In this Aftermarket Business World interview, Danny Huffaker discusses NAPA's deliberate approach to category management and how the company positions itself as an auto parts leader in an ever-growing and competitive automotive aftermarket. As a leader overseeing both category management and marketing strategies, Huffaker expounds on NAPA's product processes, vendor relationships, portfolio, and future outlook.
Q: Talk about NAPA's approach to category management and how it’s changed over the years.
Danny Huffaker: (There has been) a lot of change over the years with NAPA's approach to category management. We've brought in a lot of folks from the outside who have a deep understanding of category management. The way we approach category management is that we have deep supplier partnerships. We spend a lot of time in our suppliers' facilities, really understanding their capabilities.
We've established a line review calendar with our key supplier partners—there are about three a year. We do category strategies at the line level. We've done, I guess, 30 strategies in the last year, and we've got 40 more to complete this year. That's a deep dive strategy that's led by the category manager, looking at assortment, looking at pricing, looking at inventory, sourcing, marketing, and sales, all focused around the customer. It's a lot of discipline and activity.
Q: You mentioned reviewing categories every few months. What are you looking for in your category management?
Huffaker: New product introductions are big. We want to be first to market, especially on our innovative lines, so reviewing data that we have and our suppliers’ data from our customers accelerates that new product introduction. We focus a lot on innovation, and our customer is the technician; it’s the repair shop; it's the fleet. That's our focus. The majority of our business and the focus of our company is around that repair shop, and so we're working with our suppliers on products that reduce installation time to keep those bays moving and make it easier for the technicians to install. So, we're constantly working down those paths as we look at new product innovation.
Q: Talk about some of the data and technology that plays a role in category management that you're using now that you didn't have access to four or five years ago, and how is it helping to improve category management?
Huffaker: I think we do a better job now of mining the data that our suppliers have. So, that's one stream. (For) some market data—what's working in certain regions of the market, what's working with other customers, lines, products that we're not carrying—we do a lot more market research than we did before. We're trying to understand our customer better, so we all go into the markets ourselves. We have a KPI—10 to 15 market visits a year where we go into repair shops, we go into stores, and we learn those insights. But then we have more formalized market research where we have a couple of different avenues where we survey technicians; we survey their needs. What are they looking for? What's their brand preference? What are they looking for in the products that they use? What service challenges are they seeing, and how can we solve for that? So that's evolved in the last few years.
Q: How important is it to get the right messaging across in parts catalogs for the parts managers trying to find a part for a customer?
Huffaker: Oh, it's critical. That's the first place they go. Everybody's got their computer screens up. We've got to have clear coverage information. We've got to have the right specifications. If it's an OE product, if it's not an OE product, it's got to be easy to find, and they've got to be able to index those part numbers. We partner with our digital team at NAPA to execute that.
Q: What's the process for deciding which new products or categories to bring into the NAPA ecosystem?
Huffaker: A couple different ways. Our current supplier partners are constantly bringing us new products, so we'll evaluate that with data. We look at vehicle operation. We look at what the opportunity for growth is, going back to “Is this something that's going to help the technician install the part easier?” “Is it going to help them turn the bays faster?” “Is it going to reduce comebacks?” Those are some of the elements we look at.
We also look at brand preference. I've spent a lot of time talking to techs. NAPA has a strong private brand program. One of the things that I learned early on is that there are technicians who have preferences for certain brands. If they think an OE brand is better than a private brand, we want to be able to offer that. We've seen massive success in the last year. We've expanded it from one product line to—I think—15 product lines now because that's what the customer's looking for. So, we're going to give them those choices along with our NAPA brand.
Q: How many different product brands do you have under the NAPA umbrella?
Huffaker: We have our main NAPA brand, and then we have our NAPA Proformer brand. We've got a couple of other private brands in there, but what we try to do is use good, better, best. So, we've got that entry-level, good NAPA Proformer; we've got our NAPA, which is our core brand; and then we bring in OE brands and other brands where we see there's an opportunity.
Q: Let’s talk remanufactured parts. Do technicians find that customers are OK with a remanufactured product as opposed to a new product?
Huffaker: They are. There's also a cost-effectiveness. If you think about sustainability, it's the intersection between environmental costs financial and social. If it's lower cost and it's good for the environment, it's a win-win. I think that has been the case for a long time. As newer as new products in those categories become less and less expensive, they become more attractive because they're new. Here in the United States specifically, we've still held on to a lot of remanufacturing where other countries have gone to new.
Q: Which parts do you sell the most to shops?
Huffaker: Some of our biggest categories are batteries. We sell a lot of batteries. We sell lot of brakes, and NAPA sells a lot of filters.
Q: Have you seen an uptick in demand for EV parts?
Huffaker: A little bit. EV is still about 2% of the cars on the road. We've taken a leadership position, and so we're sourcing those EV parts, even if there's a low demand. If someone has an EV, or someone's working on an EV, we want NAPA to be the destination. We may not sell a lot of them, but we're constantly working to have them in stock.
Q: And how do you stay categorically competitive in the next five years?
Huffaker: I think the big thing we're focused on is servicing that repair shop customer better, right? Time is money for these repair shops. They want to turn those bays as fast as they can, and they want to have quality products so that the customers aren't coming back. So, we're getting the product closer to the customer (and) investing in store. We're working with our supplier partners to get more inventory in the system closer to the customer.
