Chairman, chief executive officer, and president, AutoZone
Nationality: American.
Born: 1959, in Minneapolis, Minnesota.
Education: University of Notre Dame, BA; Northwestern University, MA.
Career: Quaker Oatmeal Cereals, 1995–1996, general manager of U.S. Food Division; Sara Lee Corporation, 1996–1998, senior vice president of snacks division; 1997–1998, president of bakery foods service division; Tops Markets, 1998–2000, CEO and president; Ahold USA, 2000–2001, COO; AutoZone, 2001–, chairman, CEO, and president.
Address: AutoZone, 123 Front Street, Memphis, Tennessee 38103; http://www.autozone.com.
■ Steve Odland was the chairman, chief executive officer, and president of AutoZone, the largest autoparts and accessories retailer in the nation, with more than $5 billion in sales and 45,000 employees throughout the United States and Mexico as of 2004. One of the first orders of business for Odland when he took control of AutoZone in 2001 was to institute tougher ethical standards and practices throughout the corporation. Odland stressed to all company employees the importance of conducting business with honesty and integrity, whether dealing with the board of directors or customers.
Odland and his family moved to Denver when he was six years old. While attending high school, Odland worked as a stocker for King Soopers, a local grocery store chain. He also spent a summer interning in the accounting department for the Rocky Mountain News . In 1976 Odland left to attend college at Notre Dame where he earned a degree in business administration. After earning a bachelor's degree from the University of Notre Dame and a master's degree from the J. L.
Kellogg School of Management at Northwestern University, Odland continued to work at a variety of jobs in the grocery business. He served as vice president and general manager of the U.S. Food Division of Quaker Oats Cereals between 1995 and 1996; general manager of the snacks division for Sara Lee Corporation between 1996 and 1998; and CEO and president of the Tops Markets chain between 1998 and 2000. From 2000 to 2001 Odland was chief operating officer of Ahold USA, the U.S. subsidiary of Royal Ahold, the Dutch conglomerate that operated supermarkets and specialty food shops around the world. In 2001 Odland joined AutoZone as chairman, chief executive officer, and president.
Odland assumed control of AutoZone when the United States was in the midst of a sluggish economy, which weakened sales and lowered profits. The increasing complexity of automobiles also hurt AutoZone, since larger numbers of potential customers lacked the expertise to work on their own vehicles. Undaunted by these difficulties, Odland seemed the perfect fit to revive AutoZone's fortunes. The fast-paced, everchanging grocery industry offered little time for deliberation and less room for error; Odland's ability to adjust quickly, efficiently, and purposefully to fluid market conditions served him well as the head of the auto-parts retailer.
Odland dismissed concerns about the complexity and improved quality of modern automobiles, noting that people were keeping their cars longer and driving them more; extensive age and mileage made them ripe for repair. Upon taking the helm at AutoZone, Odland immediately sought to change the company's merchandising strategy. He cited statistics revealing that the average AutoZone customer visited the store only six times a year, spending less than $100 in that time period. On average 80 percent of customers purchased only one or two items per visit; 20 percent left the store without having made a purchase at all. Odland set out to increase the numbers of both customer visits and transactions per visit.
Where some saw only problems, Odland saw merchandising opportunities. At a Lehman Brothers' retail conference held in May 2001, he outlined five proposals to improve sales: first, remind customers of the safety risks involved in not performing basic maintenance; second, emphasize products that improved the appearance of older vehicles; third, appeal to customers' pride of ownership by aggressively marketing accessories that enabled them to customize their vehicles; fourth, advertise products designed specifically for the owners of light trucks, minivans, and sport-utility vehicles, which tended to be driven harder than automobiles and required more extensive repairs using more expensive parts; and fifth, prominently display such items as air fresheners, tools, and sunglasses that consumers often bought on impulse. Odland wanted each store to "micromerchandise"—that is, to carry slightly different products suited to its particular clientele. He insisted that stores unfailingly provide excellent customer service and that sales personnel be knowledgeable about the products on the shelves and auto repair in general so as to supply expert advice.
Odland raised AutoZone's annual advertising budget to approximately $20 million in an effort to create strong national brand identification in a generally regional and fragmented market. In an interview with Jeffrey Kutler of Institutional Investor Odland noted, "We can double the size of this industry simply by reminding people through advertising to do more maintenance" (February 2003). He introduced a new slogan for the company that had a special appeal for younger customers who thought of their vehicles as extensions of themselves and who considered themselves to be trendy, capable, and smart: "Get into the zone—AutoZone!"
Two years into Odland's tenure at AutoZone's helm, the company showed a total revenue increase of 11 percent, to $5.3 billion. The value of AutoZone stock tripled, as the company acquired a 12 percent share of a crowded market; none of AutoZone's thousands of competitors even approached a double-digit market share. In fiscal 2002 alone profits soared 68 percent. In Institutional Investor John Lawrence of the brokerage firm Morgan Keegan & Company remarked, "AutoZone has been one of the best performers in all of retail. Its stores' productivity is up, returns on capital are impressive, and it has plenty of leverage to keep moving forward" (February 2003). Even Odland marveled at the success enjoyed by the company. In addition to the overwhelmingly positive financial news and stock forecasts, the business seemed impervious to recession and depression. During hard times, Odland noted, people would tend to retain their vehicles even longer, and millions turned to AutoZone to keep them running. By 2003, 50 percent of the 225 million motor vehicles on American roadways were seven years old or older—an increase of 33 percent since 1983. Odland called them "OKVs," short for "Our Kind of Vehicles" ( Institutional Investor , February 2003).
Odland further bolstered AutoZone's success by ridding the company of unprofitable subsidiaries. Shortly after taking control he sold the struggling truck-parts division and reduced the number of new-store openings. Still, in each of 2001 and 2002 AutoZone added one hundred new stores; in 2003 that figure was increased to 150. Besides looking after the financial welfare of his company, Odland anticipated changes in corporate governance. Months before the accounting scandals at Enron and MCI became public knowledge, Odland instituted a strict code of business ethics for executives, managers, and general employees alike at AutoZone.
Odland emphasized the ethical obligations of salespeople, managers, executives, and the board of directors to both customers and shareholders, believing that the only sure way to guarantee a company's continued value was by upholding honesty and integrity in its business practices. As such Odland averred that effective and trustworthy corporate governance required the implementation of five key elements.
First was the development of clear and consistent guidelines to spell out what was expected of employees, explain how the company was to operate, and determine how the board of directors was to conduct business and monitor its activities. To that end Odland instituted a confidential, toll-free hotline at AutoZone for employees to report theft or other improper behavior in the workplace. He also assured them that they faced no reprisals for lodging complaints, even against superiors.
The second of Odland's key elements was the creation of an independent board of directors. He restructured the 10member board by removing four AutoZone executives and replacing them with people who had no connection to the company outside of the required ownership of stock. Odland himself remained the only insider. Third was the establishment of a group of officers to verify company finances; fourth was the "regular, frequent, and rigorous" reviewing of company finances; and fifth was the hiring of employees at every level of company operations who adhered to the standards of conduct stated in company guidelines. In an interview with BusinessWeek Odland told David Liss, "You must hire the right people. If you hire crooks, they'll steal"; Odland also saw leadership as vitally important, noting that employees needed to "be led from the top of the company to do the right thing and to behave with the highest ethical standards" (May 16, 2003).
Odland spared no effort in making the success and integrity of AutoZone the personal responsibility of every employee. Financial accountability fell upon all company executives, not only those in the accounting department. Every month vice presidents, senior vice presidents, and the CEO met to review the books; weekly conferences of the executive committee supplemented the monthly meetings. Similarly if one division within the company faltered, Odland involved everyone in finding the cause of and rectifying the problem. He told Liss that the company was "dependent on the success of the business as a whole, not on the success of individual parts" (May 16, 2003).
The emphasis on honesty, integrity, and responsibility may not have directly affected the financial success of AutoZone, but such an attitude certainly did not hurt the company's performance. As of 2003 AutoZone's sales growth was approximately four times higher than that of the auto-parts industry as a whole. Odland estimated that the company could still build and operate thousands of additional stores at a profit. Moreover AutoZone conducted $500 million worth of annual business in the sale of auto parts to commercial dealerships and repair shops. Already first in the retail sale of auto parts to consumers, by 2003 AutoZone occupied third place in the commercial auto-parts market, behind Napa and Carquest. With an annual growth rate of between 5 and 6 percent from 1994 to 2004, the auto-parts business presented an ideal environment for economic expansion. By all accounts Steve Odland positioned AutoZone to take full advantage of that opportunity.
See also entries on AutoZone, Inc. and Tops Markets LLC in International Directory of Company Histories .
"AutoZone Names Odland CEO/Chairman," Automotive Marketing , February 2001, p. 9.
"AutoZone's Trendsetting Governance," Corporate Board , July–August 2002, p. 32.
Battle, John, "AutoZone's New CEO Brings 'Super' Marketing Expertise to Job," Aftermarket Business , 111/2, February 2001, p. 8.
Liss, David, "AutoZone's '40-Headed CEO,'" BusinessWeek Online , May 16, 2003, http://www.businessweek.com/bwdaily/dnflash/may2003/nf20030516_8961.htm .
"Odland Presents AutoZone as Solutions Source," Aftermarket Business , June 2001, p. 1.
"Pedal to the Metal: Regardless of Economic Conditions, America's Top Auto-Parts Dealer Stays in the Fast Lane," Institutional Investor , February 2003, pp. 23–24.
—Meg Greene
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