New supermarket company: Migros remains vague

Planning for the new centralized Migros Supermarkt AG begins on Monday. The Migros management team explained its intentions at a media conference - but hardly anything concrete came out of it.

In essence, Migros wants to streamline administration and become more efficient by centralizing its supermarkets. And all this, of course, for the customers, as the leadership repeatedly emphasized to the media on Friday. "Our goal is to offer the best price-performance, this has become increasingly difficult in recent years," said the head of the Migros Cooperative Federation MGB, Mario Irminger.

In the meantime, Migros has been left behind by its competitors - and the management team let this slip: "Migros has lost market share and lost effectiveness," said Irminger. And perhaps it was "partly in its own way," admitted the CEO, who has been in office since May.

One reason for this is the complicated organization. Even if the "federalist" organization has its advantages, "it sometimes happens that Migros is smiled at a bit because it is so complicated," Migros President Ursula Nold admitted.

Centralization and downsized management

Migros therefore agreed that it could not continue in its old form. The management got its act together and examined the options. However, those responsible rejected a move away from the regional cooperatives. "The merger of the regional companies would be an economic possibility, but there is no majority in the federally organized Migros," emphasized Irminger.

The decision to reorganize, which was already taken in May, is therefore as follows: The supermarket business, which was previously organized by the ten regional cooperatives on their own, will be brought together under one roof. This new Migros Supermarkt AG (MSM) will become a subsidiary of the MGB with its headquarters at Limmatplatz in Zurich, where the MGB is also at home.

The board of directors of the new Migros subsidiary includes five representatives of the regional cooperatives of Lucerne, Eastern Switzerland, Aare, Valais and Ticino, as well as two representatives of the MGB, Migros CEO Irminger and Hubert Weber. According to those responsible, MSM is 70 percent owned by the regional cooperatives and 30 percent by the MGB.

In addition, the MGB management, i.e. the Migros Board of Directors, will be reduced from 23 to 14 members. Among other things, the cooperatives represented in the MSM will be removed from the MGB Board. This means that in future, instead of ten regional cooperatives, only five will be represented: Neuchâtel-Fribourg, Basel, Vaud, Geneva and, above all, the powerful cooperative in Zurich, which has by far the highest turnover.

Cooperatives have worked out responsibilities

The Migros management emphasized that the cooperatives had agreed among themselves who would sit on the MGB board and who would sit on the MSM board. "It is also important that a large cooperative continues to be represented in the MGB," said MGB President Ursula Nold in response to criticism from various quarters that the important Zurich cooperative is not represented at all in the new supermarket company.

As announced on Thursday, Peter Diethelm, former head of Migros Genossenschaft Ostschweiz, will take over the management of the new supermarket subsidiary. He will start planning the new supermarket AG as early as next Monday. As of the new year, the first employees will transfer from MBG to MSM, first the 700 employees of the marketing department. Central tasks such as marketing will then be managed from the new organization, as will logistics, for example.

There was ironclad silence on the specific effects on costs. Diethelm said, however, that he himself had a precise list of the potential cost savings if the reorganization succeeded. He did not give exact figures.

Diethelm said only this much: "In the medium term, MGB is targeting a reasonable EBIT margin of 2.5 percent, which is standard for the industry." By comparison, Migros' EBIT margin in 2022 was 2.1 percent. "But it's not just about cutting costs anyway, it's also about gaining market share and sales," Diethelm said.

Job cuts not ruled out

The Migros management team also refused to be drawn on any concrete statements regarding possible job cuts. "We can't elaborate on that at the moment," said Migros CEO Irminger, but conceded that there could be "selective changes." However, Migros will take a "very social" approach to any layoffs.

But he also stressed that currently there is not simply a shortage of skilled workers, but also a general shortage of labor. "We currently have over 2,000 vacancies that we cannot fill," he said. (SDA)

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