When Henry Ford hooked up with his good friend Thomas Alva Edison to place headlamps onto Ford's Model Ts, the concept of an automobile with lights was the beginning of an evolution that would drastically change the driving habits of Americans.

Today, after what many lighting industry officials describe as a dormant period of 30-40 years, that evolution within the automotive lighting category is in a sophisticated developmental stage. This stage is changing not only the automotive lighting products themselves, but how they are sold to consumers. The industry is forging onward into an age that will combine solid lighting technology and sound merchandising.

For the aftermarket retailer, no longer is a lamp, a lamp, a lamp. This stage of the evolution means improved sales and better profitability in the category.

The lighting category continues to be strong in the aftermarket. Headlamps accounted for $397 million in estimated total aftermarket sales in 1993, with $209 million at retail, according to Aftermarket Business' recent Car Care Study (See April, pages 46 and 48). The auxiliary lighting segment recorded an estimated $28 million in total aftermarket sales in 1993, with $15.7 million at retail. The category also posted strong profit margins in 1993 - 39 percent for headlamps and 36 percent for auxiliary lighting.

This year, retail sales are projected to increase 10 percent for headlamps and 6 percent for auxiliary lighting, the survey revealed. Most lighting suppliers say the modest growth will be found in the sale of halogen capsules and halogen miniature units. In the auxiliary segment, the growth will be found in replacement bulbs and lighting units, spurred by the truck and van craze.

Retailers still have to get the customer into the store to purchase lighting products. Of course, advertising and flyers help, but promoting lighting products on a consistent basis keeps sales up beyond the usual spring selling season.

David Horvat, vice president of automotive products for Philips Lighting Co., Somerset, NJ, recommends a promotion during the summer, when it is traditionally the off-season for lighting sales.

"Promote (it) when no one else is," Horvat says. "If you don't have every-day low pricing, be certain to promote very heavily during the selling season."

Norm Wishoff, president of pacer Performance Products, Inc., Los Angeles, also points out that retailers can create a "mini-season" by promoting lighting in the months of September and October when Daylight Savings Time starts. "It gets darker earlier," he adds. "There's a greater need for light."

Retailers can also increase the spring selling season by merchandising automotive lighting to other markets, such as boats and recreational vehicles. Scott Weishaar, marketing manager of Peterson Manufacturing Co., Grandview, MO, says that most of the lighting for boats and RVs, especially replacement bulbs, are basically the same as those for the automotive aftermarket.

"They wouldn't have to take on additional SKUs," says Weishaar. "Let consumers know its available to them in the store."

The future of the lighting category for the aftermarket is very "bright." With the evolution of technology moving forward, it will continue to be very profitable. It's a category that retailers can make good money with if they inventory and sell it correctly, says Bill O'Roake, vice president at Dick Cepek, Inc., Carson, CA. How successfully retailers manage the category will determine just how well they do.

"Unfortunately, lighting is one of those products that you can't tell the guy you're going to special order for him and have it in two weeks," says O'Roake. You have to have it!"

Mark Dlugoss is a freelance writer based in Olmsted Falls, OH, who has served on the editorial staff of several retailing and merchandising trade publications.

Consumer Education is Essential
Lighting manufacturers are quick to point out that the merchandising success for lighting products centers around education -- both of customers and of retail personnel. Retailers can literally create consumer demand by providing customers with the necessary information/education needed.

"There is an intimidation factor among consumers when it comes to lighting because there are so many different types of lamps and brands that it becomes confusing," says Siegfried Tigges, marketing manager for Hella, Inc., Peachtree City, GA. "And consumers are not educated to the differences in product."

Unfortunately, there are also plenty of knock-off and look-alike products that don't perform as well as major brands. A knowledgeable sales staff understands those differences and knows exactly what the products will do for the customer.

To assist retailers, most manufacturers offer training, in-store seminars and provide customer information on how the lighting works. Manufacturers encourage retailers to take advantage of these educational tools because they will be valuable to them in the long run, helping increase sales.

Educating the sales staff is followed by educating the consumer. That requires good communication and information -- to let the customer know that retailers have the ability to supply their lighting needs, and assure them that once inside the store the retailer can make a purchasing decision easier.

First, retailers should provide as much descriptive material as possible, through posters, point-of-purchase materials, even packaging, that can emphasize differences between various products. Useful installation information that is easily accessible and understandable is also critical.

Most of this information can be communicated to the consumer through shelf talkers or electronic parts catalogs. Electronic catalog devices not only help the consumer purchase the proper lighting equipment, but they assist with all the necessary information, including proper installation instructions. And all of this information is available in a unit that measures about 12 in. x 6 in. and can fit easily on a display unit. They are easy for customers to operate, eliminating the frustration in selecting a product.

Also, manufacturers have made educating the consumer easier by creating packaging that is more user-friendly. By using various color-coded packages, it is relatively easy for consumers to select the proper lighting unit.

Some of the auxiliary lighting companies have designed packaging that makes the product more visible to the consumer. Windows have been created on all sides of the packages so customers can get a thorough look at the item without removing the product or destroying the package itself.

Technological Evolution
Technologically, many breakthroughs have surfaced within the lighting category over the last five years.

Stephen Alexander, president of Automotive In-Store Marketing, Pittsburgh, expects the changes in lighting technology to revolutionize the industry. However, he does not expect something dramatic to occur.

"Let's say, the industry recognizes that it must develop its technology to meet the changing demands of power systems in cars, energy consumption, longevity of the product, and so on," he adds.

That industry recognition may have started with the development of halogen lighting. In a short time, the industry has seen halogen lighting slowly push incandescent lighting products into the age of the dinosaur.

Even within the halogen segment there is an evolution of sorts. Halogen capsules have made their presence felt in this portion of the category.

Other technological trends taking shape are:

• More halogen miniature lights;
• Long-life lighting;
• Lamps designed with black optics;
• Auxiliary low-beam headlamps;
• Improving optics using higher wattage bulbs -- and still remaining within legal DOT specifications;
• Projector beams (smaller lights with controlled pattern);
• Lamps with light-emitting diodes (LED) technology.

Alexander sees new technology that will create lighting that is more efficient, less energy-consuming, with equal brightness.

"As the halogens replace the incandescents, something called `X' will eventually replace halogens," Alexander declares. The halogen is not the end of the technology trail."

The evolution continues with tests by lighting suppliers. If the new technology is adopted by OEMs, it is only a matter of time before it will be driving sales in the aftermarket.

Some of this new technology includes various forms of high-intensity discharge (HID) and halogen infrared lamps. The HID units consist of a compact, bright light source that can be located anywhere in the automobile. The light emitted from this source can be piped out through fiber optics and illuminate a number of lights.

The halogen infrared concept is a technology that burns visible light only. It reduces the amount of unseen light, so that for every watt put in, more light output that is visible is received.

While consumers would get more light on the road with the newer technology, its tremendous costs are not advantageous to either vehicle manufacturers or consumers. However, industry officials say that when this technology does surface economically, it will be available to illuminate not only front lamps, but miniature lamps and auxiliary lighting, including fog lights and spotlights.

"What's going to be confusing to the retailers is which are the right products to have -- how can I keep this part of my store in perspective? How much space should I give it? That's going to be the trick when all this comes out," points out William Gross, sales manager for Unity Manufacturing Co., Chicago.

While a technological evolution continues in the lighting category, a revolution may be needed on the merchandising side. With more new lighting products surfacing, both from the headlamp segment and from the auxiliary market, retailers have to embrace better merchandising and marketing strategies if they wish to see continued growth.

Optional Light May be Banned
In the not-too-distant future, states may create legislation that would ban all forms of "Optional" lighting, including popular neon lighting.

Contending that neon and other forms of optional lighting is a distraction to motorists, the American Association of Motor Vehicle Administrators (AAMVA) is working on a "model regulation" which state lawmakers can adopt to ban the use of such lighting on cars and trucks. The model regulation has already emerged from the association's workshop hearing, and is going through four regional hearings. If passed, the model could be available by August or September.

The Specialty Equipment Market Association, an associate member of AAMVA, is working with the association to adopt workable language for the lighting industry. However, SEMA's position is that there should be no prohibition of optional lighting.

"We look at it from the standpoint of the government," explains Bob Burch, vice president of technical and legislative affairs for SEMA. "We've used the argument that federal law would be basically in favor (of neon and optional lighting) because it would add to the conspicuousness of the vehicles."

SEMA testified at the AAMVA workshop hearing in March 1994, and submitted its own model regulation based on its own viewpoint. AAMVA rejected it.

SEMA also pointed out that AAMVA has not been able to build a legitimate case for creating the regulation. There are no statistics that the lighting is distracting, nor is there any data that links neon and optional lighting to accidents and/or vehicle-related fatalities.

This is not the first time that AAMVA has proposed the model regulation. Last year, the association tried to draft a similar regulation, including "anything AAMVA would deem as optional."

It went so far as including opera lights on many car models. Spurring the interest of General Motors, the regulation eventually failed.

Burch says the regulation limits what can be done. He adds that many of the new cars coming out of Detroit in the future will have neon lighting.

"(SEMA) makes provisions for innovative products that eventually may become safety features on cars," declares Burch. "Our basic language would allow for innovation that could be turned into safety features of the future."

Category Management is a Must
Because of the changing nature of the lighting business, retailers will have to incorporate more category management principles. They need to continually look at the percentage of sales by lamp type and ensure that the space given to that type is commensurate with the sale rate.

As a result of the influx of more lighting products, retailers should re-evaluate their lighting programs regularly, at least once a year. They should look at what they are selling and what the price points are.

"(Retailers) complain their category isn't doing well," says Pat Redmond, national sales manager for KC HiLiTES, Inc., Williams, AZ. "If you take a look at the category, they have five suppliers all competing at the same price point."

Bob Cronstedt, vice president of sales for Blazer International Corp., Franklin Park, IL, comments: "Many retailers treat lighting as a stepchild. As a result they complain that lighting does not do much for them."

"Almost everyone today is running leaner on inventory because they don't have the space to stock large amounts of product," says Don VanWagner, marketing manager for Osram Sylvania, Inc., Hillsboro, NH. "The word is keep your inventory dollars down and turns up."

Retailers only need to observe the growth of halogen capsules as an example for proper category management. Since the market is moving from sealed beams to capsules at such a rapid rate, retailers will see a reduction in the amount of display space for lighting. The planogram will need to be reviewed -- and appropriate space allocated to capsules -- on an annual basis.

"You will not need as much linear footage for your lighting category," asserts Don Burgstead, manager of market planning for the Cooper Automotive Group/Wagner Lighting Co., Chesterfield, MO. "It's a bit early, but you'll see retailers re-examining their planograms and start shifting that space around.

In merchandising the category, suppliers suggest that retailers maintain a careful balance of inventory. For example, in front-end lighting, there should be a balance between traditional sealed beam systems and replaceable bulb systems.

"You want to be positioned for growth of replaceable bulb systems, and you don't want to be overstocked in traditional sealed beam systems," suggests Jack Oliver, product manager North America for General Electric, Cleveland.

Other approaches include:

• Sell lighting, especially front-end lamps, in pairs and point out the reasons and advantages of purchasing in pairs;
• Insure that peg hook space given to halogen capsules is consistent with the percentage of sales;
• Take advantage of manufacturers' merchandising aids, such as rebates and shelf management systems that provide point-of-sale at the display;
• Sell brand name lighting products;
• Incorporate other merchandising approaches such as window decals, in-store posters and applications charts; and
• Implement demonstrations and displays that show customers how the lighting is mounted and how it works.

"Lighting is a difficult category because it's still the type of product the people want to see and touch," explains Bill O'Roake, vice president at Dick Cepek, Inc., Carson, CA. "People usually don't buy lighting at the level we're trying to sell lighting at unless they can see it, touch it, look at it and see how it works."

One of the most important merchandising aspects for lighting is its location.

Bill Mosey, national sales manager for K-D Lamp Co., Cincinnati, points out that many retailers believe the product will sell even if it's relegated to the back shelf. "It really doesn't, though," he adds. "You have to have an impulse suggestion with lighting."

Experts suggest developing a strategy that takes the category out of its dull, in-line approach and give it a "sense of romance. The category should be moved off back shelves and placed in the front of the store so customers can "experience" the products and make a solid purchasing decision.

Another theory is that all lighting -- headlamps or auxiliary lights or for a car or truck -- should be merchandised together in a "lighting section."

Norm Wishoff, president of Pacer Performance Products, Inc., Los Angeles, has found that many retailers are merchandising lighting products for pick-up trucks in the truck accessory department. In one case, his company convinced a retailer to shift the auxiliary lighting to the lighting section. As a result, sales for the product increased threefold.

"What does that say?" asks Wishoff. "It says that people buy lighting for lighting, not because it's a pick-up truck accessory."

Today's packaging not only assists in consumer education, but in category management for retailers as well. With the stronger demand for category management, suppliers have reduced packaging size for space efficiency. By creating a smaller package, suppliers have allowed the retailer to increase the number of SKUs on display.