(10-16-2020, 05:40 PM)NilesMike Wrote: (10-16-2020, 04:26 PM)EricL Wrote: Take stocks like the auto parts stores.
Both are roughly trading at fair value, yet who is jumping on them to buy?
I am NOT buying. I work for one of the big boys as my retirement job, it's not pretty going forward IMO. Most of the DIY customers are keeping their beaters together as cheaply as possible. I'm actually shocked at what these people drive! Eventually those cars will pass away and the next generation of cars will be MUCH more difficult to DIY.
EVRYTHING on the retail floor is way overpriced compared to Walmart, Menards and of course on line. Who needs to buy a headlight bulb for $13 when it's available on line for $2, scouts honor. I bought fog light bulbs online for my brothers Grand Cherokee, name brand closeout. FIFTY CENTS.
Commercial side is also not pretty. Nothing but warranty returns. Sometimes the part is bad, sometimes it's not even ours but they warranty it to not lose the account.
Many new returns. This is how THAT game works. None of us make any of these parts, they are just re sellers. Joe Blow Garage needs an alternator ASAP. Sending it right over Joe, it's $209 plus core charge. SEND IT! Simultaneously, Joe orders one online for $129. 2-3 days later Joe calls, I need to return the alternator- customer walked. So, we go pick it up and sure enough a brand new alternator is in the box-the one from online! We write up the return, process the credit, put it back on the shelf-right next to the one that just came in. Couple days later, the warehouse calls for one of the parts to be sent back. Now someone has to pull the stock lift, process it, pack it up for return to the warehouse. That part or paperwork for that part has been touched by 9 people and there was no sale.-LOL
Repeat many times with many accounts.
I'm in an urban area with 5 stores within 2 miles. That's about 5-6M in parts, oversaturation indeed.
At some point, Amazon will take over one of them for their distribution system and keep a MUCH smaller footprint.
If you think that would be good, ORLY has the best distribution and would be the most likely candidate
I only worked at AZO for about three months in early 2019, but I can confirm all of the above is true. I seriously considered buying some stock but couldn't figure out how the earnings growth could continue. I was on the sales floor every week raising the prices on already very expensive sales floor product. We install some of it for free so that explains batteries, wipers, light bulbs etc. Warranty return rate is quite high. A lot of time spent on their 1990's era technology trying to find a customers old receipt for lifetime warranted items. The stock was a great ride but the model is getting a little mature. IIRC AZO has about 6K stores. The US market is saturated. Not sure how they make more money other than jacking up prices and continuing to significantly underpay employees vs other retail. As a semi-pro DIY customer I only spend half as much at AZO as I did 10 years ago. Online is just too easy and I can often get the better brands I prefer. (Actually a reason I shop at ORY when I have an option.) I do think the quality of AZO and competitor branded parts has improved over the years FWIW. AZO needs to spend an enormous amount of money on technology soon. I sure typed a lot for somebody that isn't interested.
I should have just said I need a hard pullback in SP to interest me. It's not overvalued, but the growth story is suspect so I need a good deal lol.
