satellite transmission dish, located at the back of the company's headquarters in Roanoke. Advance has a contract with Convergent Media Systems of Atlanta to deliver the appropriate video feed from a TelStar 5 satellite, depending on a store's time zone or other special requirements. Stores in centers with large Hispanic populations, for example, receive programming in Spanish and newly opened stores receive a targeted feed.
In the Orlando area, for instance, where Advance opened new outlets this month, the company is running a targeted regional feed coordinated with other media advertising and events. In April, it will do the same for the Nashville region.
Coordinating advertising campaigns, says Fowler, is a key lesson Advance has learned in the five years of operating the in-store network. "In the past, it was so new and different that we treated it separately," says Fowler. "Now it's part of our overall marketing plan. If we're launching a new product nationally, through television or newspapers, we'll support that effort in the store."
The primary costs involved in operating the network are the production of content and the satellite hookups. The satellite feeds also transmit other corporate data between the stores and head office, such as the electronic parts catalog. RMS Networks of Fort Lauderdale, Fla., creates about 80% of the content for the programming, while Advance produces the rest, such as in-house advertisements, news feeds and sports scores, on its own. Fowler brought most of that expertise with him, having previously worked in broadcast television for 24 years. For the majority of the day, the programming runs in a two-hour loop. A new 30-minute segment is produced every week, so that every four weeks there is a completely new program.
At the Alpharetta Advance store on a recent Tuesday afternoon, customers seemed to be going about their shopping without paying much attention to the three screens above the registers. Two years ago, this store had its yellow-and-black brand colors for Discount Auto Parts switched over to the bright-red-and-checkered-flag scheme familiar to all Advance Auto Parts stores. Discount was the latest buy for acquisition-hungry Advance, and that meant the store's employees had to quickly become familiar with Advance's products, sales systems and corporate culture.
But before long the store's employees were getting the Advance message, beamed in by satellite from corporate headquarters and played 14 hours a day on a bank of three Phillips 19-inch standard television screens directly over their heads. In the morning, before the store opens, the Advance Auto Parts Network delivers training seminars, information on new in-store computer systems, product introductions and company news. After the doors open at 8 a.m., it's sports scores, car parts and accessories, repair tips and more car parts and accessories as the regular programming kicks in.
Manager Jeremy Whalen says the system makes its greatest impact when the store is busy and customers are waiting in line. Then, their attention will drift to the screens and quite often, they'll stay to catch a full segment on changing brake pads, or replacing constant velocity joints.
But will they buy? It depends. Both Whalen and Fowler agree that for some products, such as a new carburetor, the customer has a definite need and is not subject to impulse advertising. But for other items, such as motor oil, body fillers and even cashews, Advance has had success in driving in-store sales. A recent promotion for Bosch windshield wipers, for example, resulted in a 62% increase in sales.
Fowler says the network's biggest impact to date had nothing to do with the bottom line. Spots for the National Center for Missing and Exploited Children with "America's Most Wanted" anchor John Walsh have been included in the two-hour programming block since April 2003, and last June an employee spotted an abductor with a child in an Advance store in Warner-Robbins, Ga. The employee called the police and the boy was reunited with his mother after four years.