Car Toys Keeps Expanding, Eyes Entire U.S.

SEATTLE— Car Toys, with 55 stores, is aiming to eventually move beyond the Western half of the country to become the first nationwide retail chain to focus on mobile electronics exclusively.

Car Toys said it expects to complete its store build-out in the Dallas-Fort Worth and Houston markets by the first half of next year and will likely begin entering a new market, to be announced, in 2003. According to VP marketing Theron Andrews, the chain has been growing at a rate of 15 percent to 20 percent annually, and has opened 11 stores in the past 10 months in Texas.

"We have opened six stores this year in Texas and we have two more stores on the books for later this year and there will be others. We feel we've built out Dallas and Houston to where we have the store density that allows us to do the advertising to dominate the market. We plan to be nationwide at some point. We want to continue to grow the company, but we want to make sure we do it in a healthy fashion," Andrews said.

In merchandising, Car Toys said it is concentrating on mobile video and satellite radio this year and is still debating whether it will enter performance accessories.

Merchandising VP Jim Warren said sales in mobile video are up 200 percent over last year in same-store sales, and satellite radio is tracking about 45 percent ahead of Car Toys' expectations. The company doubled its SKUs in mobile video with a particular emphasis on overhead video monitors, which increased from two to six SKUs this year.

"Sometimes [in new technology] you are way ahead of the customers. This is the one time, where I think, as an industry, we are behind the customers. They are ready for flip-down monitors in their cars so we're hurrying to keep up with them, getting more of an assortment and shifting dollars away from other categories into what we call 'car theater,' " Warren said.

Regarding satellite radio, he said, "We have yet to hear from anyone signing up and turning it off. It's very exciting and it helps the in-store presentation of car audio because of the high-quality demo material." Regarding Sirius Satellite Radio, Warren, as many other merchandisers said, is anxiously awaiting the market entrance of Panasonic, as the company has yet to announce a firm product commitment for this year.

Warren is also very bullish on the new hard-drive-based car stereo units and foresees the category replacing the CD changer. "We were talking about reducing the space allocated to CD changers and we decided to keep that space, anticipating that it will be replaced with hard-drive based units. We're enthused about the category."

Regarding performance accessories, Warren said, "It's something we're researching. We haven't made any decisions. It is certainly an interesting segment."

Car Toys' sales overall are running slightly ahead of last year, despite a sluggish economy in the Pacific Northwest, which has been hit with a lot of technology layoffs, including downsizing at Boeing, Warren said.

Car Toys claims to have made its mark by offering a wide selection and emphasizing customer service. It claims an assortment of 90 to 100 head units compared to "a Circuit City, which may have 30," Andrews said.

Car Toys currently operates stores in Washington, Oregon, Colorado and Texas.