Pep Boys is taking initiatives to "improve performance of our four-wall property," spokesman Bill Furtkevic tells GSR. With just a handful of units renovated so far, current retail sales per sf have risen from $146 in 2003, but additional steps are designed to accelerate the momentum while also improving the company's performance in the area of auto service.

Retail accounts for 56% of the company's income, while auto service accounts for the remaining 44%. In the latest quarter, overall company retail sales rose 16.7%, but the service revenues dropped 5.3%.

The new initiatives include a reorganization of field operations into two separate organizations, each focused on the retail and service businesses; a reformatting and renovation of units, the addition and expansion of retail product categories, and increased cross-selling among related product categories and between retail and service. Service business improvements call for greater training in service and repair skills, while both service and retail employees are being trained to cross-sell.

The new organizational structure provides for a store retail manager and store service manager at each location who report up through a distinct organization of area directors, divisional VPs and SVPs specializing in operating its respective business. A new SVP of store operations, the service component, has been named and a counterpart SVP of retail is expected to be announced within days, according to Furtkevic. Both will report directly to Larry Stevenson, chairman and CEO, who came aboard just nine months ago.

Two divisional VPs for the retail business were just hired from "other successful big box retailers," Stevenson said. "Given the breadth of responsibilities across both retail and service that we had previously required, these hires would have been impossible for Pep Boys in the past," he added.

The renovation of units, Furtkevic says, "represents a compression of our average of 11,500-sf of selling space to mirror the selling space of our competitors' units. We re-merchandised our existing product offerings into about 4,000 sf, and the new found space makes way for new and expanded product categories."

Among those are: personal transportation, which includes scooters; travel equipment, such as canopies and towing gear; garage items, including storage units and tools, and truck and performance vehicle accessories, which includes personal electronics, lighting, liners and car beds, for example.

"It's hard to say how many new SKUs we'll add, because we're getting more creative in our assortment, and the products are often seasonal," says Furtkevic. "Where we once carried one air compressor, we'll now carry a selection of 20 to 30," he says. "We're adding more selection and depth to our retail assortment."

The renovations also include relocation of the service desk to the center of the retail area in order to increase cross-selling between the service and retail businesses. There is also a new logo and signage. This process began with four units in February 2004 and another 12 units were renovated last November.

This year, the plan gains speed, and between 225 and 250 units will be completed by the end of this year. "The process has proved to meet our objectives," Furtkevic says. "In addition to increasing sales productivity, the refurbished units also give better employee coverage and improve the customer experience," he says.

Plans for an expansion of units are on hold until the renovation program nears completion, he says, adding, "but we do plan unit growth –probably in 2007, and probably in existing markets." Those markets currently cover 36 states and Puerto Rico.