While no business nor industry is entirely immune to economic downturns, AutoZone has prepared itself to weather economic storms through strategic plans that allow for easy adaptation to market and social trends. For instance, if the economy plummets, consumers are less likely to spend money on newer vehicles. Those same consumers may not be the do-it-yourself type of stakeholder, but they do become very frugile in difficult economic times. This means they may hold on to their older car longer which increases maintenance costs associated with such. This is where the strategy of service and product availability becomes very relevant to AutoZone and its strategy. Sales usually increase fo rAutoZone during these times (James, 2015). AutoZone, …show more content…
If the prices at the pump increase drastically, people will drive less, which lowers the demand for replacement parts and accessories. Technical breakdown and/or market shakeout. A continuous move under the average on high volumes could trigger a serious danger alert. The economy. A strengthening in the economy will drive customers back to newer cars, leaving less demand for replacement parts and accessories for older model cars. If store sales fall, the stock may experience a drop (Georgopoulos, 2011). AutoZone make almost 50% more do-it-yourself sales than its closest peers, and has captured roughly 15% of the retail market in fiscal 2014, according to the Automotive Aftermarket Industry Association. The corporation has capitalized on its ever-present retail charisma and the comparatively weak acknowledgment of most aftermarket auto brands to endorse its own private labels, Duralast and Valucraft; these components generate over half of the sales. As a end result, the company can negotiate exceedingly favorable terms with vendors, resulting in lower product acquisition costs and working capital needs with an accounts payable/inventory ratio of 115%. These mechanisms together have embossed AutoZone’s a narrow moat that has maintained industry-leading returns on invested capital, concealing 30% (Fleck,