Supermarkets and Travel
Supermarkets sell everything. Long gone are the days when they just sold food. Clothing, CD’s, financial services, cars and digital cameras can all be purchased. But they haven’t really mounted a full scale entry into travel.
A couple of weeks ago at the WTM Vision conference, Denis Wormwell, the group chief executive of the Shearings Group suggested it was because the profit that was made on travel was only 2.7%. With inflation running at almost double that, it didn’t take a genius to work out that going into travel could be a way to lose money rather than make it.
Because we in the UK have got use to cheap holidays. Discounting and undercutting by the travel industry has caused this whereas in Germany or the Scandinavian countries, more is paid for a holiday. Largely it is in the luxury or upmarket holiday markets where higher profit margins can be made. But that doesn’t stop new entrants providing us with holidays. If they can make a go of it why not the supermarkets? The same could be said about airlines. The traditional carriers were upstaged by the no-frills airlines and most of those make substantial profits in comparison with those older ones. If they can do it why not supermarkets which are supposed to have some of the greatest marketing and buying clout anywhere?
The Co-op is in travel; or rather it was as it has sold its travel division to Thomas Cook. When asked last week about whether Tesco planned to enter travel, the former head, Sir Terry Leahy didn’t really answer the question, only saying that it was already in travel via its clubcard scheme. Here, points can be offset against the cost of holidays. But since there is so much discounting is this nothing more than swapping the points for the discount you would get if you just negotiated with a travel agency or tour operator or bought it when discounts are announced? Asda has had travel agencies within some of its larger complexes for years but they don’t own them; others do and just pay rental on the space.
For at least the future then, the travel agency and tour operation business looks as though it will have only minor competition from the all-pervasive supermarkets.
image courtesy of Tesco