Mass merchants hope to snatch auto alarm biz - Hard Lines

Discount Store News, Feb 18, 1991 by Richard C. Halverson

Mass Merchants Hope to Snatch Auto Alarm Biz

Nationwide DSN Report

After years of watching specialty shops snatch away the market for auto theft alarms - which until now required costly professional installation - mass merchants now can stock easily installed, inexpensive systems that most do-it-yourself customers can handle.

Some alarm systems, considered mobile, require no installation whatsoever and can be switched from car to car.

Moreover, a growing number of states that require auto insurers to offer discounts for auto security systems is helping to drive the business. Indeed, a new Massachusetts law permits insurers to sock owners of frequently stolen cars, such as the Camaro, with a 50% penalty on their comprehensive coverage if they fail to buy an alarm.

In its ads, The Fair, a seven-store chain based in Worcester, Mass., is playing up the new Massachusetts insurance penalty, said Steve Sjogren, vice president, merchandising.

The Fair laid in a three sku assortment of new mass merchant systems from Audiovox, Hauppauge, N.Y., that sell for $69, $89 and $129, Sjogren said.

In stock since Dec. 1, The Fair experienced a 40% sell-through in seven weeks from two ads, Sjogren said.

"We're just getting into the category," Sjogren said. "It's too soon to tell what we'll do." The Fair also has ordered new DIY auto security systems from Kraco, traditionally a supplier of auto sound.

For auto security systems to sell in a mass market, customers must be able to install it themselves, Sjogren said. "They won't pay to have it installed."

That rules out Audiovox's new Stolen Vehicle Locator system, which signals when a car's been stolen through radio signals it transmits. Those same signals then pinpoint the location of the car so it can be recovered. Audiovox suggests a retail price of $1,000, including installation, plus a $15 monthly fee for the monitoring and locator service.

Installation is so complex that only specialty shops will handle it, said Patrick Lavelle, vice president, security.

All three of the DIY Audiovox systems The Fair has taken are passive, requiring no driver action to arm them, so they qualify for an insurance discount on comprehensive coverage that typically runs from 5% to 10%, depending on the state.

A number of states, including, Massachusetts, California, Connecticut, Florida, Illinois, Kentucky, Michigan, New Jersey as well as Canada, mandate insurance discounts, while Texas makes them optional. To the contrary, Maryland law forbids discounts.

The Fair also has ordered the Electronic Nightstick from Kraco, Encino, Calif., which combines a steering wheel lock with a siren and a built-in strobe light. Kraco suggests a retail of less than $100, and Pep Boys - Manny, Moe & Jack carries it at $79.95, everyday.

At the Winter CE Show last month, Audiovox introduced a wireless remote auto security system, designed to retail for $99 to $119. The control unit is mounted on the dash and plugs into the cigarette lighter, and the siren is magnet-mounted under the hood. Alligator clips affix two wires to the car's battery terminals.

"This is a security product for consumers who would never think of installing a car security system themselves," Lavelle said.

In comparison, alarm systems installed at dealers and specialty shops typically might start at $350, Lavelle said.

Retailer margins on mass market systems run about 35% to 40%, Lavelle said.

Audiovox expects a 25% growth in sales to the mass market, Lavelle predicted.

Mass merchants are giving more space and more prominence to the category. "Auto security now appears on endcaps," Lavelle said. "You never saw that two years ago."

Sparkomatic, Milford, Pa., another auto sound supplier to mass merchants, also has ventured into the low-end auto security field with its Road Alert system, designed to retail for $69.99. Road Alert is a battery powered, portable alarm, no installation required.

Kraco diversified into auto security two years ago, with a mobile alarm that retails for $69 to $79. At CES in Las Vegas, Kraco unveiled three DIY alarm systems that require attaching one or two wires to the ignition or battery. The new systems carry suggested retails of $64.95, $119.95 and $159.95, said Allen McCreight, director of marketing.

Kraco also makes a version of its steering wheel lock that comes without electronic bells and whistles. Target has offered it as low as $29, McCreight said.

The Club, made by Winner International, established the steering wheel lock category, McCreight said. Winner might well sell a million units in 1991 at about $40 each, he estimated. The Fair carries The Club at $49.

"With the advent of mobile systems and those that DIY customers can install themselves, auto security in the mass market is growing very rapidly."

Auto glass identification, which is starting to scratch the mass market surface, also qualifies for insurance discounts.

In New Jersey, one insurance company is offering a 10% discount if owners etch vehicle identification numbers into all auto glass.