And now, after all! For over 15 years, Migros defied all the textbooks on strategy and selling. It threw all modern management insights to the wind. One was already starting to doubt the internationally established management models and studies. But now came the reality check, and because it was years too late, it turned out correspondingly harsh. 1,500 jobs are being cut and, as a first step, four brands are being sold: Hotelplan, Mibelle, Melectronics and SportX. That it mainly hits the specialist stores comes as no surprise. In recent years, these had stood out for failing to differentiate themselves and losing more and more weight against the online providers. It doesn’t take much imagination to see that other specialist stores will soon be up for sale too. A similar development will certainly soon emerge at Coop as well. Here you can find the background information. What does this mean for the future of Swiss retail?
To answer this question, several levels need to be considered. The sale of the specialist stores — if buyers are found at all — will push the door to Swiss retail open even further for international providers. Since the core business of Migros and Coop is also completely out of step with the times, the pressure on both players will increase. For retail as a whole, even more emphasis will be placed on costs and efficiency. Better advice, better customer data and digital value-added services move even further into the distance. As a result, the frenzy of promotions around pricing will reach new heights, and customers will continue to be conditioned to focus above all on price.
And what does this development mean for competition? The remaining mid-sized players will have it even harder. But local online retailers will also come under further pressure. After all, the specialist stores of Coop and Migros were ‘sacrificial cows’ from which market share could be taken away year after year, piece by piece, without much resistance. With new international market entrants, that will certainly become more challenging. For employees in the retail sector, things will very probably become even more uncomfortable. Against the backdrop of current working conditions, that’s actually hard to imagine. But in the red ocean of Swiss retail, only those who rigorously keep costs under control will survive. Further training, the strengthening of digital sales competencies and a transformation will not happen for now. The margins are, relatively speaking, still high, but the market far too small.
Is there any hope at all? If you look at Globus, optimism shrinks. Sold to an entrepreneur who can be placed rather on the sporty side of company management, it is likely to become difficult to sell off all the unprofitable specialist stores and concepts. But the young wild ones in the Swiss start-up scene also tend to bet on the 1,000th niche online shop for dog shavers, instead of engaging holistically with the future of retail. The smokescreens of the industry associations and academics, who for years saw the future in value-free shoppingtainment, pour even more oil on the already blazing fire. Yet the answer to the challenge is quite simple. Switzerland, as a high-wage country, can only be successful with premium concepts. It has become clear that the retail concepts of the future must work throughout Europe. So it’s rather ‘cute’ to see that Migros is thinking about a better steering structure in the Swiss market and is selling Mibelle because it is too internationally oriented. With this statement, one inevitably thinks of the established management models and again runs the risk of believing that Migros knows better.
So what does the solution look like? It is the combination of log-in, customer data, IT competency and personal, data-driven customer advice. Retail should be understood as a convenience club in which every customer is guided through the infinite jungle of products and can optimally satisfy their prestige needs. This requires the clarity to only let people into the stores who log in and store a profile. Retail is no longer logistics, but trustworthy advice with clear added value. As with a stadium visit and in e-commerce, only those who register get in. This is based on powerful IT systems that support the salesperson in making highly personalised suggestions to the customer. Imagine that you don’t just buy a bra, but that, in a secluded atmosphere, you calmly receive the optimal one tailored to you — for going out, for work and for sport or the Netflix evening. Here it’s no longer about floor space and warehouses. Here, customer data, advisory quality and empathy take centre stage. Digitalisation and automation can take over a great deal. The concepts would also work abroad, and the ocean would miraculously turn blue.
It would actually be so simple. But neither does the start-up scene take up these topics, nor do existing online pure players recognise how vulnerable bricks-and-mortar retail actually is. That Migros only recently considered selling alcohol shows how low the awareness of the problem in the leadership must be. So it will very likely get much worse before it gets better again — or before foreign players take over retail. That’s how bleak the future of Swiss retail looks.
