AutoZone’s Burgeoning Commercial Unit Should Leverage Its DIY, Distribution Strengths

Narrow-moat AutoZone benefits from strong brand intangible assets borne of its nationwide presence, effective customer engagement driven by its high standard of service, and the success of its proprietary-label products. Coupled with a cost advantage generated by its scope of distribution and leading DIY market share, the firm stands to benefit from consolidation behind national chains that can efficiently provide reliable part availability. While AutoZone has been slow to fully embrace the dual-market approach that is increasingly a hallmark of the national retailers, we believe its management team’s measured approach and consistent focus on returns should leave the firm in a strong position to weather change.