Courtesy of Tom Greco
61| CEO, Advance Auto Parts
Just over a year after relocating Advance Auto Parts’ headquarters to Raleigh, former Frito-Lay America CEO Greco is demonstrating that an executive can successfully switch from carbohydrates to carburetors using some of the same principles.
His strategy: replace nonperformers, fire up and retain remaining employees with incentives such as stock grants, tame a complex and technology-driven inventory and distribution chain, and hitch your corporate wagon to a high-horsepower sports star. In this case, that’s the November 2019 deal to sponsor rising NASCAR star Ryan Blaney, 25, in a multiyear contract with famous car owner Roger Penske.
“This is my third full year, and when I arrived, our front-line, core-four jobs were turning over at a rate of about 38% a year,” Greco says. They are store managers, commercial parts pros that work with garages, district managers and sales-account managers. “That’s nearly four out of 10 key jobs turning every year.”
Since, Advance has issued about 18,000 performance-based stock grants of $3,000 or more. “Turnover has dropped to about half of what it was,” Greco says. The Laurentian University graduate, who earned his master’s from the Richard Ivey School of Business, also credits the November 2018 move to Raleigh from Roanoke, Va., where Advance started in 1932. It gave the capital city its only Fortune 500 company. Both $12 million-plus in state and local incentives and the Triangle’s wealth of high-technology talent fueled the relocation.
After looking at sites in Richmond, Va., and Arlington, Va., and in other states, Advance picked Raleigh. “This location had it all.”
While it has nearly 5,000 stores in the United States, Canada and Puerto Rico, Advance relies heavily on the internet. “About 80% of our sales begin online,” says Greco. Its customer base of shade-tree mechanics to repair and service professionals pulls from a parts bin with an astronomical number of SKUs, requiring components for thousands of makes and brands from new to vehicles that are 30 years old or older.
“We’re talking about a tremendous amount of data and analytics capacity,” he says. “We’re talking about artificial-intelligence platforms, machine-running platforms, inventory management, mobile applications — everything needed to make the customer experience seamless.”
Still, his own transition from snack food to car parts was not seamless. Advance bought Raleigh-based General Parts, parent company of Carquest Auto Parts, in a $2 billion cash deal in 2014. When Greco came on board two years later, the two companies were still struggling to combine effectively. “None of the hard stuff, such as technology, supply-chain and back-office integration, had been done. So the last three years, that’s essentially what we focused on.”
The Canadian-born CEO, who became a U.S. citizen in the mid-1990s, made many tough decisions, including replacing most of the combined companies’ top two dozen executives.
“It seems to be working now,” he says. “We declined in sales in 2016 and 2017, but in 2018 we grew for the first time in several years. Would we like to grow faster? Of course, but at least we’re growing.”
Revenue is expected to reach nearly $10 billion in the coming fiscal year. While Advance’s market value was about $11 billion in early January, its stock price has underperformed rivals O’Reilly Auto Parts and AutoZone over the last five years.
The future? Greco says the incentives deal with North Carolina calls for the headquarters to employ about 400 over the next decade. Meanwhile, the company is tracking changes in the future of electric and autonomous vehicles. Advance, now consolidating from six scattered locations in Raleigh, soon will move into a new building in the North Hills area.
“When you’re scattered out like that, you simply don’t run into people like you’d like to,” Greco says. “For long-term success, nothing is more important than the talent you have inside the company.”
— Edward Martin