Migros wants to compete with discounters by cutting prices
Published: Monday, Oct 28th 2024, 14:20
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Carrots, apples and tomatoes at low prices: Migros wants to defy the discounters and win back customers with price cuts. It accepts that this will reduce its profits.
The management of the struggling retailer with the orange M presented the cornerstones of its new supermarket strategy on Monday. Migros wants to win over customers again with new stores, modernized stores and, above all, lower prices.
This is because customers have increasingly turned to Lidl, Aldi and Co. "Migros has lost massive market share in the supermarkets in the food and retail sectors," Migros CEO Mario Irminger told the media. It now wants to win these back again.
Vegetables and fruit make the start
This is primarily about price. "More quality, more freshness and more service at reasonable prices. This promise is a core concern of Migros," said Migros President Ursula Nold in front of the vegetable counter in the Migros store on Zurich's Limmatplatz, the retailer's headquarters.
What this means in concrete terms can be seen behind her. Large yellow banners with the words "Tiefpreis" (low price) hover above the vegetables. To start with, 60 fruits and vegetables are now being sold at discount prices.
Migros intends to reduce the prices of 1,000 everyday products to "discount level" this year and next, as its management team explains. "There is no longer any reason to go to the discounter," says the head of Supermarkt AG, Peter Diethelm. Even if discounters lower their prices, as Aldi recently did with meat products, Migros will follow suit, he promised.
The Migros management wants to increase the proportion of own brands from the current 78 percent to 80 percent. "We have added many brands in recent years," says Irminger. He does not rule out the possibility that some of these external brands will disappear from the shelves again.
Price reductions have their price
It is clear that this will not come free of charge for Migros. The retailer is investing 500 million francs in the price reductions. "We are also consciously accepting a smaller group profit for this," said the Migros boss.
"We also have these funds available because we have worked hard to divest ourselves of loss-making businesses," he added. Migros is known to have sold or closed loss-making subsidiaries, including the specialist stores Melectronics, SportX and the braces chain Bestsmile. Migros still wants to get rid of other businesses, such as Hotelplan.
The third reason why Migros can afford this transformation is the "efficiency and cost benefits resulting from closer cooperation throughout the Migros Group", Irminger said.
New and revamped stores
However, by far the greater part of the investment - CHF 2 billion - will go towards modernizing 350 stores and building 140 new ones. This will increase the number of Migros supermarkets to 930 in five years' time, said supermarket boss Diethelm.
Irminger and his crew are also hoping to achieve growth and regain market share. With its new concept, Migros wants to pitch its tents primarily in areas where there is no competition in the immediate vicinity and the population is still growing. "This means that Migros will be the nearest supermarket for another 200,000 households," said Diethelm.
Finally, President Nold emphasized that the cooperatives were pulling in the same direction with the new strategy. For example, the renovation of the branches would be managed at national level, but carried out by the regional cooperatives. A return to the DNA, in the spirit of the cooperative founder Gottlieb Duttweiler, according to the President.
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