Advance Auto Parts to Close 700 Stores in Major Restructuring Effort
Advance Auto Parts (AAP), one of the largest automotive aftermarket retailers in the U.S., announced plans to close over 700 locations in a sweeping restructuring effort aimed at improving sales performance and adapting to evolving consumer habits. The closures will impact a mix of corporate-owned stores, independent franchise locations, and distribution centers, marking a significant downsizing for the company.
By
Nov 2, 2024
Why Is Advance Auto Parts Closing Stores?
The decision comes as rising competition, shifts in consumer buying behavior, and supply chain challenges have put pressure on the company’s financial performance. While the automotive aftermarket has remained strong, increased online shopping and competition from e-commerce giants like Amazon, along with rival retailers like AutoZone and O’Reilly Auto Parts, have forced Advance Auto Parts to rethink its strategy.
In a statement, CEO Shane O’Kelly said:
“This was a difficult but necessary decision to streamline our operations, optimize resources, and position Advance Auto Parts for long-term growth. Our goal is to focus on core markets where we can deliver the best service and value to our customers.”
Impact on Employees and Communities
The store closures will inevitably result in job losses, affecting both retail employees and workers in distribution centers. While the company has not specified the exact number of layoffs, analysts predict thousands of jobs could be at risk.
In an effort to minimize the impact, Advance Auto Parts stated that employees at affected locations may be offered opportunities to transfer to other stores or receive severance packages.
Beyond job losses, local economies will also feel the impact. Many of the closing stores are in small towns and suburban areas, where Advance Auto Parts has been a key provider of auto repair supplies and services for both individual customers and mechanics.
Changing Consumer Habits: The Shift to Online Shopping
One of the key drivers behind the closures is the rise of e-commerce in the auto parts industry. More consumers are now buying car parts and accessories online, either for delivery or in-store pickup.
Amazon and RockAuto have disrupted the traditional auto parts retail model, offering cheaper prices and fast delivery options.
More consumers are choosing to buy auto parts online and install them at home, reducing foot traffic to brick-and-mortar stores.
Advance Auto Parts has struggled to keep up with competitors like AutoZone and O’Reilly Auto Parts, both of which have focused on improving online shopping and in-store experiences.
Financial Struggles and Stock Performance
Advance Auto Parts has faced declining sales and profitability issues in recent years. Despite efforts to expand product lines and improve operational efficiency, the company’s stock has underperformed compared to its main rivals.
In Q2 2024, AAP reported lower-than-expected revenue and profit margins, with same-store sales declining.
Investors have grown increasingly concerned about the company’s long-term viability, especially given its high debt levels and lack of competitive pricing.
In contrast, competitors like AutoZone and O’Reilly have maintained steady growth, partly due to better digital integration and supply chain management.
What’s Next for Advance Auto Parts?
Despite the store closures, AAP remains committed to restructuring and revitalizing its business. The company outlined several key initiatives moving forward:
Investing More in Digital & E-Commerce
Expansion of its "Buy Online, Pick Up In Store" (BOPIS) and same-day delivery services.
Upgrades to its mobile app and website for a better online shopping experience.
Optimizing Store Locations
Focusing on profitable, high-traffic locations instead of spreading resources thin across underperforming stores.
Enhancing in-store services, including battery testing, oil recycling, and DIY repair assistance.
Strengthening Commercial Sales
Expanding partnerships with professional repair shops and fleet services to drive commercial sales.
Improving supply chain efficiency to ensure faster parts delivery to mechanics and auto service centers.
Industry Experts Weigh In
Auto industry analysts say this move was inevitable given the retail landscape. Neil Saunders, Managing Director at GlobalData Retail, noted:
“Advance Auto Parts has been struggling for some time. The traditional retail model is under pressure, and unless companies adapt to new shopping behaviors, they will continue to lose market share.”
While store closures are always concerning, some experts believe this restructuring could ultimately help stabilize the company and position it for a stronger future.
Final Thoughts: A Pivotal Moment for Advance Auto Parts
The closure of 700 stores is a major turning point for Advance Auto Parts, signaling the company’s need to evolve or risk further decline. While painful in the short term, the shift toward digital transformation, store optimization, and improved commercial partnerships may be the key to its survival.
With competitors aggressively expanding and online retailers reshaping consumer expectations, Advance Auto Parts must execute its restructuring strategy effectively—or risk falling further behind in an increasingly competitive auto parts market.
For now, customers, employees, and investors alike will be watching closely to see if these changes steer the company back on track or if this is just the beginning of deeper struggles for the once-dominant auto parts retailer.
