With store traffic down, and sales starting to slow, some dealers are cancelling long-standing backorders on head units.
At the peak of the supplier shortages, it was not unusual for a large retailer to carry $100K, $200K or more in backorders. Now some dealers say product flow has improved, and sales are starting to slow, so it makes sense to cancel or reduce some of these long standing (and often over-bloated) orders with key vendors.
Kelly Kirschner of Performance Auto Sound, WA has cancelled about $75K in backorders but still has about $250K in orders left standing.
“Business has slowed down a fair amount. There’s the economy, but also in the Pacific Northwest, until [recently], we’ve had very unseasonably cold weather… It really affected our marine and UTV business,” said Kirschner.
Another retailer that wished to remain anonymous, said he cancelled almost all his backorders in the last 90 days.
Keith Selby of manufacturer’s representative Cardinal Sales, IN, said, “Most retailers are trying to make their backorders more realistic.” For the past year, dealers might order 100 of an item hoping to get 10. Now, when it comes to amplifiers and speakers, they might actually get the full order and find they are overstocked. (Head units still remain in tighter supply).
Tom Sweere of Beach Auto Sound, CA, stopped ordering last fall so he’s not carrying large backorders. “I knew this was going to happen. I was telling all my buddies we’ll be in recession by spring. I missed it by a little. I’m sitting on a lot of inventory but it’s all paid for.”
Many dealers said their business is down from last year, but some are continuing to see increases, even over a record 2021. And while some dealers are dropping the backorders, others continue to carry them, even with predictions of recession ahead.
Sound Warehouse, UT has about $200K in backorders on brand name CarPlay/Android Auto decks. Owner Dean Magnussen has no plans to cancel them. Sales for the chain are still above 2020 and 2021–both record breaking years for the retailer.
At Audio Express in VA, the strategy is to keep a close watch on backorders. Sales are still strong because average ticket prices are high, but store traffic is down. “I’m seeing other dealers overstocked on high end CarPlay. We’re not in that situation because I’ve been keeping an eye on it. At the peak, I was in the $150 to $200K range in backorder with my top three vendors,” said Andy Bagwell.
Columbus Car Audio, OH had $250K in backorders at some point in the past two years and is now down to under $100K, but owner Todd Hays is not cancelling the remaining backorders yet.
Dave Wall of Freeman’s Car Stereo, NC is not cancelling backorders, but the company has remained conservative in its buying. Sales this year are still above last year’s record sales and June was up about 17 percent over a year ago. Wall believes the chain’s decision to continue promoting, even during the pandemic, is helping drive sales momentum now.
Photo: Best Buy display
