Retailers Hope For Better Holiday Sat Sales

By Amy Gilroy On Nov 6 2006 - 8:00am

Car stereo specialists are hoping for a better fourth quarter in satellite radio than the season last year, when product shortages hurt business by as much as 50 percent for some retailers.

Many predict sales this year could exceed last year's levels, which were artificially depressed by shortages, but it depends again on supply.

Sound FX, West Warwick, R.I., said it lost more than 50 percent of its satellite radio customers last year due to shortages, particularly in Sirius Satellite Radio products. Jo-Di's Sound Centers, Hartford, Conn., said it lost about 20 percent of its satellite radio customers for the same reason.

Nearly every specialist polled said that the big box retailers had better product availability last year, which further aggravated the shortages. "We were going to Circuit City and buying them and selling them on the floor just to get the labor dollars," said a spokesman for Jo-Di's.

Some retailers said they have received assurances from XM Satellite Radio and Sirius that supplies will be better this year, although they said they were offered the same assurances last fall.

On the plus side, retailers said they expect a spike in business just following the holiday, as those who purchase portable or plug-and-play receivers at mass merchants may seek to have them professionally installed. In this manner, even specialists who don't carry the XM or Sirius/MP3 wearable receivers may get walk-in business from consumers looking to have them installed.

John Haynes, product manager for Al & Ed's Autosound, Van Nuys, Calif. explained, "We think that even if a consumer purchases a radio from a shop other than ours, at some point in time they are going to be tired of looking at their installation in a cigarette lighter plug with an antenna slapped on the roof and wires hanging down and a bouncing receiver. Especially in the Southern California area; we have a large number of radio stations squeezing the bandwidth and wireless FM modulators don't work very well."

Steve Madeiros, owner of Sound FX noted, "After Christmas we get a huge influx of customers who got gifts from Best Buy and they ask, "What can I do with it."

Retailers said that car satellite radio devices such as FM modulator products and direct tuners have become commodity items with margins of less than 20 percent. However, when the products are installed, the sale can carry 30 percent margins.

Many also said car-related satellite radio products are taking on a seasonal sales pattern where Christmas sees a large spike in sales.