Auto Parts Sector Stays Resilient to Online Competition

AutoZone operates 6,023 stores across 49 states, and In 2017, it opened another 168 stores in the US.

CHICAGO—Competition from e-commerce has decimated portions of the retail market, and landlords now make it a point to sign leases with service-oriented businesses that can resist internet competition. Many net lease investors also increasingly prefer properties occupied by such ventures. One retail category that now looks especially promising is auto parts retail.

It’s a $58 billion industry which has experienced steady growth over the past few years, usually in the single digits, according to a new study by Quantum Real Estate Advisors, a Chicago-based firm that specializes in investment sales brokerage. Online retail sales within the industry have become more important, totaling $8.89 billion in 2017, a 16% increase over 2016. But AutoZone, Advance Auto Parts and O’Reilly Auto Parts have strong leads in market share, and the high levels of competition make it difficult for new operators to succeed. And this type of property has an additional advantage.