Some Retailers Buck Slowdown; Gas Prices Add to Challenge

By Amy Gilroy On May 19 2008 - 6:00am

A few leading car stereo specialists said they have managed to post annual gains despite the downturn in 12-volt retail sales, and they credited their success to heavy promoting and to belt tightening.

Mickey Schorr, Custom Sounds and Hitts Autosound are among the retailers bucking the trend this year, even as gas prices climb and the economy falters.

"We're up — we're smoking," said Mike Cofield, president of Custom Sounds, Austin, Texas. "I think the majority of the downturn is at the big boxes because they can't do the integration any more … We're up 8 percent year-to-date," he said, claiming that amplifiers, subwoofers and navigation are leading the increase.

To boost promotions, the company pulled its Yellow Page ads and diverted the money to radio and TV advertising and to more tent sales. "We used to have two events per market a year. Now we have seven."

Pontiac, Mich.-based Mickey Schorr is up slightly, also due to heavy advertising. "We are concentrating on taking market share, and because of that we have increased our overall advertising budget along with more sales and installation training," said GM Jeff Pitts.

But Pitts and others do not see the car stereo aftermarket turning around any time soon, particularly in light of the economy. Pitts noted, "The increase in gas prices, along with the economy, has us concerned. We have lost over 200,000 manufacturing jobs in the last four years in Michigan."

Hitts AutoSound, of Port Royal, S.C., has downsized and is benefiting from surviving as others exit the market. "We had our best-ever January, February and March, and April stunk. May seems to be turning around again," said owner Russell Harley, claiming the store is up by single digits through early May over the period last year. To stay lean, Hitts let go of some employees and Harley spends more time in the shop himself. Two of the four specialists in his area closed up shop, "So I think the herd is thinning and those left are benefiting," said Harley who also leads the forum.

Few retailers were ready to say that the worst of the autosound downturn is behind them.

Paul Gosswiller, merchandising VP for Chronic Car Audio, Phoenix, noted, "In greater Phoenix, it seems like every time we think we have the bleeding stopped, there's another gas increase and it starts all over again."

The Specialists, located in Tucson, Ariz., said year-to-date sales are flat, and Discount Autosound, Virginia Beach, Va., said sales are down 20 percent to 25 percent.

"The gas prices are definitely affecting retail, but it's not just our industry. A lot of industries were down. We're in a military town — with the war going on for years, it's having an impact," said Les Ore, Discount Autosound president.

Buyer Ed White of Freeman's Car Stereo, Charlotte, N.C., added, "The gas is killing everybody. The economy, the housing marketing — people are not spending. We're coming into our big season with gas at $3.60 here in Charlotte. I think people are really watching what they are doing ... Now they're talking about gas at $4 a gallon.

But Van Nuys, Calif.-based Al & Ed's Autosound predicted, "2008 will end up being a good year for us," according to product manager John Haynes. "Although Southern California has been deeply affected by economic concerns, especially with last year's devastating wild fires and a high percentage of sub-prime mortgage foreclosures, the local economy is not in as bad a shape as other parts of the country. We have always had an ingrained car culture in California, and when people slow down their new-car purchasing, they will begin to reinvest their dollars into their existing vehicle, which fits exactly into what we do best."

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