Document zaxQxjL2yKMNpRjrE6ND4N6m

-- 8.2 billion to $18.9 billion 1978 to 1984 -- $81,700/outlet to $164,500 There are less outlets doing much, much more business. Independent Garages (see chart 9) 1973 to 1984 -- 108,000 outlets to 150.000 -- $9.9 billion to $40.5 billion 1978 to 1984 -- $171,500/outlet to $270,000 There are many more outlets doing a whole lot more business. New Car/Truck Dealer fsee chart 10, page 12) 1973 to 1984 -- 39,000 outlets to 25.000 -- $8.4 billion to $15.6 billion 1978 to 1984 -- $360,000/outlet to $622,500 There are a lot less outlets doing lots more business. Truly the future is yours. The market is tremendous and growing every day. There are lots of myths in this business. We all try to talk ourselves into believing what we want to believe. In NAPA we deal with all aspects of this great industry and I can tell you without question or hesitation that the future is yours -- if. Yes, there is no question about the potentialities, but there are two big ifs -- the consumer and your competition. To me the number one, biggest if is the consumer -- not if there are enough of them or if they will all drive imports and do their own work. It's not that, but whether you will be responsive to his needs or not. To those who respond, success will follow. To those who don't, they will surely fail. We all have been guilty of ignoring the consumer, while others have served his needs and grabbed segments of the repair business right out from under our noses. Yours and mine. That's right, when the tra ditional end of this business loses market share NAPA suffers right along with you, because we and other traditional distri butors built our system and service for your needs, not for the needs of the specialty shop or the mass merchandiser. We have adjusted our system to serve these markets and have done it well, but we don't and can't get all or even most of their business. The consumer today is smarter, better informed, more conscious of his own wants and needs, more quality conscious, and spoiled! Yes, spoiled! We have become so scientific in all business and have learned so much about consumer market segmen tation that in all areas from underwear, to bathroom tissue, to food, to watches -- there are hundreds of examples of seg menting a group and zeroing in on that market niche with a product and an ad campaign. And the consumer has been spoiled. He expects to get just what he wants when he wants it. Look at the fast food business. Just a few Chart 7 Where Automobile Parts Are Purchased Store Types and Percentage of Product Sales Undercar Annual Purchase Rate Traditional Auto Parts/ Home & Auto Mass Merchandisers Service Outlets Gas Repair Stations Garage Sub Total Regular Shocks Struts Tires Alignment Brake Lining Muffler Catalytic Converter 6% 1% 33% 27% 11% 12% 1% 17% 13% 3% 2% 28% 16% 0% 37% 19% 17% 10% 6% 13% 4% 7% 7% 12% 14% 13% 10% 11% 11% 25% 4% 28% 25% 12% 46% 18% 32% 16% 42% 38% 22% 56% Specialty Service 19% 25% 55% 36% 14% 41% 21% Chart 8 Service Stations by Annual Repair and Service Dollar Volume Annual Repair and Service Volume Under $20,000 $20,000 - $39,999 $40,000 - $59,999 $60,000 - $99,999 $100,000 - $149,999 $150,000 and Over /o of Stations 1981 1984 10.0% 15.7% 12.4% 22.7% 17.5% 21.7% 7.2% 9.4% 10.3% 16.9% 17.4% 38.8% 100.0% 100.0% Number of Stations 1981 1984 12,000 18,840 14,880 27,240 21,000 26,040 8,280 10,810 11,845 19,435 20,010 44,620 120,000 115,000 Chart 9 Independent Repair Shops by Annual Dollar Volume Annual Repair and Service Volume Under $60,000 $60,000 - $99,999 $100,000 - $149,999 $150,000 - $249,999 $250,000 and Over /o of Shops 1981 1984 22.3% 16.7% 18.4% 16.3% 26.3% 15.5% 11.1% 18.9% 20.7% 33.8% 100.0% 100.0% Number of Shops 1981 1984 30,328 22,712 25,024 22,168 35,768 23,250 16,650 28,350 31,050 50,700 136,000 150,000 years ago Ray Kroc discovered that if you have a clean facility, give good service and a quality product at a good price and keep your menu simple, you can be a success. McDonald's still has the greatest share of that market but look at all the competition -- each with their own little angle, ploy or specialty to attract a certain segment of the market -- and it works. So why don't you spoil your customer? My point is -- decide what you're going to be and be the best you can. You can't be all things to all people, but you can be sensitive to your customers needs. I can guarantee your success if you have a good, clean and well-organized shop, have com petent, well-trained and highly motivated employees, have the right equipment, you're conveniently located, treat the (Continued on next page) 11