The news just seems to get more depressing by the day and it seems sometimes as though we are all in for a rough ride in the coming years. Obviously the travel industry is not immune but, perversely, I thought I would spend this blog talking about how other sectors are reacting to these changing times.
Much of what I am using here is drawn from Marketing Magazine - I don’t always agree with its conclusions but its news section is often a reliable indicator of how customer trends are changing. So, I’ve collected together a collection of stories that caught my eye.
Is organic food set to become a luxury consumers can’t afford? and Credit crunch causing rise in retail disloyalty on UK high street both emphasis how customers have become more price sensitive over the last couple of months. Things that were ‘necessary indulgences’ are being replaced by cheaper replacements and there is a rising number of customers that are purely shopping on price - loyalty be damned.
For me a number of things jump out of these two stories. The first is that it’s fine to be green in a time of plenty but people’s attitudes harden in times of lean. I think the number of people who will make purchasing decisions based on ‘ethical ‘grounds will decrease and this will hit sectors and suppliers who have this as a USP.
On the other hand, if the ‘green-ness’ has a definable economic or tangible immediate advantage, then it will remain a strong card. An example of this is in the Virgin Galactic technology (as much about getting fuel efficient aircraft in the sky as offering space adventures). Another example might be making an increased virtue of locally sourced food - at some point it simply might become cheaper to source some foods this way.
Another thing that jumped out at me was the sentence in the second article, “…there is evidence that despite their focus on value, consumers are also demanding quality service.” As we know, it was ever thus but the challenge (especially for smaller operators in whatever sector) is to deliver this top level of service from a decreasing pool of money.
This second article is also interesting as it suggests that it is possible to retain customers through a judicious blend of customer service, products and value for money and cites John Lewis and Amazon as examples of this. In other words, the current climate does not mean an automatic race to the bottom - you can compromise in some areas but not all areas if you want to survive.
The final article is Supermarket chief identifies ‘Northern Rock effect’ and I include it because it is a great article of how good customer insight can keep your business a success. For me, the killer paragraphs were:
- “Lucy Neville-Rolfe, Tesco’s executive director of corporate and legal affairs, said that findings from its regular customer research changed ‘almost on the day’ Northern Rock’s problems emerged in September, which led to a run on the bank.
- Since then, Tesco has witnessed a shift away from sandwiches and ready meals, as more consumers make meals from scratch.
- The supermarket’s Value line has also recorded a ‘big uplift’ and there has been keener interest and awareness of promotions such as its ‘Veg pledge’, which offers five lines of vegetables at half price every week.”
Being an habitué of Tesco, I can recall that recently their whole sales strategy seemed to literally change overnight to catch the new mood of the public - out went the expensive wine promotions and in came the ‘value you can trust’ own products. They haven’t gone down market in most respects (their service is still good as ever for example) but they acted on their information to tell them how to realign and keep their customers coming in a changed market.
So what?
Seeing that there are changes in one sector and making the leap to say they will affect another sector in the same or similar way is asking for trouble. Life doesn’t work like that and, just because people are buying own brand supermarket product doesn’t mean that their travel plans will change in the same way.
However, I do believe that these reports give us a clue about the changed mindset of the travel industry customers. In a sentence, I think we are looking at a period of lower prices, good service and some jettisoning of indulgences. Money will need to be stretched to deliver better value and people will make a mental calculation between the cost of saving the planet and the cost of accommodation. On the more positive side though, those that really understand their customers are going to come though this even stronger.
This entry was posted on Thursday, July 17th, 2008 at 10:59 am and is filed under Future trends, Opinion, Space tourism. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.