Lang Aftermarket iReport: Integrated channel surge
“The Integrated channel dominates two-step product distribution in the car and light truck U.S. aftermarket.
“Integrated distribution has significantly outperformed the overall car and light truck aftermarket over the past five years, expanding its light vehicle product share. The Integrated channel also generated the largest share of aftermarket product growth between 2013 and 2018.”
— Jim Lang, publisher, Lang Aftermarket iReport
Integrated Channel’s Hallmarks
Integrated distribution in the U.S. aftermarket is defined by the consolidation or “integration” of aftermarket distribution levels and functions.
Product ownership in the Integrated channel does not change hands, or franchise affiliation, from the time of purchase from Manufacturers to the sale of products to Installers (repair outlets and DIYers).
Integrated Channel Product Growth: 2013 to 2018
Integrated distribution significantly outperformed the overall car and light truck aftermarket between 2013 and 2018.
The Integrated channel’s light vehicle product volume soared at a 3.5% average annual pace in current dollars during these five years, over half-again faster than the 2.2% average annual compound product growth rate of all other light vehicle aftermarket channels.
DIFM Versus DIY Product Share
Integrated distribution commands a greater share of the Do-It-Yourself (DIY) market than it does of light vehicle Do-It-For-Me (DIFM) product volume.
Retail Auto Parts Stores, Discount Stores/Mass Merchandisers, Drugstores/Supermarkets and Ecommerce Sellers are major Integrated channel participants in the Do-It-Yourself light vehicle aftermarket.
Growing DIFM Product Share
Although Integrated distribution generates a smaller share of the DIFM market than it does of DIY product volume, Integrated distribution is steadily increasing its presence in the car and light truck DIFM market.
Much of the Integrated channel’s product growth is generated by the expansion of Retail Auto Part Stores into the commercial (Independent Installer) segment of the aftermarket.
The bulk of Service market Integrated distribution is generated by large Specialty Repair chains (Monro, Midas, Meineke, etc.) as well as many regional operations which purchase direct from Manufacturers and distribute products through company Warehouses to their service outlets.
Discount Stores/Mass Merchandisers with service bays also are important Integrated channel participants in DIFM market.
Other DIFM Integrated Channel Growth
Ecommerce Sellers that warehouse products are a rapidly growing part of the Integrated channel. Initially focusing on the DIY market, Ecommerce Sellers are expanding their sales focus to Installers in the DIFM market.
Operational Benefits of Integrated Distribution
Integrated distribution can enable companies to better control inventory investment and reduce the cost of product acquisition by allowing them to better implement and coordinate marketing plans, particularly at the consumer and repair outlet levels.
Expanding Product Share
The Integrated channel climbed from just over 37% of car and light truck 2013 product volume to nearly 39% of the 2018 market.
Aftermarket Growth Share
The Integrated channel has generated nearly half of aftermarket light vehicle product growth over the past five years, accounting for more than twice as much product growth share as the next closest channel.
Six Major Takeaways
- The Integrated distribution channel is characterized by the consolidation or integration of aftermarket levels and functions. Product ownership in the Integrated channel does not change hands, or franchise affiliation, from the time of purchase from Manufacturers to the sale of products to Installers (repair outlets and DIYers).
- Integrated distribution increased at a 3.5% average annual pace over the past five years (2013 to 2018), much faster than the combined 2.2% average annual growth rate recorded by all other light vehicle channels.
- The Integrated channel records a greater share of Do-It-Yourself (DIY) volume than it does of the Do-It-For-Me (DIFM) product mix.
- Much of the Integrated channel’s growth is being driven by expanded Retail Auto Parts Store sales to the commercial (Independent Installer) aftermarket and the growth of Ecommerce Sellers that warehouse the products they sell.
- Integrated distribution increased from 37% of car and light truck 2013 product sales to nearly 39% of the 2018 market. The Integrated channel has accounted for almost half of aftermarket product growth over the past five years.
- More analysis of the Integrated channel (and the other major distribution channels) is provided in the 2020 Lang Aftermarket Annual, which will be released next week. Order now for early delivery.
Copyright 2019 by Lang Marketing Resources, Inc.
NOTE: Special thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.