Some Retail Winners In Car Audio

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




A handful of car stereo retailers say they are running against the tide and showing year-to-date gains of up to 15 percent by actively changing the way they market car audio.

With dollar sales to consumers this summer down 10-13 percent in single CD players, amplifiers, speakers and satellite radio, according to The NPD Group, the more successful retailers say they are bucking the trend by playing up their strengths and embracing change.

Crutchfield, based in Charlottesville, Va., and Seattle's Car Toys both report car stereo sales ahead of last year. Mickey Schorr of Pontiac, Mich., and Car Toys of Tulsa Okla., both claim to be up 15 percent year to date.

Mickey Shorr, with 16 stores, said it boosted advertising and is aggressively pushing core car audio.

"Everybody's pulling back advertising, but we're spending," said GM Jeff Pitts. "I think my ad budget is 15 percent up. We're doing TV, we're in five different newspapers every week, full-page, four-color, 12-volt only,"

The decision to increase advertising in January was in reaction to slower car audio sales. "We started the first of the year," said Pitts, who added that now "I'm up in CD, up in speakers and up in amplifiers."

Pitts' core audience is the younger demographic, so he pulled out of radio advertising completely. "The young kids aren't listening to radio, they want their iPods." Instead, the company invested in Google word search advertising, print and TV.

"We feel we're taking market share," said Pitts. He is also embracing OEM integration and promoting iPod-ready head units and adapters in ads and on the Mickey Schorr Web site.

Also pushing integration is Car Toys (see story, right). The company claims its sales are up in every key 12-volt category with the exception of in-dash CD, although senior merchandising VP Dan Jeancola, said the chain is tracking ahead of the industry in CD.

In OEM integration, Car Toys redesigned a wall in the store that now shows Apple's iconic black silhouette of a person holding an iPod. The large silhouette is backlit and in its chest is a 16-inch LCD monitor while its hand holds a video iPod. The monitor shows an iPod commercial and a Car Toys commercial. A slogan on the wall proclaims that now users can do more than look at video on little screens. Underneath are two shelves of iPod and MP3 docks for the car.

"When people walk in they see the familiar silhouette and the iPod and they see the video on the larger screen, so it says you can do more than look at the little screens," Jeancola said.

Car Toys said it is also seeing strong sales in in-dash navigation/video and is able to generate attachment sales of amplifiers and speakers. "If we're adding video, we're adding audio with that video. Our amps and speaker sales are strong. We're getting the attachments" Jeancola said.

Satellite radio and iPod connectivity products such as the Harman Drive+Play are also driving sales. "I think it's going to be a huge Christmas for navigation, the portables now are in the commodity price points and there's strong demand for in-dash navigation with video, which has been strong all year," he added.

Like Mickey Shorr, Car Toys said it has also reduced its radio advertising in favor of other avenues like TV.

Crutchfield said its car stereo sales are in the black this year, boosted by portable navigation.

In addition, the company is showing gains in in-dash CD which it said still accounts for more than 25 percent of its car audio sales.

The company is playing up its advantage in portable GPS as a direct sales catalog/Internet seller that can carry a broad selection of brands. Carl Mathews, senior director for mobile merchandising, said this is particularly important in portable GPS, where the "hot product" changes frequently and the products have short life cycles. The company carries about ten brands. Without portable GPS, the retailer would be slightly down for the year, said Mathews.

Car Toys of Tulsa, a one-store operation that is distinct from the 52-store chain in Seattle, said it has been attracting new custom installation jobs costing as much as $50,000 so that sales in September were up almost 80 percent over last year, with two more custom jobs waiting in the wings. The current job is a "Pimp My Ride" style mobile office in the back of a Lexus RX470, said Don Tessier GM and buyer.

But the retailer is not switching its business over to custom. "We're still a car audio shop," said Tessier, noting, "Navigation is crazy, that's probably one of the biggest reasons we're up." The company carries Eclipse in-dash navigation and is also performing a lot of OEM integration with PAC, Metra and NavTV. Car Toys claimed much of its success is due to word of mouth and its status as five-time IASCA world champions. Tessier also credits "return customers. I was waiting on them when they were 16 years old. Now, they are like my kids."

He admitted a lot of kids now buy on the Internet, so the store allows one installation a day where the customer brings in his own merchandise. He charges $100 an hour to install it, double his average labor rate, and he offers no warranty. "If I put it in and it burns up, it's too bad."

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