|
|
 |
 |
|
|
|
COMPETITIVE INFO --
The Internet Advertising Bureau says ad revenue for its medium rose to $21.2 billion last year, with search accounting for 41% of the total (up from 40% in 2006). Ad Age says the number puts the web ahead of radio in dollars, which had been expected, but also slightly ahead of cable, which was not expected for 2007. Retail is the largest spending category (45% of consumer online revenue), with automotive at 21%, leisure at 13%, entertainment 9% and package goods 8%.
Editor & Publisher has two items that illustrate the state of the newspaper business. It reports the Kansas City Star is laying off nine people in the paper’s advertising services (production) department; their functions are being outsourced -- to India. And the Myrtle Beach Sun News is dropping classified sections from its Monday and Tuesday papers, suggesting that readers go to its website to get classifieds.
HONDA LEANS ON DEALERS TOO --
We recently reported that Toyota was putting heavy pressure on local dealers to upgrade their facilities. Now Automotive News reports that Honda is doing the same —going as far as to threaten to pull franchises if dealers do not spend the money to upgrade.
Using the same rationale as Toyota, that the number of Hondas in operation is much greater than in the past, the company has given dealers until the end of the month to lay out their plans and until January 2010 to make their improvements — or else!
Dealers could get a short-term franchise renewal if they promise to make improvements, but Honda will give the typical 5-year renewal only “if the shovels are in the ground.”
Of course, many dealers are upset. One said, “It’s a $2 million to $3 million investment they’re talking about. I’m in a small market. This is a recipe for disaster.” Another dealer said, “All of a sudden they drop this black cloud on you. It would cost me about $2.4 million to do what they want....they’re trying to squeeze people. Look at the threat (no franchise renewal) implied by that letter.”
STORES CITES SUCCESS STORIES
In a nation that’s generally believed to be “over-stored,” (although current closings by many chains will tend to relieve that), it’s tougher than ever to create a new, winning retail format. But it can be done, and Stores magazine is celebrating the success of six companies -- all less than ten years old --that have become big hits in a short time.
Apple stores had a lot of advantages including an iconic brand with a reputation for quality, and strong television advertising for the parent. Still, retail chains from other manufacturers have failed, but Apple stores succeeded. Stores said it “set a new standard” with innovations such as its Genius Bar and concierges. Launched just seven years ago, the chain has over 200 units now. It’s running 42% ahead of the previous year in latest calculations.
Can supermarkets be different these days? Stores notes the success of Bloom, launched four years ago as a spinoff of Delhaize’s Food Lion. Based on two years of research, its stores focus on convenience and service through an easy-to-shop layout, featuring a broad range of fresh products and home meal replacements. Offerings are generally upscale, such as 25 varieties of artisan and whole grain bread and more than a hundred kinds of cheese.
In the restaurant category, Grand Lux Cafe was designed by the founder of Cheesecake Factory — the owners of Las Vegas’ Venetian resort had asked him to build a restaurant to fit the hotel’s format. The “broad and eclectic menu” was good enough; the chain already has 13 units open from coast to coast.
The Hollister unit of Abercrombie & Fitch is very targeted — it promotes a Southern California lifestyle image to the 14-to-18-year old market. Its uniqueness includes touches like a “signature fragrance” called SoCal, dimly-lit stores sprayed with the fragrance, and a policy to play rock music at the 80-85 decibel level, just below OSHA’s “discomfort threshold.”
Netflix isn’t a bricks-and-mortar retailer, but it has done so well in its mission, it has severely hurt one a couple of decades ago, which was seen as a huge success itself. Stores says CEO Reed Hastings defied skeptics who thought rentals-by-mail could not succeed. Hastings felt he could achieve success by “zigging while the rest of the world zagged.”
Zappos.com was started in 1999, with the idea of carrying the largest possible selection of hard-to-find items, now stocking over three million SKUs -- with 1,100 different brands of shoes, handbags, clothing, eyeware, watches, and accessories. It did $32 million in business six years ago, and is projected to reach $1 billion this year.
|
|
|
|
|
|
