Aftermarket's Future Is Bright Despite 'Broken' Consumer Habits, Say Execs
“I believe consumer habits have been fundamentally broken” due to COVID-19, Tom Greco, CEO of Advance Auto Parts, said today as part of a panel discussion during the Virtual AAPEX Experience.
But that’s not necessarily a bad thing, Greco and fellow panelists noted during the event, which was hosted by Auto Care Association President and CEO Bill Hanvey.
“We're fortunate to be in an industry that is very resilient,” said Greg Johnson, CEO of O’Reilly Auto Parts.
“When the economy is booming, our industry does well and on the opposite side, even during recessionary times, our industry holds its own. Consumers tend to keep and maintain their vehicles.
“I remain very optimistic,” he continued. “Short-term, heading into 2021, miles driven (have been) softer…(but) I see that changing for the better. Consumers have been pent up and they want to get out. They want to drive their cars.”
“I expect to see growth in aftermarket replacement parts,” says Duncan Gillis, CEO of BBB Industries. “We are very bullish in 2021. The only thing that could impact that would be another set of major lockdowns, but barring that, we should be in great shape.
“We’re fortunate that our industry is not like a lot of others,” he noted. “We are relatively recession-resilient and we need to take advantage of that.”
Certain consumer trends, including the use of e-commerce, have accelerated during the pandemic, said Sue Godschalk, president of Federated Auto Parts.
“I believe online ordering will continue to increase. I also think do-it-yourself (DYI service) has grown due, in part, to the stimulus and also due to the fact that more people are home.
“I think going forward, there will be a larger focus placed on digital resources,” she said. “I also think we will see more automation in manufacturing and distribution centers… to guard against additional disruption to the labor force.
“COVID-19 has caused us to look at the safety of our employees and customers. And we’ve put many things in place that will continue into the future. I think all of these will be permanent and ongoing."
Measures taken to protect customers and employees at the retail level, including social distancing and the use of plexiglass barriers, “will be here in the future,” said Greco. “I’m not sure they will immediately go back when there is a vaccine.”
Reluctance by consumers to travel by air or use public transportation will work in the aftermarket’s favor, he added. “People are talking about 2022 or 2023 when airlines will start to get back to where they were before.”
Eric Sills, CEO, Standard Motor Products, doesn’t foresee any “hard left turns.”
But he identified three changes that “probably won’t last. First, the work that shifted to DIY as a result of the lockdowns will shift back to a more traditional share of do-it-for-me.
“Secondly, I think in time, we’re going to see the traditional workplace shift back to the pre-COVID environment.”
Finally, in-person trade shows “will probably be reimagined a bit, but that they will be back,” he said.
“I think this pandemic has magnified what we were already doing,” said Johnson. “Our industry has been focused on e-marketing and omnichannel (marketing.)
“But we’ve become a society of convenience,” he continued. “Who would have thought that people would pay $5 to have fast food delivered to their homes?
“There is a shift in the way that consumers buy products, but I still feel our industry is insulated from some of that. I still feel like the average DIY customer needs the support from brick and mortar retailers.”
Panelists praised aftermarket companies for quickly adjusting to the “new normal” created by the pandemic.
“Companies always have to adapt to meet the evolving needs of customers and the good companies do it better and faster than others,” said Gillis. “All that happened is COVID-19 put it into overdrive.
“Companies in every category need to focus on the customer experience. And as the others pointed out, we’ve been doing that in our industry.”