The Migros headquarters and the regional cooperatives are struggling to reorganize the supermarket business. But the orange giant has to be careful not to get too busy with himself.
It is currently unclear where Migros is headed in its supermarket business.
Migros has a problem with its structures. In their most important business, the supermarkets with the orange M, there is chaos behind the scenes. Customers can’t be indifferent to this: they pay for the inefficient structures at the checkout.
Duplication and wrangling over competence
The difficulties have been known for a long time. The ten regional cooperatives are responsible for running the supermarkets. They are legally independent companies. Especially the self-confident and power-conscious among them, such as the Zurich regional cooperative, often think they know best how things work. If something doesn’t suit them, the headquarters can’t force them to do anything.
At the same time, for a long time now nothing has been done in the supermarket business without the headquarters, the Migros Cooperative Association (MGB). After all, Migros has also recognized that centralization makes business sense. The MGB ensures, for example, that the cash register systems are standardized throughout Switzerland and has also taken on many functions for the rest of the IT. He takes care of 90 percent of the purchase of goods. He organizes parts of the logistics, the nationwide marketing and much more.
Nevertheless, many parallel structures have remained. This creates conflicts and friction losses between the regions and headquarters. And it leads to a bloated apparatus. The costs push up the prices in the Migros supermarkets.
Unrealistic disempowerment of the regions
In principle, it is to be welcomed that Migros now wants to change something about this. The conflict is openly on the table: MGB and regional cooperatives want to clarify in the coming weeks how they want to work together in the supermarket business in the future.
But the devil is in the details. The most convincing solution would be to abolish the regional cooperatives outright – like its competitor Coop did around twenty years ago. With centralization, the structures would be clarified once and for all.
However, this is unrealistic. At Migros, the regional cooperatives cannot be disempowered without ballots in all regions. But the approximately two million members of the cooperative would hardly agree. You didn’t even allow Migros to sell alcohol recently.
Danger of a bad compromise
The Migros managers are therefore faced with squaring the circle. From the outside it is currently not clear how they could solve the problem convincingly.
It is possible that the planned “Supermarkt AG” will amount to a rotten compromise: a little centralization in order to become a little more efficient, and conversely certain competencies for the regions so that they can retain their prerogatives. It may even be possible for the regional cooperatives to take control of the whole thing. Then the already centralized functions would have to be painstakingly removed from the MGB and transferred to the new “Supermarkt AG”.
Too much navel gazing
As a result, Migros should be busy with itself and its messed-up structures for quite some time. Competitors such as Coop, Aldi and Lidl, who like to lure customers away from the orange giant, will be happy about this.
But the customers and members of the Migros cooperative deserve better. The traditional Swiss company still enjoys a remarkably good reputation among the population. All shortcomings and problems seem to miraculously roll off him.
Nevertheless, the self-confident regional managers of Migros and the MGB management staff should not bet on the Swiss people forever forgiving them everything. A Migros is needed that doesn’t concern itself with its own sensitivities, but instead puts itself entirely at the service of its customers.