Auto accessories still in the fast lane - Auto Update

DSN Retailing Today,  May 5, 2003  by Debbie Howell

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Muscle cars have evolved into a new breed of tricked-out pickups and imports that scarcely resemble the Mustangs and GTOs of yesteryear. Demand for new extras has reshaped the accessories business, making it incredibly diverse, fashion-driven and lucrative.

Retailers, in order to capture higher sales, are experimenting with new merchandising strategies in accessories. AutoZone is now testing a concept called Truck Zone in some stores, while CSK Auto has opened performance specialty centers in 50 stores over the past two years. O'Reilly Automotive, meanwhile, has significantly expanded its truck, sport compact and performance accessory selections in all of its stores.

Last year, money spent on automotive specialty equipment grew 3.6% to $26.8 billion. The bulk, or $15.5 billion, related to appearance accessories such as truck bed liners and sunroofs. Performance and racing products drew $4.9 billion, while $6.5 billion was spent on handling equipment, custom wheels and performance tires. These figures, from the Specialty Equipment Market Association, include installed-product sales.

A growing niche within that $27 billion is the sport compact performance market, which registered 60% growth in aftermarket sales last year to $2.5 billion. Imports such as Hondas and Mitsubishis are being outfitted as hot rods today, primarily by males ages 18 to 25.

"In the '80s and '90s, there weren't a lot of exciting vehicles to accessorize and personalize. Today, the import 4- and 6-cylinder cars are a canvas for personalization," said Rosemarie Kitchin, director of consumer/public relations for SEMA. "Americans are falling in love with their vehicles."

Popular accessories range from racing seats and neon lighting to high-end audio and video systems. What's under the hood maybe less important, though that seems to be changing.

"When the sport compact market first started, it was very accessory-oriented. It is now trending a lot more toward performance-oriented products to increase the horsepower," said Joe Winterberg, merchandise product manager at O'Reilly Automotive.

Winterberg said K&N performance air filters that increase horsepower and improve gas mileage are hot, but traditional performance step-ups in carburetors, manifolds and exhaust systems aren't. Devices that reprogram the engine's computer for higher horsepower are also popular, said Barry Sanders, who owns Trail Blazers, a three-store chain based in Kentucky For retailers, the challenge is not only to figure out what's trendy, but how extensive a selection to offer. O'Reilly, for example, supplements its store offerings with an on-site catalog.

Meanwhile, another hot market involves truck accessories. This is buoyed in part by the fact that over the past decade, the size of the light truck aftermarket has nearly doubled to $74 billion, according to the Automotive Aftermarket Industry Association. That number, which includes vehicle service revenue and retail sales, is expected to grow 7.8%.

AutoZone in March began testing "Truck Zone" centers in an unspecified number of stores in key markets. The large proportion of trucks and sport-utility vehicles now owned represents a sizable market opportunity in accessories, said spokesman Ray Pohlman.

CSK, which several years ago tested a separate retail concept called Truck Depot, is instead focusing on expanding truck accessories that sell well, such as Delta truck boxes.

Because of its diversity, the accessory market is a challenge, given continually changing trends in vehicle ownership as well as customization. But it's one the retailers gladly accept, considering the significant upside potential to sales.

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