Advertiser Tidbits for the week of 12/06/04

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Advertiser Tidbits for the week of 12/06/04

Automotive:

November automotive results come out later this week, but the Detroit News reports the numbers are expected to “sputter,” and be flat at best. Manufacturers are playing December incentive strategy close to the vest, with no word yet on GM’s Lock ‘n Roll program, set to expire today, or Ford’s 6-year, no-interest deals. Chrysler told dealers new incentives are coming, but hasn’t released details yet.
Comerica Bank, which studies automotive “affordability” quarterly, said cars became a bit more costly in the third quarter. It took 20.8 weeks of the median family income to buy the average car in the quarter, up slight from the 20.5 weeks calculation in the prior quarter.
Despite all automakers’ attempts at quality, there have already been more vehicle recalls (affecting 25 million vehicles) this year than ever before. The Associated Press believes shared componentry, stiffer reporting rules, and swifter response to prevent litigation all combine to drive up the number.
General Motors is predicting that auto sales will be flat to slightly positive for November, with its own sales expected to be off about 6%.
Lincoln intends to promote its new luxury pickup, the Mark LT, with a spot during the Super Bowl.
Mitsubishi has entered into a joint venture with Merrill Lynch to offer auto-sales financing to Mitsubishi buyers.
Total car sales fell 3.3% in November, while light truck purchases were up 0.8%. The Big 3 U.S carmakers saw a 5.6% decline, Asian makers were up 9.8% and European makes fell 11.5%, mostly because of Volkswagen’s 30.4% loss. In other automaker results for November, Mitsubishi sales fell a scary 50.8%, Subaru was up about 20%, Kia sales jumped 44.1%, and Hyundai set a new November record, up 7%.

Retailing:

Wal-Mart, which had been planning to be less promotional this holiday season, has already blinked, after a lackluster Thanksgiving weekend and November. “While our prices were generally as low as they’ve been,” said a company spokesperson, “our competitors were even more aggressive. We have learned from this and will move quickly to respond to what our customers have told us during the remainder of the shopping season.” Despite a very strong Black Friday, chain store sales actually slipped last week, down 1.8% from the week before. Sales were up 2.4% year-to-year, off from the 3.9% increase of the week prior. As a result, the International Council of Shopping Centers lowered its November forecast to +2.5% to +3%, from the previous 3% to 4% rise.
Burlington Coat Factory, which only reports sales on a quarterly basis, said its September-November fiscal quarter comps were up 4.8%.
REX Stores, competing with the big guys in the electronics/appliance business with 238 locations in 37 states, had comp-store sales up 1% in the latest quarter.
Home Depot is joining with AARP to mark products with a seal of approval as safer and more user-friendly for older Americans.
Rhodes Furniture has received bankruptcy court approval to sell 21 of its namesake stores and three John M. Smyth’s Homemaker locations. The units are located in Georgia, Illinois, Kansas, Kentucky, Missouri, North Carolina, Ohio, South Carolina and Tennessee. No buyers have been named as yet.
The New York Daily News reports Vornado, which once operated the long-gone Two Guys discount chain but then became a real estate company, will bid for Toys ‘R’ Us in a partnership with Bain Capital. Toys ‘R’ owns more than 300 of its store locations, which could be sold off to other retailers.
West Marine same-store sales were down 2.9% last month.
Rent-Way finished its fiscal year with a 5.2% comp store sales gain. It is also teaming with Levitz, to test a lease purchase program in Levitz stores.
One of the most visible trends this holiday season has been the spread of gift cards being sold in locations other than the chain in which it will be used. Blockbuster just announced agreements with 16 different convenience store chains; including some of the big ones like 7-Eleven, WaWa, and ChevronTexaco.

Drug Store & Supermarket Chains:

Longs Drugs comps were down 2% last month. The company is saying last year was atypically high because of the strike against supermarkets that occurred in parts of California then.
Canadian company Alimentation Couche-Tard, which recently completed its acquisition of the Circle K convenience store chain, says it is still in the market for more locations, especially in California and the Southeast. The company’s CEO told CSP Daily News recently that “I’m surprised we don’t have a player with 10% of the market. This market has to be consolidated. It makes sense.”
Walgreen’s continued its winning ways in November; same store sales rose 11.4%.

Fast Food & Restaurant Chains:

Same-store sales fell at KFC in November, down 7%, eradicating most of the gains at siblings Pizza Hut (+3%), and Taco Bell (+5%).
Dallas-based Wingstop Restaurants has signed agreements for new franchised eateries in Las Vegas, Jacksonville and Phoenix. Obee’s, parent of the 81-location Obee’s Soups, Salads and Subs, says another 70 stores are currently in development and the company has commitments for another 1,300 stores over the next ten years. Obee’s is a subsidiary of Ultimate Franchise Systems, based in Heathrow, FL.
Not only has Wendy’s been having problems with its main chain, necessitating the return of Dave Thomas into its current spots, the Baja Fresh brand it bought has turned out to be a bad investment. Wendy’s will now close 15-18 underperforming Bajas, and write down the value on its books by close to $200 million. And at the Wendy’s restaurants themselves, November same-store sales were down 5.3% at company-owned stores, and 4.6-4.8% at franchised units.
Marco’s Pizza, a 127-store Toledo-based chain, reported same-store sales up 6% so far this year, and credits its TV and radio advertising for a large part of the success.
Burger King is joining the QSR’s that offer healthier variations of its kids meal. Mott’s applesauce can now be substituted for fries, and Minute Maid apple juice for soda.
The Captain D’s restaurant chain has been sold to a consortium of investment firms, according to Thedeal.com. The deal, involving the chain’s 587 eateries in 24 states, is expected to close before the end of the year.
Some November comp sales reports from restaurateurs: Applebee’s was up 4.1%, with franchised outlets up 4.8%; Outback rose only 0.8%, systemwide, while its Carraba’s Italian Grill subsidiary was up 4% for the month; and Cracker Barrel recorded a 3.8% gain for the month.
Nashville-based O’Charley’s has signed agreements with current franchisees for new restaurants in Michigan, Louisiana and Wisconsin.
Benihana’s has started a new Japanese-style animation TV campaign, hoping to appeal to young customers influenced by Asian culture. Nation’s Restaurant News reports the campaign is currently on in 21 markets and, if successful, other anime commercials may be made.

Telecommunications:

The New York Times predicts mobile phone companies may start selling equipment that carries their own brand names instead of the manufacturers’ nameplates. Cellular companies want to better manage features and services used on their services, and by dealing with “no name” companies instead of makers like Nokia, equipment costs could be held down.
T-Mobile is emphasizing its Sidekick II “anti-Blackberry” internet communication device, targeted at 12-24s, in its holiday campaign.

Financial Services:

Jackson-Hewitt has signed a 3-year sponsorship deal with NASCAR. It already sponsors some drivers.

Other Categories:

After a successful test in Austin and Denver, Starbucks and Jim Beam will roll out a Starbucks coffee liqueur early next year. The target is category-leader Kahlua, which mostly uses cable TV and print in its media plans, according to Advertising Age. Starbucks/Beam’s media mix isn’t known yet.
Ad Age also reports Hershey and Cadbury have been “pointing out to the FTC the clout” that Wrigley’s purchase of Kraft’s candy brands would create. If they can’t get the deal disallowed, they may “allocate exponentially higher marketing resources” to compete with the new behemoth. The deal is expected to close in mid-2005, if the FTC does allow it.
The National Pork Board has approved a $53.7 million budget for next year that will allow it to create a new marketing program. The Richards Group, Dallas, is working on the new effort, set to launch in March. And speaking of pork, Smithfield Foods reported this week its profits rose sharply last quarter in large part because of a 36% rise in hog prices.
The use of “cashless alternatives” seems to be the current hot button for several advertisers, and the variations continue to evolve. Dunkin’ Donuts has introduced rechargeable cards at participating locations in New England and launched an ad campaign to support it. And Sears has a new twist: a buyer can put their photo onto the card they’re giving as a present.
Southeast Airlines has ceased operations, citing high fuel costs as a major reason. It had flown from three Florida markets to four in the Northeast and Midwest.
Kimberly-Clark will launch a major line extension of its Huggies brand early next year. It had already moved beyond the diapers category with branded washcloths and babywash; now it’s adding 20 new toiletry items for babies.
A bit of a dot-com comeback? eBay and Yahoo have started up current campaigns, looking to build up their growth.

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