Where You Are: Home > News > Archived Advertiser Tidbits

Advertiser Tidbits for the week of 9/27/04

Automotive:

• Automotive News reports the minivan wars are heating up, as that model seems to be taking back some share from SUVs. Chrysler is expanding production capacity to give it more long-wheelbase Stow ‘n’ Go minivans marketed as Chrysler Town & Country and Dodge Grand Caravan. Meanwhile, The Car Connection reports that SUV slowdown, which reached a drop of 14% in August, has been very selective geographically, with business as usual in some markets. It’s expected that incentives on SUVs, which have generally been less aggressive than those on other models, will become more generous than they’ve been before.
• The Detroit News says that Ford will lose market share this year for the ninth consecutive year, despite the fact the F-150 has been a hit. Overall Ford-brand sales are down 4.5% this year.
• General Motors, which has tried to step back from huge incentives, plans to offer zero financing for 72 months in a three-day sale next week. The reason--the carmaker has a two-month supply of 2004 vehicles as the 2005 cars and trucks are arriving at showrooms. “Sounds like a move of desperation,” said a J.D. Power & Associates spokesperson.
• GM has also lowered its targeted number of Hummer dealers, now that sales of the huge vehicles are declining. The company had originally wanted 200-225 dealerships, now it is looking at 175-180, up slightly from the current 167.
• Toyota is cracking down on the advertising practices of its dealers. Dealers are not allowed to use the word “clearance” in their ads, except at the end of the model year. Nor may they say the price of a vehicle is “below invoice.” Dealers who violate the rules could lose the usual factory allowance of $200 per vehicle. The requirements are meant to “promote full disclosure and high ethical standards,” says Toyota.
• Following the example of General Motors, Ford has decided to conduct its own sale for five days next week, offering 0% financing for six-year loans on 2004 models. But Ford says it is not trying to reduce a glutted inventory, just staying competitive. Chrysler plans a media blitz of its own next week to publicize its 0%, five year loans and cash back offers of up to $1500. So much for the automakers plans to cut back on incentives!
• The Detroit News says that Ford will aggressively target the luxury truck market with a 2006 Lincoln Mark L.T. model, retailing for a little over $40,000. Lincoln’s first foray into the truck market, the Blackwood, (which started at $53,000), was pulled off the market two years ago having sold only about 3200 units.
• And Automotive News reports Mercedes has started to line up dealers for its Smart small SUV called ForMore. About 80 of Mercedes’ 327 dealerships will get the car, and they have to be exclusive dealers who will build a separate showroom or stand-along building. The model doesn’t go on sale for about two years, but teaser advertising will start next year.

Retailing:

• Wal-Mart is reiterating its September forecast of 2-4% same-store sales increases. The company, that has 209 stores in Florida and 105 in Alabama, also made a comment that flies in the face of those from other companies that blame poor results on the weather. Wal-Mart said that while hurricanes affect the timing of sales, in the end they are “mildly accretive” to sales.
• The Dallas Morning News says JC Penney is considering purchasing 40 Mervyn’s locations in California. The company would not comment on the report.
• Sears has been heavily involved with ABC’s Extreme Makeover: Home Edition since the show debuted. Now carpenter Ty Pennington is set to appear in spots for the chain, and design products to be sold in the stores. Sears also announced a new logo.
• Advance Auto Parts is starting up monthly car-care clinics at its stores to teach drivers how to maintain vehicles and do minor repairs. Advance’s competitor AutoZone reported an 11% increase in profit last quarter, even though same-store sales were down 3%. Based on its prior expansion, however, total sales were up a little, 0.3%.
• Radio Shack and Sprint have teamed up in a wireless deal, and will open about 500 mall kiosks in the next few years, almost 100 by next spring.
• Expansion is still the word at Jos. A. Bank, which says it’s on target to have opened 40 new stores during the second half of the year.
• Heilig-Meyers has submitted a bankruptcy reorganization plan that would spin off the 64 locations of The Room Store as an independent chain. The Heilig-Meyers name would disappear from the retail landscape.

Drug Store & Supermarket Chains:

• Albertson’s has acquired the Bristol Farms chain that operates in southern California. Bristol will continue to operate independently, but the deals marks Albertson’s entry into the “fresh, gourmet specialty foods” market and may signal a direction it might take in the future.
• Speaking of supermarkets, although online groceries never caught on the way people expected them to (remember Webvan?), a couple are still in business with “bricks-and-clicks” business plans. Peapod, now owned by Royal Ahold and teaming up with Stop & Shop in some markets and Giant in some others, noted its 15th anniversary this week, saying it’s made over 6 million deliveries in that time.
• The once-troubled Rite Aid chain has been reporting better news lately, and it was able to claim a small profit in the latest quarter compared to a loss in the same quarter last year. Same-store sales for the third largest drug chain were up 2.0%. Rite Aid has backed off opening or acquiring many new units; instead it’s heavily involved in remodeling many of its existing units.

Fast Food & Restaurant Chains:

• Dave & Buster’s says it has won the bidding for the assets of Jillian’s Entertainment Holdings, a mall-bound chain of 35 restaurants in 20 states. Jillian’s filed for bankruptcy in May of this year.
• Deli chain Schlotzsky’s, which is also in bankruptcy, says it has received inquiries from as many as 50 parties and will likely soon announce new ownership.
• Cold Stone Creamery plans to open as many as 60 new stores in Michigan over the next three to five years, adding to its current 16.
• The Associated Press is reporting on Bob Evans Farms’ woes, saying the 568-unit family dining chain may need to undergo a major makeover. Same store sales have been consistently down despite an increase in pricing, and customer surveys have found “the value proposition isn’t being fulfilled.”
• Citing damage from the various recent hurricanes, and higher beef prices, Wendy’s has cut its estimates for profits this year.
• The Chi-Chi’s restaurant chain has closed. Outback Steakhouse bought the restaurants from bankrupt former owner Prandium, and is expected to reopen most of the locations as some of the concepts it owns, like Carrabba’s, Fleming’s, Bonefish Grills, or Cheeseburger in Paradise restaurants.
• Krystal Restaurants plans an expansion in Texas, opening 18 units over the next four years in Dallas, Houston and Austin, TX.
• Pizza Patron has launched its first TV campaign in three years. The Spanish-language spots are airing now in Dallas-Ft. Worth and will expand to other markets in the fourth quarter. Spanish Marketing, Inc, Garland, TX, created the ads.

Telecommunications

• Verizon Wireless is expanding its high speed data service, a competitor to both DSL and cable modems, into thirteen new markets on Monday: Altanta, Austin, Baltimore, Kansas City, L.A., Miami, Milwaukee, Philadelphia, Tampa, West Palm Beach and parts of New York City and Newark. The service is already available in Washington, DC, San Diego and Las Vegas. The focus will be on getting business customers initially, but a consumer promotion is expected next year.

Other Categories:

• Two package goods giants had some negative things to say about their current outlooks. Colgate predicted its second-half earnings will be down due to increased spending on marketing, and Unilever, which has severely pared back the number of brands it sells in order to focus on its best brands, now says growth from the remaining brands will be less than expected. It will not, however, alter the strategy of concentrating on brands like Lipton, Ben & Jerry’s and Hellman’s.
• Adams Beverage Group, a research company, says the low-carb craze cut into the beer industry last year. For the first time in seven years, consumption fell, though only slightly, by 0.3%.
• Interstate Bakeries, the nation’s largest wholesale baker and distributor of brands like Wonder bread, Hostess, Twinkies, and Drake’s, has filed for bankruptcy, noting declining sales, high fixed-costs, excess industry capacity, and high ingredients costs. The company expects day-to-day operations to continue as it works through its problems.
• Bravo Foods has struck a deal with Masterfoods and will produce single-serve milk containers branded as Milky Way, Starburst, and 3 Musketeers.
• An administrative judge has upheld the Federal Trade Commis-sion’s order that Telebrands stop making unsubstantiated claims for the heavily-advertised Ab Force belt.
• Beverage Digest says Pepsi will reformulate Pepsi One next year, changing the brand’s sweetener. It also says Pepsi is looking at a sparkling Aquafina line extension, and also a low-calorie flavored water possibly called Splash.
• In a very timely note, The New York Times says Florida Tourism will double its marketing budget to about $130 million.
• Birds Eye is acquiring the California & Washington company, known as C&W. Birds Eye’s strength has been on the East Coast, and it sees C&W as key to West Coast penetration. It will continue to market C&W products under their existing name.

NOTE: Content copyright © 2004 by Cable Spots, the daily fax newsletter and used by the CAB with permission. Contact Cable Spots at 1-888-884-2630 or visit their web site to subscribe for daily business and industry news updates.

Top of Page