Marketing professionals fear for Migros

By the end of 2025, Migros wants to reduce the prices of 1,000 everyday consumer products to the lowest possible level. To do this, the retailer intends to spend half a billion francs over the next five years.

On the one hand, the money must come from the sale of loss-making companies. On the other hand, savings. But it is “impossible to express in francs what this represents and where it will come from exactly,” explains a Migros spokesperson. Each company in the group made “a different loss or profit each year”. Migros does not publish the results of each entity.

On the other hand, in order to lower prices for consumers, Migros wants to give up part of its profit. It “knowingly accepts that the group’s profits decline”. Is it true then, when the group’s managing director, Mario Irminger, states in an interview with German-speaking Swiss television that Migros customers have “perhaps partly paid too much” in recent years?

“Migros is not a discounter”

According to Jörg Staudacher, Mario Irmiger is certainly right in his statements. But the retail expert and professor at the Zurich University of Economics is still surprised: “Why did he say that?”

This question arises. Those who shop at Migros know that they also finance social commitment, “Swissness” par excellence and a wide assortment. And for the others for whom Migros was until now too expensive, and still is, they did not pay too much, since they migrated to the competition.

On the other hand, brand expert Thomas Wildberger questions the new price profile on which Migros supermarkets are now banking. Because she is thus embarking on a risky path.

“It’s a little light to just boast that we have lowered prices,” underlines the specialist, who did his sales apprenticeship at Migros and who then launched several image campaigns for the group as than advertising. He is now a partner at the business consulting firm Prophet. “We are entering into unnecessary competition with discounters, because Migros is not a discounter.”

He believes that Migros is right to focus on its core business. “But it would be even better if it focused on its core business since its foundation, good products at favorable prices.” These should not necessarily be cheaper than before or than those of any competitor.

According to him, the main thing is a convincing price-performance ratio. “This is how the customer perceives a product as cheap in the true sense of the word.”

Communication is also criticized

By trying to give itself an image as a discounter, Migros is taking a risk, he indicates. This is also the opinion of retail expert Jörg Staudacher. However, he approaches the issue more from a communications perspective. He considers the press conference at the beginning of the week to be “failed”.

“I didn’t understand who should be concerned.” According to Jörg Staudacher, Migros is unnecessarily educating its customers to pay even more attention to prices. “Why doesn’t Migros just lower its prices without shouting it from the rooftops?”

The advertiser deplores that the launch action certainly presents a brand strategy, but no overall vision. “In other words, we no longer know what we want. I no longer know what Migros stands for.”

Basically, the question of whether a new low-price strategy is the right path for Migros remains open. Almost ten years before the arrival of Aldi and Lidl in Switzerland, Migros successfully launched the M-Budget low-cost line in 1996, which, according to the activity report, was “particularly popular” in 2023.

Regarding M-Budget, the director of the Migros supermarket Peter Diethelm simply says that it will not be abolished. But what will happen to this very popular brand? “M-Budget is a great brand,” says Thomas Wildberger. “It works well and theoretically would have even greater potential.”

It will also be difficult for Migros to offer more of its own products from M-Industrie – under brands such as Micarna, Elsa, Bischoffszell, Jowa or Frey – at very low prices, as it had announced. “We will increase the share of our own products in Migros stores and invest targetedly in their prices and quality,” said Guido Rast, chairman of the board of directors of Migros Supermarché SA, in a press release.

Can the Migros industry further reduce costs?

Asked how to achieve this, the group responds that the Migros industry and Migros Supermarché SA have “a clear requirement to be competitive together”. Many assortments produced by the Migros industry are subject to “Swiss customs protection”, which applies to all distributors.

In other words, M-Industrie’s foodstuffs benefit from the imposition of customs duties on imported products. With regard to other ranges, Migros “constantly examines whether production by Migros-Industrie or that of another manufacturer is more advantageous for it”.

Jörg Staudacher thinks it will be difficult for the Migros industry to keep pace with Aldi and Lidl in the next ten years. “The Migros industry has been reorganized several times in recent years, squeezed to the maximum.” For Aldi and Lidl, “two global groups, it would be child’s play to lower their prices by 30% in Switzerland”.

He considers the slogan “There is definitely no reason to go to the discounter” to be wrong, because it disavows Denner, one of the group’s golden gooses. By seeing the yellow indications on the low prices, customers realize that Migros could also pay more attention to the prices applied in the rest of its assortment.

Questions about the color yellow and customer experience

“When you see a salad with a yellow label indicating a low price, you automatically ask the question: “Where is it cheapest?” In addition, the color yellow is not integrated into the Migros universe, explains the marketing expert. “Why not orange?”

The specialists instead have proposals for moving Migros in another direction. For Jörg Staudacher, for example, it is clear that Migros, instead of practicing a policy of cut prices, should fundamentally reposition itself. “It should move from retailer to maker of better lives. But it won’t work if it continues to play on the price spiral. It should instead offer added values ​​focused on experience and advice.”

“Why neither Migros nor Coop have an app that guides me in stores to where the best foods for me are?” He gives an example. Based on a Migros recipe, a diabetic is shown by the Migros app, via GPS, the path she must follow to find the products that suit her on the shelves.

The added value of digital “convenience”, in the sense of simplifying everyday life, having a positive impact on health, is a trend that Migros and Coop did not see coming. “In Swiss retail, we rely too much on discounts and mechanisms known to the industry and anticipate too little the changes in the lives of customers,” concludes Jörg Staudacher.

After announcing his strategy – glory at low prices – Thomas Wildberger regrets that he lacks “emotional closeness, for the moment totally neglected. Migros still belongs to the people. It should succeed in reawakening this feeling of solidarity, pride and conviviality.”

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