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Advertiser Tidbits for the week of 6/13/05

Automotive:

• First word on General Motors’ current “employee pricing” deal is that sales were strong over the weekend, and the company may be positioned to have a good month. Prices are generally about 3-4% under dealer invoice. For a longer term fix, GM is announcing a “new model blitz” for the next two years, including SUVs that will have better gas mileage than the current models.
• Along with all the changes it’s making in positioning and marketing, General Motors will make massive changes in manufacturing to help it improve its results. While GM is looking at as many as 25,000 job cuts in three years, it’s also increasing capital spending on new models by almost $1 billion this year.
• Mitsubishi will discontinue the Montero after the ‘06 model year. It will introduce a redesigned Outlander with 7 seats for the ‘07 year. The current Outlander seats five.
• There’s concern in some circles about whether Malcolm Bricklin can really succeed in bringing the Chinese Chery cars to the U.S. The New York Times says several execs of his Visionary Vehicles firm have left that company in the last couple of weeks. Bricklin had originally promised to identify dealers starting last month, but none have been named as yet. Bricklin is now saying he will identify firm deals in an ad in Automotive News in the next few weeks, and “I think everybody will be surprised.”
• With gas prices still high and hybrids selling quickly, Nissan is setting a goal of 50,000 units for the hybrid Altima when it starts U.S. production next year.
• Ford is firing another salvo in the rapidly-escalating incentive war. It added cash-back deals on the Five Hundred, Montego, and 2005 Freestyle, each of which had been launched last year and had not had incentives attached before now. And the incentive on the Explorer SUV was raised to $5000.
• In an otherwise dismal year for Ford, its F-series pickups have been holding up relatively well. The company says it will sell over 900,000 of them again this year, the first time any nameplate model, car or truck, sold over 900,000 two years in a row. Texas is seen as a particularly important target.
• Even though sales of SUVs have been declining this year, the market for luxury SUVs, about $40,000 and up, has still been strong. The Detroit News says Chrysler will offer its first Chrysler-branded SUV next year, targeted to compete with Cadillac, Volvo, and Lincoln.

Retailing:

• USA Today reports that Wal-Mart is “quietly” testing company-owned gas stations at some units. Most existing Wal-Mart gas operation are actually owned by its partner Murphy Oil.
• Sears Holding Company reported quarterly results. Same-store sales at Sears stores were off by 3.1%, and Kmarts were down 3.7%. Cooler weather was seen as the primary problem, but construction at many stores was also mentioned as a factor.
• Speaking of Sears, its Chairman says top-line sales are not the company’s top priority. Instead, it will focus on profitability, which includes cost-cutting and a close eye on inventory levels. Still, Edward Lampert said, after converting some Kmart stores to Sears Essentials, there is still a profit opportunity to remodel more Kmarts.
• Samsung will introduce a premium line of home appliances in all Lowe’s stores starting in September, with refrigerators the first item to be stocked. Lowe’s has become the second-largest appliance retailer in the country, behind just Sears.
• How important have online sales become to retailers? The head of Macys.com told an internet retailer convention sales on his site will be up 40% this year. Macy’s is expecting 116 million visits this year, compared to 84 million in ‘04, and the average order is expected to come in at $125, up from $119 last year.
• Toys R Us, being acquired by an investment group, lost more money in its first quarter than it did last year. Domestic same-store sales were down 0.7%, although Babies R Us comps were up 4.3%. The takeover by the new owners is expected to be completed by the end of next month.
• Haverty Furniture comp stores were up 1.2% in May, well below the year-to-date which is now at +4.6%.
• Regis Corp. produced blended same-stores sales gains of +1.5%. SmartStyle was its hot brand, up 4.8%, but both MasterCuts and Trade Secrets were down for the month.
• Advertising Age reports Costco is dropping Pampers from its stores, and will offer just Huggies and a private label diaper.
• Another company expanding is Gander Mountain, the Minneapolis-based outdoor retailer. It’s on track for its planned 18-20 new stores this year and will open several of them in diverse markets from Maryland to Texas in the next five months.

Drug Store & Supermarket Chains:

• CVS will be the first store of any kind to offer single-use camcorders, priced at $30. A buyer can shoot 20 minutes of video and get DVD processing at the store for $13.
• Total comp store sales were up 1.8% for Albertson’s in its latest fiscal quarter; identical stores were up 1.6%. Dual branding continued during the quarter with an additional 383 pharmacies converted to either the Osco or Sav-on name, and by the end of the current fiscal year, all food stores with pharmacies will be dual branded with one or the other name.
• Rite Aid will launch an online digital photo processing service. Customers will be able to upload their pictures, then pick up the prints at the Rite Aid location of their choice an hour later. one valued them.”

Fast Food & Restaurant Chains:

• Subway will end its stamps-and-cards promotion, which has been around since the 1980’s. The problem is that counterfeiters had been producing Subway cards and stamps and selling them. It will be completely phased out by 10/1, and the company says it will have a new promotion to replace the Sub Club.
• McDonald’s had a decent month, with same store sales up 4.2%, helped by the new fruit and walnut salad and expanded hours. Still, May was below prior months and pulled the Y-T-D number down to +4.9%.
• Brinker International had a strong May, with all five brands showing comp store gains. Brinkers were up 5.8%, Chili’s +6.8%, Macaroni Grill +3.5%, On The Border +6.7%, and Maggiano’s +2.5%. All five chains established prices increases during the month.
• Diageo will buy two brands from Allied Domecq, but agreed not to make a rival bid for the whole company against Pernod Ricard’s current bid. If that bid stands, the restaurant business including Dunkin Donuts and Baskin-Robbins, will be sold.
• D’Angelo Sandwich Shops is evolving into a new name, D’Angelo’s Grilled Sandwiches, and will go into expansion mode. The goal is to roughly double locations in the next five years from the current 200 to about 400.
• Yet another tough month for struggling Bob Evans Farms. Same store sales were down again, 2.4% this time. The chain says its older core customer has not been back as frequently, and it’s pursuing “a variety of marketing and new product initiatives” to get them back.

Financial Services:

• Washington Mutual will buy Providian Financial, to take on “high-yielding credit-card assets,” according to CBS Marketwatch, while giving WaMu more opportunity for growth in consumer banking and the middle-market customer.

Telecommunications:

• Earthlink has a new technology that allows its customers to use traditional phone equipment to get to the internet eliminating some of the complications VoIP providers have been facing. Earthlink will package the new product with broadband and offer it in Dallas, San Francisco, and Seattle later this year, with a possible national rollout to follow.
• AT&T and Microsoft announced a new strategic agreement that will position the companies to compete in the business-to-business communications telcom segment built around VoIP protocols.
• BellSouth will start a test of a wireless broadband service in parts of Georgia. Verizon has recently started a test of a similar service in a couple of towns in Illinois.
• With new subscribers harder to find, wireless providers like Cingular and T-Mobile are making efforts to win teens and college-age customers away from the pre-pay services. One analyst said “Youth and pay-as-you-go were the two most classic stepchildren."
• Ford and Sirius Satellite Radio have extended their deal for all Ford brands including Lincoln, Mercury and Volvo through 2011. By the 2008 model year, nearly 90% of all Ford, Lincoln, and Mercury vehicles will have Sirius as a factory option.

Other Categories:

• Although actual implementation probably won’t happen for about a year, United Airlines is the first U.S. carrier to get government approval to offer in-flight wi-fi, which will allow passengers to surf the net and get e-mail while in the air.
• Amtrak’s Acela trains could be back in service in the Northeast by the end of the month.
• The FTC had challenged Tropicana’s “Healthy Heart” claims in its advertising, and the company says it will stop advertising the brand reduces risk of heart disease and strokes.
• Sharp is significantly increasing the ad budget for its Aquos line of TVs, according to The Wall Street Journal. The company is the world’s largest seller of LCD TVs, but is way behind Sony in brand recognition. Wieden + Kennedy is creating the new campaign.
• After testing in some markets, Anheuser-Busch is going national with Bud Light in aluminum bottles. Busch sees the package as great for times when non-breakable containers are important.
• Nestle will put a TV effort behind its Stouffer’s Corner Bistro line of frozen foods, trying to get the upper-end of that market. The six-item line is aimed at casual-dining restaurant customers.
• Masterfoods USA will launch Mega M&M’s next month, in an effort to reach an adult audience. The candies will be 55% bigger than the current childhood favorites, and will have different colors that will provide “contemporary sophistication.”

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