AutoZone is making significant progress in the expansion of its mega hub network, a strategic initiative designed to improve store fulfillment speed and efficiency. As of September 2021, the company had aimed to increase the number of its mega hub locations from 58 to over 100, a target which has since been revised upward due to the strategy’s success.
During a February earnings call, AutoZone’s leadership noted the positive impact of opening multiple mega hubs in major metropolitan areas, which did not lead to cannibalization of sales among the locations. This observation prompted the company to raise its expansion targets significantly, with plans to extend the network to more than 200 mega hubs in the foreseeable future.
AutoZone operates over 6,000 stores across the U.S. that benefit from the inventory support provided by these mega hubs. The hubs are capable of delivering inventory coverage to stores multiple times daily or on an overnight basis, according to the company’s annual report. Hub and mega hub locations allocate up to 85% of their space for hard parts inventory, a substantial increase compared to the up to 50% space utilization for such inventory at satellite stores.
The primary goal of the mega hub strategy is to ensure quicker delivery of hard-to-find parts to AutoZone’s commercial customers, thereby enhancing service speed and efficiency. President and CEO Phil Daniele highlighted the importance of reducing delivery times for these critical components to improve customer satisfaction and drive market share growth.
Reaching the ambitious target of over 200 mega hubs will require considerable time due to the complex setup process for each location. However, Daniele expressed confidence in the long-term benefits of the expansion, emphasizing the positive impact on sales and customer service by facilitating faster access to essential automotive parts.
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