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Advertiser Tidbits for the week of 10/18/04

Automotive:

• Chrysler’s certified used car sales rose 23% in September. Sales were up 18% for the third quarter. 2004 was Chrysler’s biggest year ever for product launches, according to the Detroit News. On the other hand, 2005 is seen as a relatively quiet year for new models.
• Automakers claim that being the number one brand in the U.S. is not that important, but Ford and Chevy are so close in sales as the end of the year approaches that some analysts are saying that there could be a burst of advertising trying to push one or the other to the top for bragging rights.
• Perhaps General Motors gave away too many of its Pontiac G6 cars on The Oprah Winfrey Show. Automotive News says that dealers are having trouble getting enough of the cars to keep up with demand.
• With sales of Toyota’s Prius hybrid booming, one of its execs said, “It does make sense” about making the model in the U.S. Jim Press noted “the demand has been tremendous” and “hopefully we’ll make an announcement soon.”
• General Motors profits were at the low end of its forecast, with earnings from its finance business very strong, but global automotive business showing a loss. U.S. dealer inventory of unsold vehicles has now been reduced by 230,000 units during the quarter.
• Perhaps part of GM’s problem was summed up in a report from Edmunds.com, which said in September the average vehicle sold for $5,287 below sticker price.

Retailing:

• Tractor Supply Company has been doing well and finished the quarter with a 3.4% same-store sales increase. While all regions were positive, stores in areas hit by hurricanes were up 36%.
• Ikea has begun a multimedia marketing effort aimed at Hispanic consumers. TV spots have been created by agency Anita Santiago Advertising, Santa Monica, CA.
• After conducting an audit of 25 of its product lines, TruServe, parent of TruValue Hardware, has realized about $17 million in cash and product cost savings. All lines will be reviewed by the end of 2007. But the company wants its membership to do its part by upgrading and modernizing their stores. TruServe is also getting back into the lumber and building materials business.
• Sears has decided to launch an aggressive expansion of its Orchard Supply Hardware chain. Orchard, with 82 stores currently, plans to add as many as 50 units over the next three years, and is looking at new markets in Nevada, Arizona and Oregon. A number of stores will also be refurbished, along the lines of the recently redone San Jose store.
• Wal-Mart says October same store sales are pacing at the expected +2% to +4% rate.
• Office Depot is the latest chain to find a partner in the growing VoIP area; it will sell Voiceglo at more than 900 of its stores.
• A Wall Street analyst is speculating that Limited Brands may be close to selling its Limited and Express chains.
• Party America continues to grow. After acquiring Paper Warehouse last year, it’s now buying Wisconsin-based Party Concepts, which operates 170 stores in 35 states under the Great Party, Paper Factory, and Paper Outlet names.
• TruServe, parent of True Value Hardware, is changing its name to True Value.

Drug Store & Supermarket Chains:

• CVS said September same store sales were up 6.1%, with front end sales increasing 2.1%.
• A&P, admitting it hasn’t done anything in online retailing and has fallen behind competitors in that regard, will partner with Irish online retailer Buy4Now to help it get into that business.
• Buehler Foods is acquiring 16 former Winn-Dixie stores in Kentucky and Indiana, and is planning to convert those locations into a new format called Buehler’s Fresh Markets. The strategy of the new chain, fresh perishables at low prices, is similar to that of the current 28 Buehler’s Buy-Low stores.
• Meijer Inc. plans an aggressive capital expenditures program, building nine new stores in 2005. New supermarkets are planned for markets like Columbus, Detroit and Grand Rapids.
• 7-Eleven reported same-store merchandise sales, excluding gas, were up 6.5% last month. Gas sales rose 18.8%, and despite the increase from an average $1.70 last year to $1.90 this year, average gallons sold per store were up 5.7%.

Fast Food & Restaurant Chains:

• Some good news from the beleaguered Ground Round restaurants. After shuttering all of the company-owned stores and almost throwing in the towel for the entire chain, the Independent Owners Cooperative that took control in July is now starting to open a few new stores and remodel others. Former owner American Hospitality Concepts has filed for bankruptcy.
• And Carvel continues on its big expansion push; it opened 28 new locations last quarter and has signed deals for better than 130 locations so far this year.
• McDonald’s is still hot as can be. Same store sales rose 10.6% in the U.S. in September and 8.5% during the third quarter. The reasons? The company says its “more menu variety, choice and value, better tasting food, more convenient hours, stronger marketing and improved service.” Mickey D’s has also begun its latest Monopoly game, this time in conjunction with Best Buy. Apprentice runner-up Kwame Jackson is one of the spokespersons for the accompanying campaign.
• Other restaurateurs are also doing very well right now. At Sonic, same store sales rose more than 8% in the most recent quarter. Longer hours were credited with some of the gains. CKE continues on a roll. During September, Carl’s Jr’s comp sales were up 8.8% and Hardee’s comps rose 5.1%, on top of very strong numbers last year. And Cosi, with 85 locations in 11 states, saw its same store sales jump 6.9% in the third quarter.
• As Starbucks raises its prices, Dunkin’ Donuts will be more active in selling its own coffee. The chain’s new campaign from Hill Holliday promotes coffee as the “perfect afternoon comeback.”
• Although recent news from Burger King about sales has been encouraging, we’ve also reported some of its franchisees have had terrible times the last couple of years. On top of bankrupt Sydran getting out of the business, Lorch, Inc., has now closed some restaurants in Ohio. BK says it intends to get some of them re-opened.
• CiCi’s Pizza has signed new franchise agreements for 75 restaurants in markets like Chicago, Cincinnati, Denver, Des Moines and Pittsburgh.
• Starting today, Einstein Bros. Bagels is rebranding itself as Einstein Bros. Cafe. “We’re not abandoning the bagel,” says the company CEO, “we’re moving beyond the bagel.”
• Burger King is about to launch a campaign to get out the vote. Spots with the tagline “Have it your way on Nov.2” feature celebs like P. Diddy, Snoop Dogg, Ted Nugent and Michelle Branch.
• After a string of very poor months that helped drive some of its franchisees into dire financial straits, Burger King has slowly been turning things around. Albeit off of poor figures from last year, September same-store sales were up 5.3%, the chain’s eighth straight positive month.

Telecommunications:

• Now that the Federal Communications Commission has upheld its decision that Baby Bells do not have to share their broadband lines with competitors, SBC Communications has announced it will upgrade its networks to offer superfast DSL connections to 18 million homes by the end of 2007.

Financial Services:

• To help keep the housing boom going, the Chicago Tribune reports some banks are participating in a test started by Fannie Mae (the old Federal National Mortgage Association), which would see if 40-year fixed-rate mortgages make sense for some people. 16 credit unions nationwide are experimenting with the idea.

Other Categories:

• It looks like the start of a coffee war. Companies like Eight O’Clock and Chock Full O’ Nuts are launching campaigns to take advantage of the new “coffee culture” sparked by Starbucks and other coffee shops. And there’s the competition from Starbucks, which has begun selling its coffee at retailers.
• Dr. Pepper is launching a new line extension, only the second in its history. Cherry Vanilla Dr. Pepper will be introduced in Texas first, then rolled out to other states. A diet version gets a national launch in January.
• Taking advantage of the renewed popularity of poker spurred by a number of television shows, Connecticut’s Foxwoods Resort Casino has dropped its regular TV campaign with the tagline “The Wonder of It All” in favor of one that targets poker players and highlights the $300 million expansion of the casino. “Our poker business, which we thought was large to begin with, has almost doubled in the last two years,” says a company spokesperson.
• Just-food.com reports the U.S. sugar industry, through the Sugar Association, is ramping up for an ad campaign to combat the perception sugar is responsible for obesity. Spots will highlight a teaspoon of sugar is only 15 calories.
• With gas prices through the roof, Shell is launching a new promotion with MasterCard to generate more applications for Shell-branded cards from Citibank. Shell hopes to pick up applications by 50% in the next three months.
• Six Flags says poor weather resulted in third quarter revenue not reaching expectations.

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