If you’re looking for a two-week holiday in the Seychelles, the chances are you’re not going to find it in the fresh produce aisle at Tesco’s. Nor will you strike lucky if you head down to Sainsbury’s.
But holidays from the supermarkets are not far off. There are a couple of things simmering away that will have an impact on grocery retailing as well as the travel industry, if they boil over.
Firstly, Tesco is upgrading its Clubcard loyalty scheme, whereby customers spending a certain amount at the checkout will qualify for half price and 75% discounts on a greater range of flights and travel offers. Secondly Wal-Mart, the US owner of UK chain Asda, has just launched a travel service on its Web site. Supermarkets have been using holidays as an incentive to get their customers to spend more for years. It works – everyone wants a few weeks in the sun, wherever they shop.
On February 22, Tesco will be reviewing its loyalty-card offer, five years after its launch. It is in the process of mailing out details to all its Clubcard holders telling them about new holiday and travel partners, which could see as many as 10 more airlines added to the deal, including KLM’s cheaper alternative, Buzz.
Tesco’s news last August that it was to offer its 10m Clubcard holders discounted holidays and air fares, as well as travel on Eurostar, Virgin Trains, KLM and Aer Lingus, was greeted by Sainsbury’s with the cool response that it had been offering holiday and leisure bargains to its 14m cardholders through its partnership with Air Miles since 1996.
Safeway upset its loyalty-card holders when it scrapped its popular ABC Triple Points promotion in September 1998, a scheme which allowed customers to get cash back. The retailer replaced it with a series of cheaper deals including a tie-up with British Midland offering two-for-one travel deals. Shoppers with 1,800 points were able to fly to European destinations from £60 return.
Safeway’s Triple Points scheme was back by popular demand in May last year. And while there aren’t any amazing travel deals with British Midland, Safeway does have one-off promotions with operator Page and Moy, as well as deals with Best Western Hotels.
So the travel deals are already around, but walking into any supermarket and leaving with a weekend break in your trolley is another story. While retail analysts are counting the days when supermarkets start selling holidays and even cars, it’s very doubtful that many of them will give away precious floor space to house their own travel agents. Asda currently has success with agents owned by First Choice, but they are concessions and there are no signs that other supermarkets will follow suit.
And this is where Wal-Mart steps in. Before Christmas it launched a travel service on its Web site. It also boasts Wal-Mart vacation centres in six of its US stores. And even though Asda shelved its loyalty card last August as its rivals were battling it out, a quick browse on the supermarket’s site reveals not only travel insurance, but hotel links to on-line travel operators, including lastminute.com, Bargain Holidays, ebookers and The Hotel Shop.
The UK grocery retailers are getting savvy with the Internet and the non-food sector. Tesco Personal Finance, which includes pensions, insurance, Visa cards, ISAs and personal loans, is now in its third year and customers can check their balances and organise credit card details through the retailer’s Internet site.
Similarly, Sainsbury’s bank, a partnership with the Bank of Scotland, is due to go on-line, following a £15m investment into the company’s new Web site. And with Sir Peter Davis due to take the helm at Sainsbury’s, the man from the Pru could do to the retailer’s Internet presence what he did to Egg, the on-line banking service.
So while home shopping is still in its infancy, more and more people are using the Internet to buy their goods. Testament to this is Tesco’s announcement this week that it will be creating 7,000 jobs with the expansion of its home shopping service.
Offering travel over the Internet on the supermarket’s Web sites is not far away. We know that supermarkets have got all the technology in place to move into the travel industry, as well as the invaluable insight into consumers’ lifestyles they glean from their loyalty-card databases, a possible tool to identify family package holidays. It surely must be just a matter of time before it takes off.
Supermarkets are becoming global players, using their brands as launch pads for a whole host of non-food offers from every industry sector. They’re all becoming ‘one-stop-shops’ as they try to differentiate themselves from their rivals. While they are unlikely to have a physical travel presence in their stores, using the Internet to sell holidays under their own brands is a feasible option. Watch out for Asda and Tesco. These are the ones most likely to make the first plunge into the travel waters. And once they’ve got their feet wet, it will only be a matter of time before the others follow.
Tesco launched its Clubcard loyalty scheme in February 1995 and now boasts 10m Clubcard holders.
Tesco is updating the Clubcard, adding up to 10 new airlines, including KLM subsidiary Buzz.
Under the Clubcard Keyholder promotion, shoppers have to spend £25 to get one key. A total of 25 keys means customers qualify for basic Keyholder status, which leads to half-price discounts. Customers with 50 keys can get reductions of 75% with the Premium Keyholder status.
Existing partnerships with Clubcard include Aer Lingus and KLM, First Choice Holidays, Bridge Travel Services, and Eurotunnel.
Sainsbury’s Reward Card, in partnership with Air Miles, was launched in 1996, and currently has 14m holders.
Reward Cardholders must spend £250 for 250 points to get one reward voucher. Customers can redeem 40 miles per reward voucher.
Promotional Reward Card deals have included discounted holidays from the 1999/2000 brochures of First Choice, British Airways Holidays, Sovereign and Crystal.
Safeway launched its ABC loyalty card in 1995, and now boasts 10m holders.
The supermarket offers one-off promotions with tour operators Page and Moy, as well as holiday deals with Best Western Hotels.
A one-off promotion in October 1998 with Page and Moy, was the highest redeeming family offer.
Asda ditched its loyalty card in 1999.
Its Web site, www.asda.co.uk, includes travel insurance, as well as holidays and flights through links with on-line travel services such as lastminute.com, Bargain Holidays, The Hotel Shop and ebookers.
Wal-Mart launched a travel service on its Web site, www.walmart.com before Christmas 1999. Six of its US stores have Wal-Mart vacation centres.