What we can learn from the demise of Thomas Cook

Must Read

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...

GTBank Releases Q3 2019 Unaudited Results, Reports Profit After Tax of ₦146.99 Billion

Key Highlights  Gross Earnings decreased by 3.3% to N326.03bn from N337.27bn in Q3 2018 Profit before Tax increased by...

Owo Arugbo: Ekiti Begins N20,000 Payment To The Elderly As Monthly Stipend For Social Security Scheme

Ekiti State Governor, Dr Kayode Fayemi on Wednesday re-launched the social security Scheme for elderly citizens in the state with,...
- Advertisement -
- Advertisement -

By now you will probably have heard that 178-year-old British travel company Thomas Cook ceased trading recently, stranding 150,000 UK holidaymakers, threatening over 20,000 jobs and challenging the tourism industry around the world. The company’s demise is a salutary reminder that big is not the same as strong when it comes to business and brands.

This was not the first brush with disaster for Thomas Cook. In 2011 the company nearly collapsed but was saved by a last-minute £100 million loan extension. In retrospect, this action simply staved off disaster and added to the debt burden the cost of which the company was already struggling to pay. Since then, the company has been living a hand-to-mouth existence that ended abruptly when talks with investors failed to extend funding.

The inquest into how so a big company could suddenly cease trading has already begun but the conclusions will likely highlight that the company failed to adapt to changing times. Setting aside the short-term impact of Brexit, two major changes combined to change consumer behaviour and undermined the prevalence of the package holiday, as follows.

  1. The rise of the low-cost airline meant that people could easily take short breaks in major cities across Europe, undermining demand for the traditional two week packaged holiday. At the same time, Thomas Cook was challenged to match low-cost airline prices without the same infrastructure or scale.
  2. The advent of the internet meant people could easily put together their own vacation, from finding a destination to booking flights and accommodation. However, this in itself does not mean a lack of desire for specially curated vacations, simply a lack of need for the everyday package holiday. Thomas Cook might have been better off if it had introduced a premium vacation service instead of buying up equally challenged competitors.
Read:  DHL Expands Africa EShop Online Shopping Application To 34 Countries Across Sub Saharan Africa
Read:  Sony & Ebony Life TV Partner To Produce a Series on Dahomey Warriors, Former Kingdom in Benin

Essentially these two changes created a travel ecosystem that debundled the package holiday for many people. It was not a case of one thing or the other but both. Many, like financial analyst David Buik quoted in the New York Times, have suggested that Thomas Cook failed in part because it had too many physical stores. However, as we see with many DTC companies, a physical store can be a strength if it is used to add value to the company’s offer. Where Thomas Cook failed was in not figuring out what its real strengths were compared to cheaper, shorter and do-it-yourself breaks. In 2019, the brand was hugely salient but lacking both meaning and differentiation compared to other vacation providers, proving once again that size is no substitute for relevance.

Read:  Nestlé launches plant-based coffee lattes

However, capable today’s management team, what is clear is that past incumbent were to blame for not evolving the company’s business model to a changing environment which enabled people to easily satisfy their desire for a quick break now over the delayed gratification of a long vacation in several month’s time. Failing to adapt led to the financial death spiral which ultimately led to the company’s demise.

But what do you think? Could Thomas Cook have changed its future for the better?

Please share your thoughts.

Insights from Kantar Millward Brown

- Advertisement -

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

“Best Global Brands 2019” – Mercedes-Benz is once again the world’s most valuable luxury car brand

Mercedes-Benz further increased its brand value and is once again the world's most valuable luxury automotive brand. In the...

Average Prices of Petrol and Cooking Gas drop in September – NBS

The average price per litre paid by consumers for Cooking Gas decreased to N1,976.11 in September 2019 from N2,000.34 in August 2019., according to...

Nestlé reports nine-month sales for 2019, revamps waters business as organic growth slows

Organic growth of 3.7%, with real internal growth (RIG) of 3.0% and pricing of 0.7%. Growth was supported by strong momentum in the...

GTBank Releases Q3 2019 Unaudited Results, Reports Profit before tax of ₦170.7 Billion

Guaranty Trust Bank plc (GTBANK) has released its unaudited financial results for the period ended September 30, 2019, to the Nigerian and London Stock...

More Articles Like This