By David Wall, guest columnist and CEO at Freeman’s Car Stereo Inc.
Why the future of the 12-volt industry depends on creating enthusiasts, supporting the install bay and working together again
I started in this industry a long time ago. In 1996, I was working as an installer at Freeman’s Car Stereo on Independence Boulevard in Charlotte. It was a big store. We had eight installers and five salespeople.
There were mornings when customers were lined up waiting for us to open and we might have 30 cars that needed to be worked on.
Anyone who was around this industry in the late ’80s and ’90s remembers that kind of excitement. Car audio was something people talked about. People built systems, showed them off, went to competitions and couldn’t wait to hear what somebody else had done.
We love to call those the “good old days.”
But instead of simply being nostalgic about them, maybe we should be asking ourselves a harder question:
What were we doing then that we’re not doing today?
We Used to Grow the Industry Together
Years ago, manufacturers, retailers and organizations like IASCA invested heavily in creating enthusiasts.
Manufacturers supported competitions. Dealers built demo cars and held events. There were national advertising campaigns. Retailers advertised locally on television, radio, newspapers and billboards.
We didn’t just wait for somebody who already wanted a car stereo to walk through the door.
We created excitement around car audio.
And those efforts benefited everybody. Maybe a customer heard one manufacturer’s amplifier in a competition car, bought another manufacturer’s speakers and eventually had a local independent shop install the whole system.
Everybody didn’t have to win every transaction for the industry to win.
Somewhere along the way, I think we’ve lost some of that thinking.
Today, I see manufacturers spending money attending motorcycle rallies, Jeep events and other enthusiast gatherings. There is absolutely value in that. Those events put our products in front of people who are passionate about their vehicles and are potential customers.
But there’s a difference between finding enthusiasts and creating them.
We’ve gotten very good at fishing in ponds where the fish already are.
Who’s stocking the pond?
Growing The Pie: The Install Bay Is More Than a Place to Install Products
The install bay is part service department, part classroom, part R&D facility and part showroom.
We demonstrate products. We introduce customers to products they didn’t even know existed. We design systems. We figure out how to integrate those products into increasingly complicated vehicles. We troubleshoot problems. We install the equipment. We handle customer questions after the sale.
And, maybe most importantly, we create enthusiasts.
Now we find ourselves in a time when more and more manufacturers and suppliers are skipping the install bay and going directly to consumers.
In 2016, Clarion made the decision to exit most U.S. brick-and-mortar aftermarket car-audio distribution and concentrate its car-audio business through three online retailers: Amazon, Crutchfield and Sonic Electronix. At the time, Clarion cited growing online sales, shrinking brick-and-mortar sales and the cost of supporting the traditional retail channel. ceoutlook.com
I’m not suggesting that decision alone explains everything that subsequently happened to Clarion. It doesn’t. The company was eventually acquired by Faurecia, and there were much larger corporate factors involved.
But the decision is worth remembering because the argument behind it sounds remarkably familiar today: Why carry the expense of supporting all these retailers when the product can simply be sold online?
There are cautionary examples outside our industry too. Nike spent years aggressively expanding its direct-to-consumer strategy. More recently, it has been rebuilding and reinvesting in wholesale relationships. That doesn’t mean DTC “failed” at Nike. It means even one of the world’s most powerful consumer brands discovered that direct and wholesale channels can serve different purposes. Nike Investor Relations
Maybe there’s something for us to learn from that.
I want to be very clear about something: I am not against online sales.
Freeman’s sells online. Consumers want convenience, and online commerce is an important part of the future of our industry.
The problem is the idea that the specialist retailer is simply a middleman who can be removed from the transaction.
Because what happens in a good 12-volt shop goes far beyond moving a box.
If we continue weakening that infrastructure, eventually we’re going to have to ask who will be left to do all of those things?
Online & Brick & Mortar Need Each Other
Crutchfield, one of the biggest success stories in online car audio, built a significant portion of its customer experience on physical, hands-on vehicle research and installation knowledge.
Crutchfield is arguably the name most associated with online car-audio retail. But Crutchfield isn’t simply a website with products sitting in a warehouse. It operates two physical stores in Virginia where it offers car-audio installation. It maintains a dedicated vehicle-research operation. Its team physically takes vehicles apart, measures them, photographs them and documents how aftermarket equipment integrates into them. Crutchfield says its fitment database now contains information on more than 40,000 vehicles. Crutchfield
That hands-on knowledge helps power the online experience.
Think about that for a minute.
Maybe online and the install bay aren’t enemies after all.
Maybe they need each other.
Online Sales Are Not Free Money
I’m not suggesting every 12-volt dealer needs to become an online retailer.
Brick and Mortar dealers shouldn’t assume that putting up a website suddenly creates another profitable revenue stream.
A recent CE Outlook article examined this exact issue. Only 6% of MESA members – nine retailers – reportedly offer e-commerce. Custom Sounds CEO Mike Cofield described the resources required and warned that without enough time and attention, dealers can simply end up losing money. ceoutlook.com
I can tell you from experience that online sales are not free money.
You need inventory. Warehousing. People to pick, pack and ship orders. Customer service. Technical support. Digital advertising. Fraud prevention. Returns processing.
Then there are shipping costs, marketplace fees, fraudulent credit-card chargebacks, hot swaps and customers returning products that can no longer be sold as new.
Building a real e-commerce operation can require an investment every bit as serious as opening another store—and in some ways it can be even more difficult.
Online and brick-and-mortar each have strengths, and our industry should be figuring out how to connect them instead of trying to eliminate one another.
Where Does Disintermediation End?
Supplier “partners” scooping sales out from under their own brick and mortar dealer base is killing our industry.
Which leads us to an uncomfortable question manufacturers should consider:
If the argument is that manufacturers should go directly to consumers because eliminating the dealer allows them to capture another layer of margin, what prevents dealers from applying exactly the same logic?
Much of what we sell today is produced by OEM and ODM factories around the world.
Buying groups and groups of substantial dealers have purchasing power.
If retailers are simply an unnecessary layer between the manufacturer and the consumer, eventually dealers may decide that some manufacturers are an unnecessary layer between the factory and themselves.
We can go directly to factories. We can develop brands. We can source products.
And then everybody can keep cutting everybody else out until we’ve successfully optimized our way into a much smaller industry.
That’s the race to zero.
There has to be a better answer.
We Have a Responsibility Too
This isn’t just something manufacturers need to fix.
At Freeman’s, we recently held two IASCA events at our stores for the first time in many years.
We didn’t do that because I calculated the number of amplifiers we would sell that day and decided the ROI made sense.
We did it because somebody has to create the excitement.
And I think those of us on the retail side need to look in the mirror too.
Years ago, dealers spent real money introducing people to our industry. Today we have incredible tools like Facebook, Instagram, YouTube and TikTok. But posting on social media isn’t automatically the same thing as investing in growing the industry.
What are we doing to expose someone new to what we do?
What are we doing to make a 16-year-old hear a great system for the first time and think, I want that?
Because that 16-year-old isn’t just a potential future customer.
He or she might be our next installer.
Our next salesperson.
Our next fabricator.
Our next engineer.
This industry requires an enormous amount of specialized knowledge, and it’s difficult to convince someone to spend years mastering it unless they first become passionate about it.
Our enthusiast pipeline is also our employee pipeline.
Let’s Start Growing the Pie Again
Manufacturers have a responsibility.
Distributors have a responsibility.
Buying groups and industry organizations have a responsibility.
And those of us who own and operate specialty retail stores have a responsibility.
I don’t think the answer is turning the clock back 30 years. Consumer behavior has changed. Vehicles have changed. Technology has changed. Online commerce is here to stay, and it should be.
But maybe some of the principles that built this industry are still worth remembering.
We need physical experiences. We need great retailers. We need skilled installers. We need competitions and events. We need manufacturers investing in the channel. We need dealers investing in their communities. We need online convenience. And we need all of those things working together.
Most of all, we need to create enthusiasts again.
Freeman’s has been in this business since 1979. I want this industry to be healthy enough that the next generation has the opportunity to build businesses that last that long too.
So maybe the question we should be asking isn’t how manufacturers, distributors, online sellers or brick-and-mortar dealers can grab another percentage point of market share from one another.
Maybe we need to ask a different question:
Instead of fighting over who gets the biggest slice of the pie, what are each of us doing to make the pie bigger?
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