Brand Loyalty Bumped, Sales slumped, and A Balanced NFL Postseason

March 30, 2022
Wellllcome to Wednesday. Today we’re talking about what happens to brand loyalty when supplies are tight. Hint: It doesn’t go up. We also cover the most recent sales numbers for Q1 and some changes in the NFL that fans and teams are looking forward to
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March and Q1 new car sales number taking a hit due to supply shortages

  1. Analysts expect March U.S. new-vehicle deliveries to drop 24 to 26 percent to around 1.2 million, with the seasonally adjusted, annualized rate of sales falling to 12.7 million to 13.1 million, down from 17.79 million according to Motor Intelligence in March 2021, which kicked off the industry's hottest three-month stretch on record.
  2. The average new-vehicle incentive is on pace to reach an all-time low of $1,044 in March, LMC and J.D. Power said, a 69 percent decrease from a year earlier. One of the leading contributors to the sharp decline in incentives is the lack of lease deals as factory subvention eases. Leases accounted for 30 percent of all new-vehicle retail sales in 2019 but will account for just 18 percent of March retail volume, LMC and J.D. Power said.
  3. Average transaction prices are expected to reach a March high of $43,737, a 17 percent increase from a year ago, LMC and J.D. Power predict. First-quarter average transaction prices are forecast to reach $44,129, an 18 percent increase from the first three months of 2021.

Brand loyalty takes a hit as supply chain issues and inflation kick the door in. 

  1. “We are seeing people make more choices on items because they are available,” said Tony Sarsam, chief executive officer of grocery chain SpartanNash Co. In the Grand Rapids, Mich.-based company’s supermarket aisles,
  2. About 70% of U.S. shoppers said they had purchased a new or different brand than they had pre-pandemic, according to a survey conducted from May 2020 to August 2021 by private-label consulting company Daymon Worldwide Inc.
  3. Jif Peanut Butter is gaining ground, “There’s more to get if you can outperform,” Geoff Tanner Chief Commercial Marketing Officer said. About two-thirds of Smucker’s product portfolio is increasing its market share today compared with one-third before the pandemic, he said, and the company is boosting advertising.

NFL changes postseason rules to give both teams an opportunity to score

  1. Proposed jointly by Eagles and Colts
  2. If the teams are still tied after both teams possess the ball, it becomes sudden death.
  3. Big impact on Chiefs/Bills playoff game last season


Kyle Mountsier, Paul Daly

Paul Daly  00:23

Yo, it's Wednesday, March 30. I'm in a new studio. It's all echoey in here, but Kyle's bouncing. It's about to start. The hits are coming today. But guess what? We're hitting back. We're hitting back together. Let's do this. The people really want to know what's so good?

Kyle Mountsier  00:46

Okay, real quick, quick story, morning story, hanging out with the kids this morning. Looking at my kid, I'm like, It's Wednesday, how you feeling?

Paul Daly  00:55

I looked at my kid.

Kyle Mountsier  00:57

He's like, great. I was like, it's hump day. My son goes, Dad, what was his response? So then, so then think about describing hump day to a child, you're like, how do you how do I describe this, you know, a Camel's Hump. And then the my Sunday, Monday, Tuesday, and then he's like, I need it. What is this is life with kids that are six and eight. They describe hump day. Yeah, over the hump is.

Paul Daly  01:28

Oh, man, well, I moved all of my stuff. Yesterday, I had like, we're moving into our new building or new studio. And I was like, I can't like official moving date for congruent the agencies on Monday, I was like, I gotta get my stuff over there and get started. So Isaac and I, at the end of the day, we've just like the desks and the computer, and like, I'm in an empty office and the ceilings high. So it's really echoey in here. And even though it's like my same stuff, I feel all disoriented.

Kyle Mountsier  01:51

This is like that first night sleeping in your bed at your new house. It's like, this is my bed, but it doesn't feel like my bed. I don't

Paul Daly  01:59

know, lay there and look at the ceiling, blink, blink, blink, blink. That's what I feel. But we had a lot of good news to talk about today. I mean, yes, a lot of it's bad news. But it depends on how you take it. perspective, perspective, solid news, we have a lot of solid news. So to look at today. Well, I'm

Kyle Mountsier  02:15

what I love about the news that we're talking about today is it's approachable for auto dealers to go, okay, that's what's happening. How do I assess it and and move forward with? Yeah,

Paul Daly  02:24

right. These are, these are as typical, we try to talk about indicators from not just inside automotive, but outside in automotive, because we believe like drawing a big circle around the indicators allows us to make better decisions, and approach things in better ways. And also, I think, understand the people that work inside our businesses, because they're also dealing with these considerations on a regular basis. 

Kyle Mountsier  02:46

paul real quick, you know, we didn't plan this. But we keep saying we've said in the email this week, we say this thing about drawing a big circle. I was actually thinking about this earlier this week. And I think I want to just just take a couple minutes and jam on it real quick. Good is, you know, when we say drawing a big circle, a lot of times, circles start to become exclusionary. Right. And that's not the intention of this, it's not to go, Hey, we're going to close the ring and exclude everything that's going on. The reason why we say big circle, is because what has typically been done in the automotive industry is small, little circles, of small little pieces of information, or segments of people that are given access to information have been drawn, it doesn't matter whether it's 20 groups or media companies, or, or, you know, digital dealer nada. But it's what has happened is our is our industry has been given segmented information, even even on social media, right? That access to information that's quality that can help people make business decisions is limited. And so the idea is to take a new circle and draw it much bigger and try and draw the circle is so big, that it captures the entire industry. And not just the top that quote unquote, type of people that we want to talk to. Yeah, we actually had a conversation we had a sponsor approached us that initially, the question was, hey, do we want? Do we like, do we want to have a brand association there? And the reality is, is that if we don't say, Hey, we're open to that, and let's create a conversation around why or why we want to do that, and then bring that partner into why maybe that's been a bad partnership for others in the past, and then reconcile that to the entire industry? Yeah, that's what we mean about joining a big circle. So when you hear us there might be times where, you know, hey, we look at Carvanha or car Max and what quote unquote, the disruptors are to the franchise retail side, and they go, hey, they're doing a good thing because, believe it or not, they're part of the entire automotive industry. And that's how big the circle we want to draw around this thing for

Paul Daly  04:53

sure. Everything's coming to mind of all the things that we've learned from the people that we might want to like push outside the circle, but the reality is we innovative dealer that we know, studies them, and we learn from them and executes to them. So I like that you said that, you know, we've been working on kind of like the automotive State of the Union brand tenants, right? Like what is important to us and drawing a big circle is so core to that around business and automotive and culture. Like it matters. So I'm glad you stopped for a minute to say that because we're going to be saying that a lot more. And we probably you know, when we get sick of talking about it is probably when everybody else just starts catching on to what we mean. So, right. We're not sick of talking about it yet. So we got to get got to get going. Okay, Chris is getting bad. What do you say getting bad news early is good news. That's There you go. Good news. Right in, but maybe it's the bad news in a good way. It won't be as bad. That's hilarious. What was that from?

Kyle Mountsier  05:49

The hood Men in Tights? Okay, let me try to get you wouldn't believe this. Everybody? Oh, that's good. That's pretty good, I think.

Paul Daly  06:01

All right. All right. Let's get some real news, though. So Automotive News lead story today, the March 1 Quarter new car sales number took a major hit during supply due to supply shortages and reading from the article analysts expect March us new vehicle deliveries to drop 24 to 26% to around 1.2 million, with the seasonally adjusted annualized rate falling below 12.7. So basically, you know, March last year kicked off the hottest month in the automotive industry ever. And this year is a very different

Kyle Mountsier  06:33

story. Yeah, but all the dealers are out there, like, so I get it, that it's a down month. But I've got 78 deposits. I'm rolling over the next month, right, because still still still in the pipeline. So I think we're actually talking to a dealer that the other day that we were just we were ruminating on the fact that even looking at a month as a business strategy is not even possible. It's not even we can't look month over month, it's we can't even assess this month, and understand what our business is doing because of well, okay, so from two months ago, I had 33 deposits that the vehicles arrived. And so the shoppers typically would have purchased in January, but they actually purchased in March, the registrations, but also I've got another 72 that I've sold in the pipeline, how do you approach that from a, you know, from a closing ratio perspective, from a sales pipeline perspective, it's just, I really think what we're gonna have to do as an industry is go and take a look at, you know, 2022, and maybe, maybe even like, a 48 month time or a 24 month timeline, where we look 2022 2023, what was the net result of the total sales pipeline across that, and really just approach our business in a different way?

Paul Daly  07:49

It's like the indicators used to change, right? I mean, like, a little bit, right, business environment changed a little bit. But now the fundamentals of the business seem to be changing on a monthly basis, not like little things, major things. And so you talked about it yesterday, we're gonna keep talking about it. The indicators, we have to weigh them differently than we ever did before. A couple other indicators in this article, the average new vehicle incentive is on pace to reach an all time low of $1,044 in March, down 69% from last year, so also

Kyle Mountsier  08:28

all dealers everywhere, they're like, forget the incentives. We don't need them.

Paul Daly  08:34

Isn't it funny? It's like really kind of like, it's like, doublespeak. This is an incentive. Right. It's like, Oh, it sounds like a good thing, right? I mean, I guess it's a good thing. It's not even a good thing for the consumer. No, right? If you have to incentivize that means that the product isn't, is out of balance. I think, if you have incentives, that means the product supply demand is out of balance.

Kyle Mountsier  08:53

This is I think about this being a being from the dealership side and being in retail all the time. You know, I get contacts every year. And I always think I'm like, every single year doesn't matter when I get the contacts what month it is. There's a there's a 50% rebate from the manufacturer, like

Paul Daly  09:12

contact lenses. So about contact lenses for contact lenses.

Kyle Mountsier  09:15

Yeah. How does that how does that even work? Like you've just literally overvalued you products that you can continually offer the same rebate to all customers every month of the year. Right, right. Come on now, guys.

Paul Daly  09:27

Well, here's, that's I mean, like, how many incentives do you get from the Apple Store? None. Know why it means there's supply and pricing and demand is in balance. It's in balance. So incentives are down. I think it's a good thing overall for everybody. Also, last indicator, the average transaction prices are expected to reach a high of 43,007 37 which is a 17% increase over last year. First quarter transaction prices are forecasted to reach 44,000. So q1, we are 18% of overlap. So, I mean, like inflation, the current number is like seven to 8% is what everything retails tracking. We're more than double that in automotive, we've been talking about higher transaction prices, pricing people out of the market, sidelining buyers is, you know, maybe right now, because things are okay. And the demand is low. But um, this is this is an indicator that we really have to pay attention to. So again, we're talking about indicators, right? Is q1 in 2022? A lot different than q1 and 2021? Yes. Which was a lot different than q1 in 2020. Yes,

Kyle Mountsier  10:33


Paul Daly  10:33

What do you think is going to be q1 in 2023? You have no idea?

Kyle Mountsier  10:37

No, there's you can't approach that's, uh, yeah, it's an unapproachable conversation. Although I do think that, you know, what, you know, in late 2021, there was a lot of speculation that, hey, by by end of q1 2022, things will write themselves. And there are a lot more economists and, and business strategist that are saying the current mode of inflation, prices, inventory, all of that is going to last at least another 18 months, we're going to be late in 2023. Will we see any sort of quote unquote, normalcy, whatever that means? Yeah. So I really think that we're gonna see more of the same.

Paul Daly  11:21

That's wishful thinking too. It's like, right, if everything gets back to normal, right, if everything's normalizes, right, who knows we have election this year, if you have an election,

Kyle Mountsier  11:32

there's, there's a lot there. There's, by the end of 2023, we're gonna have

Paul Daly  11:35

an election next year. A real big one. So alright, let's talk about some other indicators of this one is in retail branding, in general, most specifically, consumer packaged goods and brand loyalty. So this Washington Post or Wall Street Journal story says brand loyalty takes a hit as supply chain issues and inflation kick the door. And basically, the premise is that when as there has been supply shortages, that people no longer are loyal to the brands that they bought, they're willing to try more products. More often. Quoting from the article, we're seeing more people make more choices on items because they are available, says Tony sarsam, Chief Executive Officer of grocery chain SpartanNash. Co. I don't know what that is in Grand Rapids, Michigan. That's why I don't know what it is. And 70% of shoppers polled said they purchase new or different brand than they had pre pandemic. So

Kyle Mountsier  12:24

the personal story here personal story, my wife, as a lot of people know, was pregnant. We've now had our baby, but there was a time in late February, early March where she was like, I gotta have rice krispie treats, right? Have to have rice krispie treats Well, apparently, Rice Krispie Treats are shipped from none other than Canada. Everybody knows Canada had some supply chain issues because some truckers were doing some things up there. Well, I would have never thought like let's buy the off brand Rice Krispies because you know those never snap snap, crackle pop, like the real Rice Krispies. But you better believe we were hunting down every single possible opportunity to find some sort of off brand rice krispie treat of which we now have like four to five boxes in in the pantry just in case things get dicey.

Paul Daly  13:10

did she find a new favorite.

Kyle Mountsier  13:13

That you know what, when you put marshmallows and sugar around them, everything becomes a lot more similar.

Paul Daly  13:20

Oh my goodness, one of the one of my favorite brands that was mentioned in the article JIF Peanut butter. I like it because I use it as an example and a lot of brand classes I teach because yeah, really, when it became choosy moms choose JIFF, they disproportionately crushed everybody because they branded it correctly, or appropriately. And so basically, Jeff is making a comeback in this market. Their chief commercial marketing officer said there's more to get if you cannot perform in supply chain logistics. So they have seen an increase in market share across Smuckers brand across their products, because simply they've been able to be there. So this is a time when operational excellence actually can overcome some of the brand loyalty hurdles, how you think we're seeing this in automotive like I want this. This other ones available.

Kyle Mountsier  14:02

Oh, absolutely. Like crazy. Yeah. It's it's like I need a new car I need to use car I'm just gonna go we actually back back at Digital dealer in Vegas. I was on a panel that talked specifically about how new and used car accessibility is going to change brand loyalty and dealership loyalty over the next three years because we have more used cars purchase in the market, meaning retention and and loyalty to not just brand but also dealer is going to shift dramatically. And that's just I feel like it's a topic that we still have not really approached as an industry because we're in such high sales volumes, such high gross volumes, that we're not recognizing what the retention issues that we're going to have because we have such high used sales volumes.

Paul Daly  14:48

Yeah, that's that's such a huge play. The summary of that, right if someone buys a new car and buys a used car from you or new car, the retention is way different on those purchases. And I I think it's also like this kind of gets into process for automotive. So if no one has inventory, the person that does the best job walking the consumer through the ordering process, making it easy for them, making it easy to show them what the new product is and making them feel good. I think that if you're, you know, you're in an accord, you could easily consider a Camry if you have like, if you know same model same or you know what I mean? Same segment. If one does just a really good job showing you how easy it is to buy a car without driving like, you know what I mean? Like I think that there's it's a wide open game, brand loyalty, market share is what there is to gain right, which is really the ultimate KPI KPI, in my opinion,

Kyle Mountsier  15:39

I completely agree I think and and obviously you have to measure market share based off of whatever everyone else is doing. But if you're if you're earning market share life, like Jeff said, if you're earning market share, that's the hardest thing for someone to get back from you.

Paul Daly  15:52

Yeah, and JIF, smelt spells the word JIF right by the way.

Kyle Mountsier  15:56

That's how you spell and that's how you spell just not just how you say it.

Paul Daly  16:00

Gi F is how you spell GIF. JIF is how you spell GIF.

Kyle Mountsier  16:05

Just well that to the guy who just passed away who created it.

Paul Daly  16:08

And stuff you can cost the money of a dead man in court Kyle you. Finally here's here's a little bit lighter. And if you are a Bills fan, this is really going to hit close to home The NFL has officially changed postseason rules. Last year, there was this amazing playoff game between the chiefs and the bills and Josh Allen, the quarterback of the bills had been dazzling the entire game. Well, the chiefs won the toss in overtime, meaning they got first shot to score. Well. They scored a touchdown, meaning the bills never even got a shot. Like so. I'm happy to announce that the Eagles and the Colts submitted a proposal I

Kyle Mountsier  16:44

don't know of all teams.

Paul Daly  16:46

I don't know why they both had Carson Wentz as a quarterback in the last decade last There you go. They submitted the proposal and FL accepted it so now both teams in an overtime situation will have an opportunity to touch the ball and score. And so after the after everyone has the opportunity, it becomes sudden death. Isaac Our producer is a big Bill's fan we just learned this about him hey at no one's perfect. I'm just kidding. I like actually a lot of the Eagles we both know how to lose championship games. Um but yeah, so whatever it is NFL is gonna be a little more balanced this year. Right? Because they listen to the fans and they listen to the consumers right people were upset about it and guess what? They change Oh, we got another Bills fan in the stream this morning.

Kyle Mountsier  17:25

Bills fans we got Philip ganzer with as a Bills fan. Come on now. Everybody all Bills fans are like yeah, she proves them right. Wow. You know, a hair a hair too close there. Missed it just by Oh.

Paul Daly  17:41

Oh, well. That's it for your Wednesday episode. We hope we get you thinking a little bit broader about indicators and impact. Go ahead and make an impact today make some changes and take care of one another