NEW YORK –
The mobile electronics aftermarket started the year more slowly than last year, but mobile electronics specialists, online retailers and A/V specialists that focus on the category have fared better and in many cases have continued to grow their 12-volt sales, industry participants told TWICE.
The 12-volt sales and market share of big-box retailers, on the other hand, continued to slip and will likely continue to do so, as they look to shrink their store sizes, reduce 12-volt selections, and scale back low-end price points, some marketers said.
For the full year, some suppliers expect the aftermarket, at a minimum, to decline at a much less rapid pace if not post gains. Last year, factory-level dollar sales fell 13.3 percent to $1.29 billion, including mobile video and in-dash navigation, Consumer Electronics Association (CEA) statistics show. CEA forecast the dollar decline slowing to the low-singledigit level in 2012. The aftermarket’s 2011 factorylevel dollar sales decline followed a 2010 gain of 3.7 percent and a 22.5 percent dollar decline in 2009, CEA said.
“Any retailer promoting the category is doing well,” said Alpine assistant sales VP Mike Anderson. “We’ll grow this year in the growth areas and with dealers who are really focused on the category.”
Reasons for this year’s expected improvement, despite a slower first-quarter start, include continued growth in A/V head units with touchscreens. Sales of these products are triggering step-up sales from audio-only single- DIN head units, suppliers and retailers said. Marketers also see continued double-digit unit gains in head units with USB or Bluetooth control of smartphone-stored music and Internet-radio apps. Amps are expected to continue growing in units and dollars.
Other reasons for expected improvement include the increased age of vehicles on the road as well as continued growth in new-car sales, which aid retailers that expedite products to new-car dealers. Rising new-car sales also, paradoxically, enhance potential aftermarket navigation sales because OEM nav systems are bundled with expensive options packages that many consumers don’t want to pay for, suppliers said.
The aftermarket’s expected improvement is also tied in part to last year’s tightened supply of select products from select suppliers because of shortages caused by the Japanese tsunami and Thailand flood, said ProSource president/CEO Dave Workman. As a result, select vendors “pulled back on promotion,” he said.
For the year to date, CEA statistics show factory-level aftermarket dollar volume falling less than 1 percent in the January through February period to $198.7 million. Available NPD retail-level statistics show dollar sales of speakers down 6 percent through March, amp sales down 8 percent, and in-dash fixed navigation units down 9 percent. Other in-dash statistics were unavailable.
Last year, NPD found retail-level gains in units and dollars in amps, speakers, and A/V head units. A/V head-unit sales rose an unspecified amount, while amp sales rose 5 percent in units and 4 percent in dollars. Speaker sales rose 8 percent in units and 5 percent in dollars, NPD said.
For the coming year, CEA forecast a 5 percent gain in amp sales to $164 million, with speaker sales slipping 1 percent to $333 million. Overall head-unit sales, excluding in-dash navigation units, will slip 1.7 percent to $468 million, CEA said.
A/V head units, nonetheless, will continue to rise in units and dollars in 2012, multiple suppliers said.
Retailers performing the best last year and so far this year have been 12-volt specialists, Internet retailers with stellar online customer support, and A/V specialists that remain focused on the category, some suppliers said. Indeed, 12-volt specialists as a group might be posting 12- volt sales gains so far this year, or at least holding their own better than other sales channels.
“We’re getting pretty positive feedback from retailers, particularly from independent specialists, primarily 12-volt specialists,” said Anderson.
Although Alpine and Clarion said it’s hard to tell whether the12-volt specialty channel is posting sales gains this year, the specialists are certainly increasing their share of the business, said Ben Arnold, The NPD Group’s industry analysis director. “The mass channel is losing volume much quicker than the mobile electronics channel,” he said. “We’re not seeing sales increases in the specialist channel, per se, but they are holding on to sales better than mass.” Mass retailers, Best Buy in particular, he explained, are “looking to shrink the size of their stores [and offer] fewer ‘opening price point’ SKUs in favor of ones that pull in more revenue and more profit.” Arnold said he “would expect this type of thinking to extend to the 12 volt category as well.”
Larry Rougas, marketing and product planning senior VP for Pioneer’s car division, sees specialists gaining share, at least in dollars. He attributed that “to the differences in product mix between the various distribution channels.” Historically, he explained, “the 12-volt specialty retailer has placed a greater emphasis on products that have higher levels of features and technology, which also carry a higher average selling price. Combined with natural price compression, we see some distribution channels declining in total dollars even though their quantity volume remains steady, while other channels maintain or grow their sales in dollars by leveraging the latest ‘premium’ features and technologies.”
Other retail channels gaining share, if not sales, in 12-volt products include “high-quality Internet retailers,” such as Crutchfield and the online stores of Car Toys and Al & Ed’s, said Alpine’s Anderson. Internet retailers are doing well if they “pay attention to the category and extend their consumer experience from their stores,” he said.
Clarion’s Thomas agreed that online retailers increased their share in 2011.
For his part, Mike Cofield, president of the Mobile Electronics Specialists of America (MESA), said sales through his group’s members are “good” so far this year. “Everyone I’ve talked to is doing well this year,” he said. The group’s members operate more than 100 outlets.
ProSource’s Workman believes sales through 12-volt specialists and A/V specialists are up so far this year, as they were last year. “The big guys don’t chase sales as hard and are losing share in a declining market, and the rest are seeing solid gains year over year,” he said. Among ProSource’s Progressive Retailers Organization (PRO Group) dealers in the 12-volt business, car audio sales have posted year-over-year double-digit dollar gains since the first of this year and single-digit 2011 gains, he said.
For PRO Group members, the gains are across-the-board in amps, speakers and head units, Workman said of year-to-date sales. What’s driving consumer interest are head units that integrate with smartphones and A/V units with large displays, he said. Clarion, Alpine and Pioneer concur on the strength of these headunit categories.
Alpine’s Anderson attributes rising sales of A/V head units to price-point compression. “The price of an entry-level unit is down to the point that $300 gets you a tier-two A/V player,” encouraging consumers to step up from a highend CD player, he said.
Smartphone connectivity is the key to A/V head-unit sales, Pioneer’s Rougas said. In fact, “anything that leverages the connectivity buzz is hot: smartphone connectivity, Internet or streamed media, networked navigation or data services, Bluetooth, etc.”