Top 25 Retailers Ring Up Nearly $2B In Sales
By Amy Gilroy -- TWICE, 5/17/2004
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In its first Top 25 Mobile Electronics Retail Report, TWICE is putting the spotlight on a category that has long been a profit center for CE chains and a means of reeling in the 18- to 25-year-old customer.
Yes, 2003 was a tough year in car A/V as CD player sales dropped 5 percent in dollars for the first time, and as Gen-X and -Yers spent their money on other high-tech and high-flash products, such as iPods, cellphones and tuner accessories. Retailers and suppliers alike also faced stiffer competition from fancier OEM systems in new cars and also from unauthorized sellers, who have bloomed like spring lilies on the Internet.
But the aftermarket remains a resilient force.
Despite the 7 percent overall decline in sales this year, according to CEA, many of the TWICE Top 25 Mobile Electronics Retailers managed to post gains or to break even.
Car Toys claimed low double-digit increases, and Mickey Shorr said sales were up 8 percent due to a strong commitment to car video.
Posting the strongest gains of the Top 25 was Wal-Mart. Only a marginal player in the category a few years ago, the retail giant has picked up lines such as Sony, Pioneer and Lightening Audio in the past three years, and is rapidly becoming an industry force in satellite radio. One supplier said he expects the chain to achieve 30 percent to 40 percent gains again next year.
Other strong retail performers credited their numbers to pushing the hotter categories of mobile video and satellite radio.
Mickey Shorr said it bucked the trend by advertising at a time when most retailers were backing off. General manager Jeff Pitts said the Michigan-based chains were also able to capitalize on the growing demand for remote car starters, up 40 percent for the store over last year. "It's becoming a huge business for us," said Pitts. In mobile video, the 10-store chain's strategy was to make a full commitment. "You can't be half-married in that category. We spend the money to bring in the inventory. It's like a big-screen TV — it's hard to sell if people can't see it," Pitts added.
Audio Express said it continues to focus on its core demographic, one which demands the latest technology. Noting it caters mainly to the 18- to 25-year-old, merchandise manager Paul Gosswiller explained, "There's always that 17-year-old coming into the market, so we work the technologies. For us, the biggest increases were in video — in-dash more than rear [seat video]. Satellite was up and we introduced performance accessories."
Car Toys said it now measures store traffic by hour and by location, "staffing accordingly and measuring sales performance against traffic," according to merchandising VP Jim Warren.
Both Al & Ed's Autosound and Ultimate Electronics said they added video displays to push mobile video.
Some of the key challenges next year remain competing against unauthorized dealers on the Internet (see story, right), and battling the mass merchants.
At a time when many hot products in car A/V have become commodities, like CD players, plug-and-play satellite radio and portable mobile video, 12-volt stores increasingly face the challenge of competing with mass merchants such as Wal-Mart, Target, Kmart and Costco.
By pushing satellite radio and portable mobile video, a mass merchant with hundreds or thousands of stores can quickly become a key player in mobile electronics without carrying traditional autosound products.
Wal-Mart, in a one-two punch, is edging up the chart because it is both beefing up traditional car audio and using its mass-market muscle in satellite radio.
"Two years ago, Wal-Mart wasn't a player in mobile," said Alpine's marketing VP, Stephen Witt, noting that much of its future growth will be based on commodity items.
"There's no doubt the mass channels will continue to grow, and one of the key reasons is that product offerings are changing. An example is the Delphi SkiFi and the burgeoning category of plug-and-play satellite radio," Witt said. Since the nature of any subscription service is to flood a lot of low-cost hardware into the market to drive subscriptions, "it's natural that the mass channel can embrace satellite radio," he added.
Bob Law, senior VP of retail operations at Sirius Satellite Radio, said that while Wal-Mart is pushing satellite radio, the chain is becoming more involved in consumer electronics in general, including autosound. "This has been happening for the past two to three years. With the addition of Lightening a year or so ago, they now have American speakers and amps," he said, adding, "They've been expanding and getting much more involved in home-theater-in-a-box and plasma TVs. The opportunity they see in satellite radio is important, but I don't believe that it's the main reason for their additional support of car audio."
Even RadioShack, which is no longer a player in traditional car audio, may become one overnight when it begins selling Sirius products this summer. And Sears, while phasing out traditional car audio this year, may remain a top car A/V merchant by pushing satellite radio.
Among the TWICE Top 25, mass merchants currently represent close to 20 percent of the autosound market. National chains Best Buy and Circuit City comprise about 42 percent of the market, and regional consumer electronics/appliance chains comprise 19 percent. Specialty 12-volt stores represent 15 percent of the mobile market (however, an examination of the Top 50 or 100 mobile retailers might lead to a higher overall share of 12-volt specialists).
At the recent Mobile Enhancement Retailers Association's KnowledgeFest, 12-volt specialist were encouraged to fight challenges such as mass-merchant expansion, and Internet and OEM sales by focusing on their technological and installation expertise and getting behind the new, hotter technologies like hard-drive-based head units, Wi-Fi, Bluetooth and navigation. (See TWICE March 22, p. 4 and April 5, p. 26).
Suppliers themselves say they will offer more products with the above technologies next year — products which traditional car A/V dealers are best equipped to sell. In the interim, however, sales in the traditional product categories are dwindling.
As for industry sales, in-dash CD receiver dollar sales to dealers dropped 5 percent to $1.16 billion in 2003, although unit shipments to dealers increased 2.6 percent to 9.8 million, according to CEA.
Aftermarket speaker dollar sales declined almost 5 percent, said CEA. Even mobile video and navigation sales were off by almost 5 percent.
New features, such as MP3 and satellite radio capability in CD head units, were on the rise with MP3-ready units up 130 percent in 2003 and satellite radio-ready head units up 35 percent, said CEA.
Finally, it seems unfair not to mention some of the retailers who fell just short of the Top 25 cut. These include Ovation Audio/Video, Indianapolis, at $9 million in sales in 2003; Duke's Car Stereo, Flint, Mich., at $7 million; and Columbus Car Audio, Columbus, Ohio, $6 million.
Dollar Sales Of Top 25 By Retail Channel| Store Type (a) | Revised 2003 | Revised 2002 | Percentage Change '02-03 |
| Estimated CE Sales (b) in millions | |||
| Total National Electronic Stores | $840 | $836 | 0.5% |
| Best Buy | 490 | 458 | 7.0 |
| Circuit City | 350 | 378 | -7.4 |
| Total Electronics/Appliance stores | 367 | 376 | -2.4 |
| J&R Computer World | 14 | 16 | -12.5 |
| Fry's Electronics | 48 | 45 | 6.7 |
| Rex Stores Corporation | 19 | 19 | 0.0 |
| H.H. Gregg | 17 | 17 | 0.0 |
| ABC Appliance Inc. | 25 | 23 | 8.7 |
| Tweeter Home Entertainment Group | 91 | 96 | -5.2 |
| Ultimate Electronics | 64 | 63 | 1.6 |
| Good Guys | 57 | 68 | -16.2 |
| American TV & Appliance | 22 | 22 | 0.0 |
| Nebraska Furniture Mart | 9 | 7 | 28.6 |
| Total Mobile Electronics Speciality Stores | 309 | 304 | 1.6 |
| Audio Express | 120 | 117 | 2.6 |
| Car Toys Inc. | 110 | 99 | 11.1 |
| Mickey Shorr | 36 | 33 | 9.1 |
| Al & Ed's Autosound | 21 | 21 | 0.0 |
| Custom Sounds | 11 | 12 | -8.3 |
| Mobile-One Auto Sound | 11 | 22 | -50.0 |
| Total Consumer Direct | 96 | 96 | 0.0 |
| Crutchfield Corp. | 84 | 82 | 2.4 |
| QVC | 12 | 14 | -14.3 |
| Total Mass Merchants + Warehouse Club | 380 | 345 | 10.1 |
| Wal-Mart | 240 | 185 | 29.7 |
| Sears | 47 | 63 | -25.4 |
| Target Corp. | 38 | 37 | 2.7 |
| Kmart | 24 | 31 | -22.6 |
| Costco Wholesale | 31 | 29 | 6.9 |
| Registry Totals | $1,992 | $1,956 | 1.8% |
| (a) Store type codes were developed jointly by TWICE and the Consumer Electronics Association. (b) All sales information, except for that supplied by publicly held companies that break out line-of-business sales for consumer electronics, is based on TWICE Market Research estimates. Source: TWICE Market Research © TWICE 2004 | |||
Total Factory To Dealer Dollar Sales
| CATEGORY | 2003 | 2002 | Percentage Change '02-03 |
| Estimated CE Sales in Millions | |||
| Aftermarket Autosound | $1,620 | $1,770 | -8.5% |
| Car Speakers | 420 | 440 | -4.5 |
| Mobile Video/Navigation | 410 | 430 | -4.7 |
| Aftermarket Vehicle Security | 260 | 270 | -3.7 |
| Totals | $2,710 | 2,910 | -6.9% |
| Source: Consumer Electronics Association, Arlington, Va. ©TWICE 2004 | |||
