Coop's Swiss agreement with suppliers saves duopoly

Much to Coop Switzerland’s relief, they finally succeeded in offering 700 brands at reduced prices after almost sidelining themselves in the price war with Migros.

Last week, Coop Switzerland posted an emphatic message titled “Enough is enough” on its website, saying Euro-zone multinationals are “exchange rate leeches” as they kept profits from changes in the Euro – Swiss Franc exchange rate for themselves. This web page has recently been deleted, as Coop – just like its competitor Migros – has reached an agreement with these suppliers. 

Coop – Migros: 2-0

Today, a proud ‘Great success!’ features in capitals on the Swiss Coop website, accompanied by logos of international A-brands whose prices have been lowered by 10 to 20 per cent. In two ways Coop defeats rival Migros: Coop boasts 700 articles reduced in price (compared to ‘only’ 500 for Migros) and its price reductions were valid immediately (last Saturday) – as opposed to Migros’s price reductions that only came into force today (Monday). 

Coop’s management will be very relieved with this agreement, as pressure was immense. Its competitor Migros had already succeeded in convincing large suppliers to share its exchange rate gains with their customers in the form of lower prices, whereas Coop had not found such an agreement before last Saturday. As it was very unlikely that Coop’s previous website post inclined its suppliers into being obliging, chances were there that Coop had sidelined itself.

In customers’ and suppliers’ best interests

With this agreement, Coop can claim a major success for its customers. Of the three companies explicitly named in their previous post, only Mars’s articles are already included in the price reductions. L’Oréal and Ferrero, the two others, are not (yet) – but according to rumours there are also negotiations with those two.

As a situation with two dominant retailers is far better for suppliers than one with one predominant chain, it was clear that it was also in the suppliers’ best interest to reach an agreement with Coop. If they have realised other concessions from Coop, it is pretty certain that they will be kept as covert as the Swiss banking secrecy.