Swiss retailers Migros and Coop battle for prestige

 “Mars,
L’Oréal and Ferrero are exchange rate leeches” is Coop
Switzerland’s outspoken opinion on its own website. The message is
the climax of the Swiss price war between Migros and Coop caused by
the strong Swiss Franc. While Migros has announced a wide price
reduction, Coop has declared war on several A-brand multinationals.

For months
already, Coop has been asking its international suppliers to share
their exchange rate gains with Coop(‘s customers) through price
reductions, but to no avail. Coop has decided that “Enough is
enough” and it has announced to delist 95 international branded
articles.

Naming & shaming

The Swiss
cooperative is in such big trouble that it has adopted the naming &
shaming tactics to force its suppliers into compliance. It is
striking that two of the three companies Coop explicitly names on its
website, L’Oréal and Ferrero, did agree to similar price reductions
with Coop’s rivals Migros.

Last Tuesday, 16 August, Migros announced it will lower the price of 500
products as exchange rate changes will be shared with the customers.
This announcement came just one day after Coop’s original complaint
in this matter.

“Hard, but fair”

Now Migros
proudly announced another range of price reductions, with – amongst
others – Nestlé, Beiersdorf, Procter & Gamble and Unilever
joining the agreement. “Hard but fair negotiations with our
partners, with whom we have been cooperating for many years, have now
resulted in price reductions of between 10 and 20 per cent”, as
Migros chairman Herbert Bolliger boasted.

Migros’s
discounter Denner had already announced to lower prices of 50 brands
like Pampers and Gillette (both Procter & Gamble) earlier this
month. PlanetRetail stated Denner itself paid for these price
reductions, partly through a larger parallel import, and claimed that
these price reductions were meant to exercise pressure on suppliers
still unwilling to share exchange rate gains – meaning that Migros
succeeds where Coop fails (so far).

All about prestige

The clash
between the two is all about prestige, as producers have been complaining about Migros’s and Coop’s market power in Switzerland.
While true for smaller and medium sized producers, Coop’s focus on
large multinationals renders this complaint moot. “It is
unacceptable that large international producers, based in the
Euro-zone, keep the exchange rate gains only for themselves” says
Coop’s director of purchase Jürg Peritz, who does not exclude further delistings.