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XM Retailers Are Ready, Eager

10/08/2001 02:00:00 AM Eastern

Tweeter, Best Buy, and other dealers in the XM launch markets were ready for the big event, having erected displays, held on-site events with XM-provided demo vehicles, and put their salespeople through training.

Tweeter used mailers to drive previous customers to at least one XM event in each of its stores in the two launch markets between the end of August and the end of September. To expose as many walk-in customers as possible to the service, the chain feeds live programming via rooftop XM antennas wired directly to in-store XM tuners. The tuners are installed in floor-standing kiosks in most launch-market stores and in "virtual vehicles" in select other launch-market stores, said mobile electronics buyer Mark Spatz.

Although consumers could activate service themselves by phone or the web, Tweeter has chosen to do the activation "so the customer leaves the store happy," Spatz said.

What makes Tweeter happy are satellite-radio margins. The outboard tuner boxes enjoy head-unit margins in the high-30 to 40-point range, and the antennas deliver accessory margins of about 50 points, Spatz said.

Nationwide, Tweeter has sold 4,000 XM-ready head units beginning in April and is hoping for a high attachment rate, Spatz said. Significantly, he added, a "lot of sales tickets" in the Dallas market have featured both XM-ready head unit and outboard tuner box combined.

The Alpine-branded tuner box sold by Tweeter retails for a suggested $279, and the opening-price XM-ready Alpine head unit is $329. Tweeter also sells rooftop magnet-mount antennas from Terk and Antenna Specialists and Terk's $99-suggested through-glass antenna.

In its launch-market stores, Tweeter sold 15 tuner boxes between Sept. 12 to Sept. 27, most in the days after the official Sept. 25 launch. They're attracting the core car stereo customer between 18-23-years-old and the 40+ male, two groups that the chain already attracts, Spatz said.

For its part, Best Buy hosted three to four demo events before the launch in both markets, also taking advantage of XM's demo vans and XM personnel, a spokesman said. The events were advertised in the company's weekly area inserts.

The Sept. 11 terrorists attacks, however, forced the company to cancel a San Diego event scheduled for the next day, when XM was to bring in a demo trailer and Best Buy was to offer product and concert-ticket giveaways.

Earmark Car Audio president David Stein of Dallas said he has sold just a few XM units but predicts strong sales in the future. "I think the momentum has been stalled by the terrorist event. But we have it playing in all our stores and it sounds great. I think there's really a desire there, but everyone is so careful right now."

Progressive Mobile Electronics of San Diego said it has sold or taken orders for 10 to 15 XM units. Owner Alan Binder said the antenna for the radios has become a stumbling block "Terk is the only one who makes a glass mount antenna. Others are available for the roof but people want the glass. Every day someone comes in and asks about XM and every day we talk to everyone about it who is in here. Some who have come in and asked about XM aren't ready to buy because of the glass mount antenna," noted Binder.

Earmark Car Audio was also hoping for more Terk with Stein noting, "The glass mount is the most popular. We can get our hands on all the roof mount we want but the customer wants the glass mount."

Terk VP sales Greg Keys, said it doing everything it can to allay antenna shortages. The company is air shipping the glass mount antennas TRJ SR1 from its factory to warehouse and from the warehouse to the dealers. "We will do whatever it takes to supply our dealers."

John Haynes, purchasing manager of Al & Ed's Monterey Park, Calif., also said XM sales were slow at present but expected to pick up. "We did some VIP installs for XM using Pioneer. We haven't sold many very many yet but we don't have the displays yet in the stores."