Companies in the automotive parts & accessories stores industry operate physical retail establishments that sell automobile parts, supplies, batteries, and lubricants. The US automobile parts retail industry includes about 37,000 establishments (single-location companies and units of multi-location companies) and is the world’s second largest consumer of auto parts according to Global Insight. The industry is concentrated with the 50 largest companies generating about 60% of industry revenue. The industry is expected to grow at a compound annual growth rate of 3.4% through 2017, to an estimated $273.4 billion, according to the Automotive Aftermarket Suppliers Association. While market potential and opportunities remain vast, the industry will be faced with significant challenges and bottlenecks that need to be mitigated in the most cost effective and efficient manner.
With the pre-tax profit percentage for auto Parts & accessories stores declining in the US in 2016, as depicted in the graph above, the main focus of the automotive parts and accessory stores in the US will be to focus on enhancing financial visibility and leveraging technology to analyze future trends across store locations to aid in critical business decision making.
We have identified key differentiators that will ensure that automotive store owners can maximize their returns and enhance business profitability.
- - Cost Optimization: The dynamics of the automotive parts and accessories stores industry are
changing. The existing assumptions in the business are losing relevance and the focus is shifting
on cost optimization to sustain profit margins. The graph below highlights the mounting
operational cost that has emerged as a real threat that poses the potential to impact business
profitability for the small auto store owners. The mantra to success going forward will be on
how well businesses can optimize costs and not necessarily cut costs.
To achieve this, automotive store owners need to partner with trusted service providers with
deep-domain expertise who can provide them with meaningful financial analysis and business
insights to optimize profitability and enhance operational efficiencies.
- - Embracing Technology: The automotive industry will lean heavily on technological innovation
to harvest the emerging opportunities. Concurrently, the technological advancement for the
auto store owners is moving beyond just warehouse and logistics. The entire operations of an
automotive parts and accessory store may be disrupted with new technologies spreading in the
areas of finance and accounting, payroll and other back office services. Auto store owners are
now eager to adopt the best in breed robust technological platforms that enhances financial
visibility enabling them to become proactively insightful. Additionally, they desire access to the
next-gen technological platforms that offers best-in-class dashboards, alerts and reporting
templates across various product classes and dimensions, enabling them to gain access to the end-to-end financial analysis covering all aspects of finance, including Profit & Loss, Balance Sheet, Cash Flow, and Inventory. This will lead to a new ecosystem of automotive parts and accessory stores partnering with trusted service providers offering finance and accounting services using next-gen technological platforms at fractional price points and create new business models.
Auto store owners that fail to embrace the opportunities that the upcoming technologies are creating will become increasingly marginalized and irrelevant.
- - Leveraging Data for Business Intelligence: For decades, automotive stores have been making business decisions based on transactional data. However, as the industry adopts a higher level of technology, the growth in real time data will create the need for analytics that will help auto store owners make faster and smarter decisions. Going forward, auto store owners will require access to business intelligence tools that offers state-of the-art analysis, reporting and report designing capabilities, enabling them to measure and track overall key performance indicators (KPI’s) which can increase operational efficiency and profits of their stores. As a result, auto store owners are looking forward to partnering with service providers who can offer exclusive business intelligence tools that measure the financial health of the business and give an indication of how current business performance may affect both the short term earnings as well as the long-term revenue generation capability of their business.
In the current business ecosystem, the automotive store industry cannot afford to take a retrospective view. The auto store owners must try to re-align themselves or make small incremental shifts to meet their business objectives. They must look ahead squarely into the future and re-invent their business strategies. Companies who are agile are proactively adopting the newer technology trends, deploying robust accounting best practices and forging partnerships with trusted service providers.
With over 25 years of industry experience in providing cost-effective finance and accounting services to the automotive industry, Quatrro combines best-in-breed technology with domain expertise that helps store owners enhance business decision making. Today, over 1,500 automotive parts and auto service businesses are leveraging Quatrro’s accounting services to decrease accounting costs while gaining efficiencies with high-quality and timely reporting.
Our experienced auto accounting professionals speak your language and help auto parts stores to:
- Enhance cash flow management
- Ensure compliance with ever-changing accounting regulations
- Leverage best practices and continuous process improvements
- Monitor expenses and identify cost-saving opportunities
- Improve ability to obtain preferred terms and lines of credit
If you are an auto store owner and want to reap the benefit of our extensive experience of helping auto stores similar to yours gain access to real-time, granular visibility into their business, contact us.