Although the timing is coincidental, the results of new studies from two leading market research and consultancy firms dovetail to say much about the restaurant industry's current status. The NPD Group, Inc. is reporting that U.S. restaurant units dropped by 4,000 -- or 1% -- between April 1, 2008 and March 31, 2009, according to the company's 2009 Spring ReCount. NPD compiles a census of commercial restaurant locations each spring and fall. The negative trend came on top of zero growth in the year leading up to last spring. On the flip side, a Technomic Inc. study confirms that the recession-driven uptrend in home entertainment represents a solid opportunity on the catering front for restaurants. Looking at the industry by size and type of restaurant, independents and minor chains (50 to 99 units) fared the worst, with each losing 2% of total units. Mid-size chains (100 to 499 units) and the smallest chains (3 to 49 units) each lost 1% in units. Only the major chains (500+ units) showed growth, albeit just 1%. "The recession appears to have weeded out restaurants performing poorly prior to the economic downturn, and this seems most true for independents and smaller chains that are likely having a hard time competing with the resources and marketing power of major chains," summed up Susan Kleutsch, NPD director, product development-foodservice. Looking at restaurant types, the fine dining segment was hardest-hit overall -- losing 4% in units, although the losses came entirely among independents (down 7%). Mid-size and minor chains each saw 6% unit growth, while small chains had 1% growth. (There are no major chains within the fine dining category.) Family dining units were down 2% overall, with minor and mid-size chains hardest-hit (-6% and -5%, respectively). Major chains' units were stable. Restaurant units among quick-serve and casual dining restaurants were also stable on an industry-wide basis. Within the QSR segment, major chains grew 1%, independents declined 2% and all other types of restaurant systems declined 1%. The growing competition to tap into the industry's relatively healthy casual dining segment was demonstrated, as both mid-size and major chains upped their units by 2%. In the process, they apparently damaged minor and independent casuals, which saw units decline by 2% and 1%, respectively. Geographically, the hardest-hit U.S. Census region was West North Central, down 2% in units. The least-affected regions -- East South Central, West South Central, Mountain and Pacific -- were flat, not up. The trend to cheaper, at-home gatherings is obviously one major factor slamming certain types of restaurant categories. Indeed, Technomic's "POP: Parties Off Premise" study confirms that more than a third (36%) of consumers report that they are entertaining at home more often than a year ago (versus just 13% entertaining less), and that 40% expect to increase entertainment over the coming year. On the other hand, nimble restaurants and food service businesses can benefit from a "can't beat 'em, then join 'em" strategy. "From box lunches and party platters to parties complete with off-site food preparation, catering is one of the strongest segments of the foodservice industry and appears somewhat immune from recessionary spending cut-backs," note Technomic's analysts. More than half (53%) of respondents reported buying platters and other prepared foods for this year's Fourth of July, making this the largest-usage holiday after Christmas. Furthermore, in terms of food sources for at-home entertainment, consumers report using restaurants just about as often as food retailers (68% versus 69%), according to the study.
With Circuit City out of business, Sears looks to fill the consumer electronics sales void, rebranding CE salespeople as the Sears Blue Electronics Crew that will help consumers choose their home electronics -- particularly televisions -- and can even help with installation and repairs. "The Blue Crew is going to present themselves as a selfless group of individuals who work in service of the customer," Eddie Combs, chief marketing officer for Sears Holdings electronics, tells Marketing Daily. "We're developing new programs, so that we're not just a bunch of branded guys standing around in a store, but rather something that gives the customer something." To that end, Hoffman Estates, Ill.-based Sears is retraining and teaching its electronics sales people to make them better educated about the products they sell. They will also be able to help customers -- many of whom have done hours of research at home -- choose which product is really right for them and what the prices on those items are, even at other retailers. They will also be able to help set up installation through Sears -- something the company has been able to do in the past, but has not really advertised. "We think that the real-time price check will show consumers there's another turnkey provider out there," Combs says. "People don't think of us as one because we're part of a department store." The Blue Electronics Crew will begin appearing in stores in early fall, right around the start of football season (a time when many men think about upgrading their television sets). Sears has already filmed a television commercial featuring NFL quarterback Brett Favre -- who has famously had trouble deciding whether to retire from football -- having trouble choosing an LED television. The commercial will launch sometime after Favre makes an announcement about his football future. (Favre is said to be considering an offer from the Minnesota Vikings in Minneapolis, which is -- not coincidentally -- the headquarters for Best Buy.) "What football spokesperson has a hard time making up his mind and is trying to do it in a way of having no regrets?" says Combs about choosing Favre as a spokesman. Other marketing efforts will include print, event marketing, social marketing and public relations. The effort to rebrand the electronics staff as the Blue Crew is intended to make people think of Sears as more than a place to turn for emergencies, such as when a water heater breaks, Combs says. "People come to us in times of need, but we need to be more assertive and proactive," he says. "We need to be a little more vocal about the services we can offer and sharpen the pencil on the services we already do." By doing so, Combs is hoping to piggyback on some of the goodwill people may already have for Sears when it comes to appliances (such as Kenmore) and tools (such as Craftsman). "We're a trusted advisor that's already been in a part of their homes" such as the kitchen, basement or garage," Combs says. "We have a lot of relationships with America. We just haven't taken it into the living room."
Toyota is the latest automaker to talk up the "Cash for Clunkers" program by offering additional incentives on top of the up-to-$4,500 offer from the government. The Torrance, Calif.-based U.S. sales arm of the Japanese auto giant has launched a national ad effort comprising network and regional spot TV for ads about the Car Allowance Rebate System (CARS). The spots show a clunker being crushed in reference to a tenet of the CARS program that traded-in vehicles must be scrapped. The ads tell viewers that the automaker has 25 car and truck models that qualify for federal rebates, ranging from $3,500 to $4,500. The effort comprises 30-second ads on channels like CBS, Fox, NBC, ESPN, TNT, USA, ABC Family, A&E, and Discovery. The company says Spanish-language versions will run on Univision, Telemundo and Telefutura. The ads are also online at Edmunds.com and Cars.com, and the company says there will also be regional newspaper and radio ads. Toyota also created a microsite for the program at Toyota.com/ cashforclunkers that, like similar sites at other automakers, enables consumers to calculate CARS cash they would receive for a given vehicle. Toyota is also offering additional dealer incentives, regionally. Other automakers have been quick to jump on the CARS wagon. Chrysler recently launched a campaign, "Double Cash for your Old Car," that touts incentives on top of the government's offer. In June, Ford launched "Recycle Your Ride," a Web program to elucidate the CARS offer. Hyundai Motor America, meanwhile, says that 83% of trades consumers have made under the Cash-for-Clunkers program at Hyundai dealerships have involved swaps of trucks, SUVs or vans for new Hyundai vehicles. The company says 86% of the new vehicles purchased are passenger cars, and that the average age of a trade-in model is about 14 years, with 140,000 miles on the odometer. Hyundai, which began honoring CARS on July 2, says the program accounts for 11% of its sales so far this month. The company says 32% of the trade-in models reported by dealerships were Ford vehicles; 23% were Dodge vehicles, and Lexus, Jaguar, and Mercedes-Benz vehicles have also been traded in as clunkers.
Allstate is honing in on what's most important to Hispanic consumers in its Spanish-language integrated communication and marketing national campaign. The TV commercials, running on Spanish-language networks, are in tune with the tough economic challenges facing consumers today. Created by Lápiz, the Hispanic shop of Chicago-based Leo Burnett, the spots identify with the resourcefulness of Hispanic consumers and their desire to get the best value in their purchases, including insurance. "The Hispanic community really values name brands," says Georgina Flores, senior marketing manager for Northbrook, Ill.-based Allstate. "Part of what gives them peace of mind is doing business with a leading company. Allstate's brand is viewed very highly by Hispanics. We want them to understand that in order to save money, you don't have to sacrifice service." Two spots, "Cobbler" and "Toothpaste," broke in February and were joined by "Load," which broke in early July. A fourth spot, "Job," will break late this year, Flores told Marketing Daily. The spots show consumers stretching their dollars and emphasize that Allstate can save them money. They close with "Are You In Good Hands," the same tagline as English-language efforts. The ads are part of Allstate's ongoing Hispanic marketing efforts that aim to engage and communicate with the fastest-growing segment of the U.S. population. The company's Hispanic marketing program includes TV and radio advertising, online activations, media integrations, sponsorship of the Mexican National Soccer Team (for the third consecutive year), and sponsorship of television and radio programs including "Premio lo Nuestro" and the Latin Grammy Awards. Allstate creates communications specifically for Hispanics, Flores says. "In the general market, the messaging is about how we need to get back to basics -- how everyone has really been living beyond their means," she says. "With Hispanics, they already have been 'back to basics.' It's just the culture and way of life. They're always trying to do more with less." The company's Spanish-language Web site, www.miallstate.com, provides interactive online tools including the CoberTOUR which seeks to educate about how insurance works, what options exist and offer quote estimates. Consumers can locate one of the more than 3,000 agencies with Spanish-speaking capabilities. The site also contains resources and tips including information on purchasing a car, common insurance terms and processes and a financial calculator. "We've really stepped up our efforts online," Flores says. "Essentially, in our category, you'll find big brands simply translate their English Web sites to Spanish. Instead, Allstate went to Hispanic consumers to see what they wanted and needed. There's some similar content (to the English-language site) but we set it up in a much more culturally relevant way." The company also has created an interactive Web site dedicated to Allstate's Mexican National Team sponsorship, www. proteccioneslajugada.com. Featuring Mexican National Team goalie Memo Ochoa, the online destination offers fans and visitors an opportunity to design their own soccer balls, view behind-the-scenes footage from recent TV commercials and create unique soccer chants while fostering an emotional connection between the consumer and the game of soccer. The company has created a complete "surround sound" communications program tied to the sponsorship, including dedicated TV, radio, print, online, community events and a sweepstakes, Flores says.
Even with summer clearance sales, the auto industry is hanging fire this month, with sales likely to be down perhaps 16% from the month last year. The big question mark is how the government's "Cash for Clunkers" program will affect sales. Edmunds.com says the government program will be a boon, with U.S. auto sales likely to be up 10% versus last month, although the collective market share for the three domestic automakers is heading down a percentage point to 42.3% versus the month last year and about 3 percentage points from June. "We are looking at stable rates compared to June, so nothing much would have changed normally; but now that we have [the Car Allowance Rebate System] -- even though it's something added in that wasn't part of national demand mechanism -- we think we will have an increase over June, and that SAAR [seasonal adjusted annual rate of sales] will be at 10 million for the first time in 2009," says Jesse Toprak, head of auto industry analysis at Edmunds. "The significance is that if this rate of sales can be maintained, the economy may be recovering gradually; it could be the beginning of turnaround." One automaker definitely headed for a turnaround is Hyundai Motor America, which Edmunds sees getting an 8% improvement in monthly sales versus July last year, and a 14.5% boost over June. Toprak says Hyundai is benefiting in part from being an early mover in marketing the government program in early July. Ford was also early to bat with the program. "Hyundai started selling the program before anyone else," he says. "They took a little bit of a gamble since program details weren't spelled out yet, which allowed them to create showroom traffic, and get pent-up demand from consumers waiting for the program. So they got early-adopter traffic into showrooms, and we think they will benefit from that." Edmunds sees a handful of mass-market automakers benefiting most from CARS, based on the number of vehicles in their portfolios that offer high fuel economy and also based on consumer perception of their vehicles' fuel economy. Toprak says Toyota will benefit most, with 21% of its sales during the program time frame coming from CARS trade-in consumers. In second place will be GM, with 15% of total sales coming from such deals. The firm predicts that Honda will be third with 14% of sales from CARS, followed by Ford with 13% and Hyundai with 10%. "That is based on percentage of qualifying vehicles and perception, so even if Toyota has 18% of eligible vehicles, they will benefit more because consumers perceive them as fuel efficient."
Top 10 DMAs in which live adults who spent more than $100 on sports clothing in the last year: 1 Seattle/ Tacoma 2 Minneapolis/ St. Paul 3 Denver 4 Salt Lake City 5 Chicago 6 Cedar Rapids/ Waterloo/ Iowa City/ Dubuque, Iowa 7 Colorado Springs/ Pueblo, Colo. 8 Washington, D.C. (Hagerstown, Md.) 9 San Diego, Calif. 10 Las Vegas Source: MRI's Market-by-Market study, www.mediamark.com
Marketers are finally beginning to understand that, like any intimate relationship, a dialogue works better than "talking at" someone. When a marketer has a deep understanding of people's habits and needs, it's a pretty intimate thing. Who else knows about the double fudge ice cream buried in the grocery cart under the reduced calorie, low-fat frozen dinners? If you are a shopper at one of the leading grocery store chains and a member of its loyalty card program, we know you occasionally splurge on impulse items. It's not voyeurism -- it is delivering value to increase the standard of service people have come to expect. Through an anthropological approach to consumer market research, creativity, insight and cutting-edge analytical tools, thought-leading companies in our industry are able to uncover clues in customer behavior that translate to customer-centric marketing for shoppers and increased market share for clients, including top CPG companies and major retailers. Being invited into homes across the country rather than invading them is becoming the standard norm. Something amazing happens when marketing efforts are actually relevant to people. We see this step as initiating that crucial dialogue. And shoppers, for their part, are replying; essentially giving permission to marketers to learn their habits and respond accordingly. When a message is perceived as useful, it is not advertising. When the right content is delivered at the appropriate time, people are motivated to put out the welcome mat for marketers and brands. Offers that reflect consumers' specific shopping habits will be more successful than an annoying flood of mail-in surveys, trial offers and other coupons that inevitably find their way in the garbage. Companies can initiate ongoing conversations with people by closely tracking and analyzing the shopping habits of loyalty card shoppers, which enables marketers to reach the customers they already have and reward them. One leading grocers invested in the skills, processes and technologies necessary to boost loyalty and was inspired to develop a loyal customer mailer (LCM) unlike any other. Once a quarter, millions of LCMs are mailed out to households containing customized messages specifically for them, a thank-you for their business and offers reflecting a specific household's previous shopping experiences, thus recognizing and rewarding their loyalty. That weakness for double fudge ice cream amid a cart full of low calorie, low-fat choices? Just another idiosyncrasy that can easily be tracked and targeted, resulting in offers that make each shopping experience unique. An envelope filled with relevant content and the right offers that reflect a shopper's actual shopping list isn't considered junk mail when it's the result of a dialogue between consumer and marketer. Again and again, people say they feel like their LCM was designed or customized just for them, and they look forward to the correspondence, whether it is in their mailbox or in their inbox. This dramatic shift in perception translates directly to motivating consumers to act. Over 30% of households redeem an average of five offers. As the consumer-marketer relationship continues to evolve, customization will be critical not only in message, but in delivery. Without dialogue initiated by the marketer but controlled by the customer, the connection will be lost. In fact, the industry talks about that futuristic day when consumers decide what advertising they want to see, when they want it, and in what medium. Technology and honed strategies are already allowing us to develop the future as we uniquely get to that level and move with the consumer on this extraordinary journey. Editor's note: If you'd like to contribute to this newsletter, see our editorial guidelines first and then contact Nina Lentini.