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Advertiser Tidbits for the week of 12/13/04

Automotive:

• It may be that the SUV craze has peaked. While sales of sport utility vehicles increased 56% between 1997 and 2002, meaning that there are currently one SUV for every eight licensed drivers in the U.S., CBS Marketwatch says SUV registrations have begun to slow. Rising gas prices and increased competition from vehicles like the crossover Ford Escape and Honda CR-V are blamed for the decline.
• Although Ford seems to have beaten back Chevy’s challenge to become the top-selling single car brand in the U.S., Volkswagen is in trouble to retain its title as best selling European brand here. VW is having a terrible sales year, and is only 45 units ahead of BMW through the end of November, according to Automotive News.
• Chrysler Group says that Certified Used Vehicle sales were up 53% in November, to 8,222 units.
• Details of General Motors’ Red Tag Sale have come to light. Starting tomorrow, dealers will have red tags affixed to cars in their lot that indicate the MSRP of the particular vehicle and the lowest price it will be sold for during the promotion. Lease terms will be listed on the back. A heavy promotional campaign is planned to support the sale. The Detroit News says the new program is different in that the onus is on the dealers to advertise low prices. “It doesn’t play by their former approach of the programs being simple and uniform” says one observer. Cash bonuses of $500-$2500 are also being offered on top of current rebates for customers who finance through GMAC, and salespeople are being offered rewards of $150 per vehicle sold. The deals run through 1/3 on Chevrolet, Pontiac, GMC, Buick and Hummer.
• Mercury has decided to drop the Sable model after the current model year. The Sable apparently lost out to two new sedans, the Montego, launching in September and the yet to be introduced smaller Milan.
• A hybrid Accord has just gone on sale here, sporting a price tag of about $30,000. A new study from Thad Malesh and Ed McLaughlin, both formerly of J.D. Power & Asso., predicts that there will be more than 50 hybrid models available in the U.S. by 2010.
• With only 5% of its recent buyers taking the Lock ‘n’ Roll option, General Motors is expected to come out with a totally different incentive package imminently.

Retailing:

• Chain store sales were up 1.8% last week, compared to the same week last year. But sales are down compared to November, and Redbook Research said to expect a late flurry right before and right after Christmas.
• CarMax reported a record third quarter this week, with total sales up 13% and same store sales rising 2%. The company says the success might have something to do with sales recovered after severe weather in Florida and the Southeast during the company’s second quarter. Nine new superstores are planned for next fiscal year, including standard locations in Jacksonville, Salt Lake City, Wichita and Virginia Beach, and smaller “satellite” stores in Independence, MO, Miami and Nashville. LA will get one of each type of location, bringing the total for the market to five.
• Circuit City said third quarter same store sales were off 4.3%, more than the expected 2% decline. Part of the problem was the company’s decision to be “less promotional than last year in music and movie software.” While same store sales in the video category were flat, sales of plasma displays were up by triple digits and LCD sales were up double digits.
• AutoZone, which had been doing so well of late, says that rising gas prices cut into its business during the most recent quarter. Comp sales fell 3% while profits edged up slightly.
• Ace Hardware, which introduced its One Day Sale on Black Friday in 2001, was flat on that day this year for the first time after showing good gains in prior years. It’s already reviewing item selection, price points, and marketing to learn what went wrong. Its wholesale sales to dealers who bought all the SKUs in the promotion were up 18%, however, meaning some dealers may have lots of unsold inventory to move.
• Haverty Furniture reported its all-time record November, with comp stores up 3.7% and total sales up 6.2%.
• While we have often talked about the size and power of Wal-Mart, the company has never even had a store in New York City. However, it has just announced plans for its first Big Apple store, to open in Queens in 2008.
• Athlete’s Foot, the Kennesaw, Ga-based chain, has filed for Chapter 11 bankruptcy protection and will close 124 company-owned locations in 25 states. The 593 independent franchised locations around the country will remain open, according to the chain.

Drug Store & Supermarket Chains:

• Same store merchandise sales at 7-Eleven were up 4.1% in November. Total revenues from gasoline sales were up 36.8%.
• CVS reported November same-store sales gains of 3.1%, low for that company, but better than some competitors reported earlier.
• Rite Aid reported negative same-store figures for November, a rarity in that industry, down 1.3%, with “front-end” sales off by 1.9%.
• Kroger’s quarterly results show how important gas sales are becoming for some supermarket chains. Excluding gas, identical store sales were up a decent 1.8%, but including gas, sales were up 3.2%.

Fast Food & Restaurant Chains:

• Denny’s same store sales were up 6% in November, purely on increases in the average guest check. Guest counts actually declined 1.2%. Denny’s has recently been concentrating on getting its customers to order the more expensive menu items.
• Yum! Brands is said to be looking closely at the success of a co-branded fast food eatery KFC and fast casual Rib Crib in Missouri as a prototype for more.
• Wendy’s will offer alternatives to fries, such as baked potato, chili, or side salad, in its adult combo meals.
• Long John Silver’s is breaking the first creative from new agency Element 79 in its next campaign, which starts on 12/27. It’s combining a “good feelings” appeal with a fish, chicken, and shrimp combo promotion good through the end of January.
• Despite an uproar from some people about its 1420-calorie, 107-fat gram Monster Thickburger, Hardee’s sales of the item “exceeded all my expectations,” the CEO of parent CKE Restaurants said.
• Atlanta Bread Company, now a 160-unit bakery chain based in Smyrna, GA, plans to open about 25 new locations in markets in the Northeast, including White Plains, NY and Boston, MA. Other shops in New Jersey and Rhode Island are in the works.
• CKE Restaurants reported that same store sales at Carl’s Jr.’s rose 3.8% in November, while Hardee’s comps, buoyed by the much-maligned Thickburger, were up 5.5%.
• McDonald’s had another strong month in November, comp store sales up 7.1% on top of a 10.2% gain recorded in 11/03. Year-To-Date, Mickey D’s is now up 9.8% in comp stores.
• Ruby Tuesday, however, reported Sept-Nov same-store sales down 8.9%, 8.7%, and 8.1%. It blamed its lack of advertising for part of the problem, and said it will fix numbers by various means including increasing advertising.
• Bankrupt Schlotzsky’s has been bought out by Bobby Cox Companies, which owns a number of Texas restaurants of several brands, plus some Blockbuster Video franchises.
• Worldwide Restaurant Concepts, parent of the Sizzler and Pat & Oscar chains, has hired a banking firm to look into the sale of the company.
• Ruby Tuesday’s CEO admits the chain’s network TV ad campaign, launched in September, has not increased customer traffic. “As we go forward,” says Sandy Beall, “our advertising will transition into being more food-based and deliver more of a call to action.”

Financial Services:

• Also expanding is Wachovia Bank, which recently opened its first branch in Dallas. By 2008, the bank hopes to have 200 offices in Dallas, Ft. Worth, Austin, Houston and San Antonio.
• Citigroup plans to open more than 400 more branches of its consumer finance division, CitiFinancial. Those locations, now numbering about 2500, focus on providing personal, car and home loans.
• Here’s an example of how a TV campaign can transform and entire country. Aflac, well known for its spokesduck, has decided to incorporate the fowl in its corporate logo. A new ad campaign from Kaplan Thaler Group, launching 1/1, will give the duck a “more active role.”

Telecommunications:

• Voiceglo has become the first company in the VoIP industry to use a D.R. TV campaign, and it’s been so successful the company plans to expand it next year.
• Published reports say Sprint and Nextel are in negotiations to merge. The resultant company would be the third largest carrier in the U.S.
• Toyota will factory-install XM satellite radios starting in 2006. But competitor Sirius said that its service will be offered by local Toyota dealers in nine models starting in February, ‘05.

Other Categories:

• On January 3, Carnival Cruise Lines is launching its largest TV and print campaign ever, designed to highlight the improvement in its ships over the last few years. Cooper DDB, Coral Gables, FL, created the effort.
• Parmalat USA filed a plan to exit its bankruptcy. It wants to continue to operate Farmland Dairies in NY, NJ, and Michigan, but sell off its other assets, including its Atlanta business.
• Advertising Age says Kellogg will mount a “serious challenge to General Mills’ $500 million Cheerios juggernaut,” with a cereal geared for kids called Tiger Power. The ad campaign, featuring Frosted Flakes’ Tony, will be targeted at mothers, and break in March.
• The Supreme Court heard arguments this week over the forced contribution of $1-a-head for cattle that goes to the fund that produces the “Beef: It’s what’s for dinner” campaign. An eventual negative ruling could affect more than 100 such programs for eggs, dairy products, and many others.
• According to the L.A. Daily News, Disney is about to make its first foray into the food business. As early as next spring, the company’s consumer products division will roll out “comprehensive food products” like macaroni and cheese.

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