THE credit crunch is throwing up new business challenges – but it is also creating the chance to reach more customers, say bosses at price comparison website business moneysupermarket.com, which shed more than 100 jobs last year.
The business, which generates most of its revenues by site users clicking through to product providers, warned late last year it is facing a slight dip in profits as the trading environment gets tougher.
Company founder and majority shareholder Simon Nixon of Chester also announced, just before Christmas, he was stepping aside as chief executive to enable others to take on the day-to-day running of the core business.
As pressure increases on household budgets, more and more people are visiting the Flintshire firm’s website to see if they can get their car or home insurance cheaper or make savings on holidays.
In the first six months of 2008, 13.2 million people clicked on to the company’s insurance channel to compare quotes, up a third on the same period last year, while the travel site experienced a massive 54% jump in usage to 27.3 million visitors.
The money business, which has been hit as banks and other lenders have pulled mortgages, loans and other financial products, still managed to increase traffic to its site by 27% to 17.7 million visitors.
Until a year or two back, the money side of moneysupermarket.com had accounted for about 60% of group revenues – that has now fallen back to 40% with fast-growing insurance taking 50% and travel 10%.
Stuart Glendinning, managing director of the money side of the company, said mortgage and loan providers had tightened their lending, although customer demand was holding up and even increasing.
“They do not want to lend, and 2009 is going to be tough, there is no question about it,” he said.
But Mr Glendinning added while 2008 had been “a bit of an annus horribilis” for moneysupermarket’s money division, he was “pretty sure” part of the business will eventually regain its pre-eminent position in terms of revenue generation.
Andy Leadbetter, MD insurance, agreed the year ahead was not going to be easy, but said the credit crunch would make people take a look at their finances and hopefully realise there were massive potential savings to be made.
“I think the outlook for 2009 is positive, but it is going to be challenging. It is going to be a tough year,” said Mr Leadbetter.
“Motor insurance is about as recession-proof product as we have got. And I think house insurance will be a big growth area.”
moneysupermarket.com’s third revenue channel is travel which compares airline, hotel, holiday and car hire prices. Again, it’s a growing part of the business.
Graham Donoghue, MD travel, said: “Travel these days is not so much a luxury, people see it more as a necessity.
“Household budgets will be tighter next year, but people will rather give up a planned conservatory or a Gucci handbag they were thinking of buying than a holiday.
“In 2009 there will be fewer holidays about and prices are going to rise. That means people will be shopping around and hopefully using price comparison sites such as ours.”
Last month the company announced Mr Nixon was stepping aside as chief executive to allow Peter Plumb to take on the role.
Mr Nixon will spend on average one day a week at moneysupermarket.com as executive deputy chairman.
Mr Glendinning said he believed Chester-based Mr Nixon had instilled a culture of entrepreneurship coupled with calculated risk taking in the company which had set the direction for its future development.
The company recently introduced a shopping channel, to which 1,100 retailers have already signed up.
One of the drivers of future growth is expected to be expansion into overseas markets including Germany.
That will be spearheaded by Mr Plumb who joined moneysupermarket.com in November after working for the group as a consultant on international expansion and customer service projects.
The difficulties the company has weathered over the past 12 months are evident in the fact the headcount in the business has fallen from around 675 to 550, through natural wastage and redundancies.
The company has also dropped plans to move its headquarters away from St David’s Park, Ewloe.
The group has said its profits for 2008 were likely to come in at between £48m and £50m, down from £53m in 2007.