One M smaller: Migros divests several subsidiaries
Published: Friday, Feb 2nd 2024, 15:40
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The "orange giant" is slimming down: the retail group Migros wants to free itself from its complicated structures and become leaner. Several formats no longer fit into the business model - including traditional ones such as Hotelplan.
The travel provider, which has been part of the Group since Duttweiler's time and was recently very profitable, no longer has a place. In addition to Hotelplan, Migros is also giving up its cosmetics and hygiene subsidiary Mibelle and the specialist stores Melectronics and SportX.
Instead, the retail group intends to concentrate on the four core areas of food, non-food, health and Migros Bank, its top management explained at a media conference on Friday.
While the Group is slimming down on the one hand, it is planning investments on the other. Over the next five years, it will be investing around 1.5 billion per year in its core businesses.
Investments in other areas
The money will flow into price reductions, a new store concept and distribution centers for Denner as well as expanded logistics at Digitec Galaxus. The online food range and production are also to be expanded.
"We want and need to bring profitability in our business segments back to an adequate level in order to be able to make investments in the future," said Migros CEO Mario Irminger.
Migros' refocusing comes as no surprise to the Swiss Retail Federation. "In recent years, Migros has become too dispersed and diversified, meaning that it was no longer able to keep up with its best-in-class competitors everywhere with its existing or somewhat adapted structures," the association commented in response to an inquiry from the news agency AWP.
Future of the specialist stores still unclear
It is still unclear what will happen to the sales areas of the sold subsidiaries in the shopping centers if the buyers do not want to take them over. "It is our task to let the space to others," Irminger simply said.
And in addition to SportX and Melectronics, this could soon also become an issue for the sales areas of other specialist stores. After all, the future of Bike World, Do it + Garden, Micasa and Obi is still open. "The Migros specialist stores are not number 1 in any business segment and cannot compensate for the sales generated by online retail," said Irminger.
Therefore, sales are not ruled out for them either. The management intends to make a decision in the middle of the year. In the search for new owners, "all possible interested parties" that are permitted under competition law would generally be considered.
In the industrial sector, too, the sale of Mibelle, which produces products such as cell phone detergent and "I am" products, could mean that the downsizing process is not yet complete. "We are no longer planning any overall disposals, but we cannot rule out the possibility of individual business areas within the companies being sold off," Matthias Wunderlin, Head of Migros Industry, told the media.
It remains to be seen whether growth in the core areas will work as Migros envisions. At the dental subsidiary Bestsmile, for example, Migros has to close 9 out of 36 branches because they have expanded to "unfavorable locations", according to the management.
Unia dismayed by job cuts
Around 1500 full-time positions will fall victim to the redundancy plans. The Group regrets this and wants to make as few employees as possible redundant. Migros emphasized that workers and specialists are in great demand everywhere. In addition, 1400 jobs have been advertised within the Group.
The trade union Unia reacted with dismay: "Unia and its members at Migros are shocked by the scale of the job cuts announced today and call on Migros to do everything in its power to prevent redundancies," it said in a communiqué. As the largest private employer, the company must assume its social responsibility.
Migros was sympathetic in front of the media: "We have great understanding for a phase of uncertainty," emphasized Nold. However, she emphasized: "We are convinced that with the decisions that have been made, both Migros and the units to be divested are optimally prepared for a successful future."
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