Migros

Migros

Type	Cooperative
Industry	Retail
Founded	1925 (1925)
Headquarters	Zürich, Switzerland
Key people	Gottlieb Duttweiler, founder
Products	Supermarkets, food industry, petrol, electronics, books, home-wares, etc.
Revenue	26.73 billion CHF (2013)
Operating income	770 million CHF (2013)
Number of employees	94'276 (2013)
Website	www.migros.ch

Migros headquarters in Zurich.

Migros (German pronunciation: [ˈmiɡro]) is Switzerland's largest retail company, its largest supermarket chain and largest employer. It is also one of the forty largest retailers in the world. It is structured in the form of a cooperative society, with more than two millions of members.

It co-founded Turkey's largest retailer, Migros Türk, which became independent of Migros Switzerland in 1975.

The name comes from the French "mi" for half or mid-way and "gros", which means wholesale. Thus the word connotes prices that are halfway between retail and wholesale. The logo of the company is a large orange M, which some Swiss newspapers call "the orange giant" (German: oranger Riese, French: géant orange, Italian: gigante arancio).

History

Migros was founded in 1925 in Zürich as a private enterprise by Gottlieb Duttweiler, who had the idea of selling just six basic foodstuffs at low prices to householders who, in those days, did not have ready access to markets of any kind. At first he sold only coffee, rice, sugar, noodles, coconut oil and soap from lorries that went from one village or hamlet to another. The strategy to cut the intermediate trade and their margins led to the broad resistance of his competitors who goaded the producers to boycott him. As a reaction to this threat, Migros started creating its own line of goods beginning with meat, milk and chocolate. Later he and his drivers expanded their inventory and in 1926 Duttweiler built his first market, also in Zürich. His second store, in Ticino, presaged the future as it was founded as a cooperative. By 1941 the energetic entrepreneur had built a number of markets but in that year he basically gave the business to his customers by transforming everything from his privately owned enterprises into regional cooperatives, headed by the Federation of Migros Cooperatives (German: Migros-Genossenschafts-Bund, French: Fédération des coopératives Migros, Italian: Federazione delle cooperative Migros).

As early as 1935, Duttweiler showed his zest for expansion by founding the Hotelplan travel agency. Later the Migros brand was applied to a weekly magazine, Wir Brückenbauer (now known as Migros Magazin) in 1942. Other ventures were restaurants in 1952, gasoline stations (Migrol) in 1954, language schools (Eurocentres) in 1956, a bank (Migros Bank, Banque Migros) in 1957 and an insurance company, 1959.

MS Adele in 1952.

On behalf of the Migros Genossenschafts-Bund, the Zürich-based Reederei Zürich AG ordered at the H. C. Stülcken Sohn shipyard in Hamburg, Germany, the cargo ship Adele which was launched in Hamburg on 15 July 1952; the ship was christened by Adele Duttweiler, the wife of Gottlieb Duttweiler.^[1]

In 1954, Migros entered the Turkish market, forming Migros Türk in partnership with the Istanbul City Council. This was sold to the Turkish conglomerate Koç Holding in 1975 and is the largest retailer in Turkey. Between 2008 and 2011, Koç Holding sold most of its shares of Migros Türk to BC Partners.

Migros opened its first foreign supermarket in the frontier region of France, in Thoiry, in 1993, and its first recreation park, Säntispark, at Abtwil in St. Gallen, in 1986.

In October 2012, Migros expanded in the German market by acquiring the Hessian food store chain Tegut. In the same year, Migros opened the first Swiss store of German organic supermarket chain Alnatura.^[2] In 2013, however, the company announced the sale, effective October 2013, to the REWE retailing group of its four Migros branded stores in Germany, which it had established in 1995 (Lörrach) and subsequently.^[3]

Philosophy

Gottlieb Duttweiler was concerned by the health of his customers and decided that Migros would not sell any alcoholic beverages nor any tobacco.^[4] It is still the case today; although Denner, owned by the Migros group, does sell alcoholic beverages and cigarettes.

Here is a summary of some characteristics of Migros and its "responsible" philosophy:^[5]

• Does not sell any alcoholic beverages nor any tobacco;
• Does not pay any dividend;
• If the earnings before interest and taxes (EBIT) reaches 5%, the supermarkets have to lower their prices;
• Organised as a cooperative (federation of regional cooperatives), with more than two millions of shareholding members;
• Every adult living in Switzerland can become a member (receive a share for free) and vote at the general assembly;
• Uses 1% of its revenue to social and cultural projects.

Adèle and Gottlieb Duttweiler also wrote their "fifteen theses" (1950) which, without being legally binding, are a ethical heritage of Migros. It contains values and guidance such as a goal of "serving the community", "The general principle that we profess is to place people at the center of the economy" and "The general interest will be placed higher than the interests of the Migros cooperatives".^[6]

Migros today

The front of a Migros store in the Metalli shopping centre Zug, Switzerland.

To this day, Migros keeps the cooperative society as its form of organisation. Nowadays, a large part of the Swiss population are members of the Migros cooperative – around 2 million of Switzerland's total population of 7.2 million,^[7][8] thus making Migros a supermarket chain that is owned by its customers. More than 90% of the assortment of goods is produced by ninety subsidiaries of Migros.

Reflecting the altruism of its founder, Migros operates a number of evening schools for working adults, featuring classes in cooking, languages and other subjects. It has obligated itself to spend one percent of its annual turnover for financing cultural projects in a broad sense; the sub-organisation taking care of this is called Migros Kulturprozent^[9] ("cultural percent"). In 2011, an amount of 117 million Swiss francs was paid to finance this purpose. An example of the Kulturprozent's activity is its own record label Musiques Suisses often featuring little-known works from Swiss music history.

The supermarkets are categorized in the three size classes of M, MM and MMM. The firm's loyalty card is the M-cumulus card (a play on the word accumulate and a type of cloud formation).

Migros acquired some notoriety in 1977 when it fired its severest internal critic, Hans A. Pestalozzi.

M-Budget and Migros Sélection

A chocolate (Frey) aisle in a branch of Migros in Interlaken. The M-Budget chocolate is just visible on the bottom shelf.

In 1996, influenced by the budget ranges in supermarket chains in Australia,^[10] Migros made their budget range called M-Budget with seventy products aimed at those with low incomes and large families. Now it has grown to 330 products including mountain bikes, snowboards, mp3 players, milk chocolate, jeans, shoes and lighters. M-Budget products have a standardized packaging colour scheme, consisting of a grass green background with the Migros logo in small white text repeated over it.

Many of these products are produced in limited quantities rather than as an integral, permanent part of the Migros line. Whether they become permanent depends on their success. This, combined with the considerable brand recognition that Migros enjoys, conveys a certain amount of desirability to the rarer products. As a result, M-Budget items will sometimes be considered collectibles, as it is not always sure that they will ever be produced again.

To promote the range, in the early 2000s (decade), Migros developed M-Budget Party with tickets costing 9.90 CHF including free non-alcoholic drinks (cola, lemonade and orange juice) and snacks (crisps, chocolate and cakes).

In 2005, together with Swisscom, Migros launched M-Budget Mobile, a pay-as-you-go MVNO mobile virtual network operator.

Also in 2005, Migros introduced a premium line called Migros sélection, featuring for the most part food products typically associated with higher budgets and prepared in different fashions than is available through general stock. Sélection products also have their distinctive packaging, with pearl white and gold colour schemes.

In April 2006, Migros announced the M-Budget credit card, an initiative between the Federation of Migros Cooperatives, GE Money Bank and MasterCard, originally with an annual rate of CHF 4.40, which is low compared to credit card annual rates of CHF 100 for a MigrosBank MasterCard Argent credit card. The card was ready by the autumn 2006. After Coop, the biggest competitor of Migros, announced a credit card without any annual rate, Migros scrapped its annual charge. Migros later announced the full details of the credit card, it will have an APR of 9.9% and the ability to gain cumulus points (1 point per 2 francs).

Companies

French version of the Migros Bank logo.

The headquarters of Frey, the chocolate manufacturer of Migros, in Buchs.

M-Industry

A large part of the products sold in the Migros supermarkets are produced by its own companies (M-Industry), mostly in Switzerland.^[11] In 2013, M-Industry comprises 20 companies, 17 of which are in Switzerland, and produce more than 20'000 products for the Migros supermarkets.^[11]

M-Industry companies include:

Globus group

Globus Group (became part of Migros in 1997):

• Interio: furniture stores
• Globus: top-of-the-range department stores
• Globus Herren: menswear stores
• Office World: office supplies (not the British Office Worlds, owned by Staples)
• Globi: a cartoon character who is mascot of the Globus Group, often referred to as Switzerland's Mickey Mouse.

Subito

After some time, as their main competitor Coop, Migros also followed the idea of self-service checkout.^[12]

Competitors

Migros's main competitor, Coop (Switzerland's second-largest supermarket chain), also has a cooperative structure like Migros, but with a more centralized organization.^[13] Smaller competitors include the Manor department-store chain, and more recently Aldi. Aldi, a very large supermarket group internationally, opened its first Swiss shops in 2005, and thus operates just a few branches as of 2015. However, it is expected that Aldi will become one of the major competitors of both Migros and Coop, as it has succeeded in establishing supermarket chains in other countries under heavy pressure through an aggressive discount strategy. A further competitor, Lidl, established its first Swiss supermarkets in March 2009.^[14]

In January 2007 Migros acquired 70 per cent Denner's shares, effectively merging the largest and third-largest food retail chains in Switzerland. According to both companies, the move took place in order for the Denner chain to better compete with increasing foreign competition.^[15]

Criticism

Some critics like Sorgim, a Swiss non-profit organization (its name is Migros backwards), claim that Migros has lost touch with its founder's ideals. They say that the cooperative is not governed democratically by its members as it was once envisioned by Gottlieb Duttweiler. It is argued that instead, through various amendments to the by-laws, it is now the executive board that decides over all major business matters and policies.^[16]

See also

• List of supermarket chains in Switzerland
• Adele Duttweiler
• Gottlieb Duttweiler
• Park im Grüene

Notes and references

External links

Wikimedia Commons has media related to Migros.

• Migros Switzerland website (in German, French & Italian)
• Migros Germany website (in German)
• Migros Sélection website (in German, French & Italian)
• Sorgim's website