Some Middle Class Facts for Car Audio Dealers

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MCOR Automotive renovation

If you are a car audio dealer thinking about renovating the shop, read on.

Retailers are moving either upscale or downscale because the middle class has been shrinking.

The middle class has dropped to a 45 percent of the share of households, down from 55 percent in the 1970s, and this class has not gotten a raise since 1999, said The New York Times.

The  average household is paying about $10,000 more in expenses due to the rise in health care and childcare costs.  And with inflation, those stagnant salaries are actually down 9 percent from 1999.

The slump in the middle class has caused fast food chains, whose sales are  flat,  to seek new means of growth.   By contrast, sales are growing at  fine dining restaurants, which are up 3 percent.

“As a retailer or restaurant chain, if you’re not at the really high level or the low level, that’s a tough place to be…You don’t want to be stuck in the middle,” John Maxwell at PricewaterhouseCoopers, told the NY Times.

He is advising his clients to go upscale or downscale and car audio retailers may want to do the same.

High end gambling casinos like Wynn in Las Vegas are prospering but casinos that cater to the less affluent in Atlantic City, CT and NY are on the downswing. according to Goldman Sachs.

It’s the same in automobiles.  Luxury car sales are booming so car makers including Audi, Cadillac and Mercedes-Benz are introducing all new high end models.

Is it time for your shop to go upscale?

Source: The New York Times , Business Insider ,The Detroit Bureau, American Progress, CBS News

Photo: MCOR Automotive moved to a better location in Tampa, FL in 2013

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5 Comments

  1. Going downscale personally. Closing up my retail shop and going to work from home/mobile. The overhead to run a shop is brutal. Car audio is all but dead in my area, and the rest of the categories are also in decline. Dealer work is my bread and butter but as time goes on that is going away as well.

  2. This is a geo issue. Certainly not the case anywhere in Texas. Not catering to the middle class is a ticket out of the business in my opinion. And why choose? You can be a high end retailer and still cater to all. My bays always have all levels of vehicles, from entry level to exotics.

    We actually did the opposite. We used to be high end only, and changed gears to cater to all. That’s when we had tremendous increases across the board.

    The comparison to the Wynn is mind-boggling to me. To be clear, you can get a room at the Wynn for 149. Vs. $600 a while ago.

  3. I’m not even sure shops in some locations could really go downscale.

    Downscale automotive market here in South Florida mostly seems to comprise entry sub/compacts that already have a decent Audio system. It doesn’t seem like other parts of the country where there would be more entry pick-up trucks for HU and Spkrs upgrades…
    On the other hand, I know at least one store that went upscale and it’s doing great with all the high-end ride upgrades with premium brand Amps and Spkrs.

  4. I watched it happen in my shop in Oswego, NY starting about 10 years ago. Middle class either moved away, or disappeared and upper class was too small to support a high end shop. Tough scenario. And the question becomes, even in more affluent areas, how many high end shops can any given locale support?

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