Guides costing Michelin 15 million euros a year
Michelin’s tyre business is experiencing strong growth, yet an article published by the Financial Times indicates that the French company’s guide business – which accounts for less than one per cent of Michelin’s total annual sales – is losing more than 15 million euros a year. Cost cutting measures have already been taken as a result of this, including the business unit’s relocation from Paris’ prestigious 7th arrondissement, a stone’s throw from the Hôtel des Invalides, to an address outside the city. Yet the company appears unsure how best to approach the 111-year old institution.
Although Jean-Dominique Senard and Michel Rollier are said to be firm believers in the guide’s power as a Michelin brand marketing tool, last year Michelin hired the services of consultancy firm, Accenture, who warned the Guide Michelin needed to quickly change or risk becoming a relic in the digital age. Accenture also predicted that annual losses would reach 19 million by 2015 should Guide Michelin continue on its current path.
The consultants put forward a new business plan that involved the marketing of profit-making Michelin services to restaurants and hotels included in the guides, yet to-date Guide Michelin has announced no plans for change. This inactivity is perhaps not helped by the fact that a replacement for Jean-Luc Naret, who resigned as Guide Michelin’s editorial director last December, has yet to be announced.