Migros-Genossenschafts-Bund

1888–2003

Migros-Genossenschafts-Bund (also known as Federation of Migro Cooperatives) is Switzerland's leading retailers and one of the top retailing concerns in Europe. As it name implies, Migros operates through 12 cooperative groups with some 580 supermarkets located throughout Switzerland. Migros supermarket offering is distinguished by a heavy reliance on private-label goods. More than 95 percent of the items on the company's shelves come from its own brands, and many of which are manufactured by the company itself. The company also operates supermarkets in Austria, and to a lesser extent in France. In addition to its primary Migros supermarket brand, the company operates a number of other retail formats, including Do It+ Garden Migros; Micasa; Migros Melectronics; OBI and SportXX. The company also controls the Globus department store group, which includes 11 Globus department stores, the Oviesse clothing store chain, Interio, and Office World. Migros has long been a diversified group, and includes its own newspaper publishing and printing wing, with titles including Bruckenbauer and Construire. The company's Hotelplan subsidiary is a European leader in the travel and accommodations industry, through such subsidiaries as Hotelplan, Belair, Dornbierer Reisen, Esco, Interhome, Royal Tours, and others. Migros's cultural/social/entertainment division operates a number of subsidiaries, including Eurocentres, FitnessPark, Golfpark, Migros Kulturprozent and Monte Generoso. Founded by Gottlieb Duttwiller in 1925, Migros converted to a cooperative structure in the early 1940s. The company remains controlled by its owner-shareholders, who have a strong degree of influence over corporate decisions. The company employs nearly 82,000 people. In 2003, the company posted sales of CHF 83.15 billion ($16.02 billion).

Breaking the Mold in the 1920s

Born in 1888, Gottlieb Duttwiller started his professional career as an apprentice at the wholesale trading firm of Pfister & Sigg. Duttwiller later became a partner in the business, which took the name of Sigg & Duttwiller. Working as a wholesaler gave Duttwiller an insight into the pressures facing Switzerland's small grocers at the time. More or less forced to make their purchases through wholesalers and other intermediaries, grocers struggled to earn a profit on their sales.

The reliance on intermediaries brought other problems: the often long delivery times meant that products lacked freshness. The traditional system of weighing out and packaging individual purchases, which varied widely in size, was also judged by Duttwiller to be inefficient and time-consuming. Stores were also required to purchase and maintain relatively expensive weighing and packaging equipment, which further cut into store profits.

Duttwiller began developing an idea for a new retail model for Switzerland. In 1923, after the Sigg & Duttwiller partnership wound down, Duttwiller and wife Adèle moved to Brazil in order to manage a coffee plantation. Within a year, however, the couple had abandoned that effort and returned to Switzerland.

Duttwiller now decided to put his retail model to the test. Together with a group of four friends, Duttwiller founded a new company, Migros SA (formed from the prefix "mi", meaning 'half' and the word "gros" meaning 'wholesale'). Duttwiller put up 100,000 Swiss francs in order to purchase five Fort T delivery vans, which were converted into mobile stores. The stores featured a limited range of goods--coffee, rice, pasta, coconut oil, soap and sugar--which Duttwiller purchased in bulk and stored in his own warehouse. Goods were then packaged in standard measurements, eliminating the need to weigh and package goods in the stores.

The Migros stores first took to the streets of Zurich in August 1925. With prices as much as 40 percent lower than competitors, the mobile stores quickly attracted a strong clientele. Yet Migros also attracted a number of powerful enemies--including retailers, wholesalers and food manufacturers. By 1926, the local government joined the battle against Migros, raising taxes on mobile stores by 500 percent.

In response, Migros opened its first fixed-site store that same year. The larger premises enabled the company to raise the number of goods sold, to nearly 50 products. One feature that was to remain a company hallmark throughout the century was its refusal to sell tobacco and alcohol product. Another feature of the early Migros store model was the use of rounded pricing, rather than rounded measurements, which made making change easier for store clerks.

The Migros stores first took to the streets of Zurich in August 1925.

1928–1949

Duttwiller had meanwhile begun planning to expand the Migros concept beyond Zurich, setting his sights on Aargau. When that city moved to ban the use of mobile stores, Migros instead opened its second fixed-site store that year.

Continued pressure from wholesalers and manufacturers, which instituted a boycott against Migros, provided a new phase in the company's growth. In 1928, Migros bought up Alkoholfreie Weine AG Meilen, which was renamed as Produktion AG Meilen, and which provided the company with its first entry into food manufacturing. The company was now equipped to provide for its own product need, and Migros' quickly expanded its production capacity. The company also adopted a policy of featuring primarily its own label products--by the turn of the century, private label products represented some 95 percent of the group's sales.

Converting to Cooperative in the 1940s

Migros continued its expansion, entering Bern, Basle and Lucerne in 1930. By 1932, the company had opened stores in western Switzerland as well, giving it a presence in all of the Switzerland's regions. Migros began opening a larger number of stores over the next year. Yet the company once again faced government-backed pressure, with the passage of a ban on branch store openings in 1933. The inclusion of a retroactivity clause forced Migros to close four of its newest stores.

Duttwiller found a way around the branch store ban in 1937, when he formed a new company, Waren-Giro-Genossenschaft. The new company grouped 30 independent retailers, who agreed to sell Migros products. Four years later, Duttwiller, who had no children, went a step further. In 1941, Migros was converted into a group of nine regional cooperatives, under the umbrella organization Migros Genossenschafts Bund (or Federation of Migros Cooperatives). The company's customers were granted the right to acquire membership in the cooperative, at CHF 30 per share. At its start, the company already boasted more than 75,000 paid members.

By then, Migros had entered publishing, launching the Italian-language weekly newspaper, Azione, in 1938. In 1942, the company introduced a German-language weekly, Wir Bruckenbauer. This newspaper became the company's flagship, espousing Duttwiller's views concerning 'social capitalism.' An offshoot of this company philosophy was the creation of the Migros Club Schools, which offered adult education programs in a variety of subjects, in 1944. In that year, the company launched a French-language weekly, originally called Le Pionnier Migros, and then renamed as Construire in 1947.

The company's acquisition of a canning factory, Konservenfabrik Tobler & Co, in 1945 enabled the company to skirt new boycotts. Yet opposition to the company's retail model remained strong. The opening of the company's 11th regional cooperative in Geneva in 1945, for example, was greeted with anti-Migro demonstrations. Nonetheless, Migros by then had succeeded in winning strong support from a growing number of shoppers--and Migros members--and in 1946 the ban on branch store openings was repealed. The company immediately expanded, adding 19 new stores, as well as 10 new mobile shops.

In 1948, Migros became one of the first in Europe to test the relatively new self-service supermarket concept that had been introduced in the United States. While Duttwiller himself remained skeptical of the new retailing model, he agreed to open the company's first self-service store in Zurich in 1949. The store was an instant success, and before long Migros began converting its other stores into modern, self-service supermarkets.

1950–1989

Expansion and Diversification in the 1950s

Migros rapidly expanded its supermarket concept in the 1950s. The larger self-service format enabled the company to expand the range of goods sold in its stores, and in 1950 Migros began offering non-food items for the first time. In 1952, the company expanded the supermarket format again, launching the first Migros Markts (MM) in Basle and Zurich. These stores featured in-house butcher and flower shops, as well as a restaurant.

Migros also expanded its network of production facilities, acquiring baked goods manufacturer Saverma, soap and perfume producer Rumpf, and the Birrfeld bakery in 1951. The following year, Migros added an interest in book club Ex Libris, which expanded in 1952 with a record club, Grammoklub Ex Libris. Migros also ventured into fuel oil, launching Migrol, which acquired its first gas station in 1954. Two years later, Migros opened a new conserves plant, Conserves Estavayer, for canned peas and dairy products. This was followed by the acquisition of Riseria Curti, in Taverne, then the largest rice mill in the country, in 1957. Migros also made its first attempt to export its mobile retail concept during the 1950s, launching Migros Turk in Istanbul in 1954.

Migros growing clout in Switzerland's retail sector, and in the country's overall economy, was underscored by its entry into the banking and insurance markets. The company established Migros Bank in 1957, followed by the launch of automobile insurance group Secura AG, in 1959. Closer to its retail base was the construction of the group's own meat processing facility, Micarna, in 1960.

By the time Gottlieb Duttwiller died in 1962, Migros already represented one of Switzerland's major retail groups, with sales topping CHF 1 billion. Less than five years later, the group's sales, spurred by the buoyant economy of the period, had already doubled. By then, the company's network included nearly 450 stores, as well as 134 mobile stores. The mobile stores remained in operation until 1976. By then, the company had already introduced its latest large-scale retail concept, the MMM department store, the first of which had opened in 1970.

Migros decided to withdraw from the Migros Turk operation in 1975 after that company proved unwilling to convert to cooperative status. Migros then entered a long period of relatively conservative growth, as members--now numbering more than one million--voted against further international expansion.

Instead, Migros focused on further expansion and diversification. In 1977, the company moved into the life insurance market, then added health insurance products two years later. In the mid-1980s, the group launched its own computer software subsidiary, M-Informatic. Hotels and tourism, through the Hotelplan subsidiary, were also fast-growing segments of the group, which posted sales of more than CHF 10 billion in 1984. In 1989, the company acquired Interhome AG, the world's largest holiday home broker.

International Outlook for the New Century

1990–2004

By 1990, Migros' sales had topped CHF 15 billion. The company now represented some 16 percent of Switzerland's total retail market. Migros, by then with more than 530 stores, began to recognize that its further expansion within Switzerland appeared limited. In 1990, therefore, permission was granted to Migros cooperatives operating near the country's borders to open stores in their neighboring foreign markets. France was a natural market for the company. Yet, because another company already owned the Migros name in France, the Swiss group's expansion there faced a major obstacle. Nonetheless, the company opened an MMM department store in France's Val Thoiry in 1993, followed by a second MMM store in Etrembieres in 1994.

In 1993, Migros entered the Austrian supermarket sector, forming a joint-venture with Konsum Osterreich to acquire the 112 store Familia supermarket chain from the Zumtobel Group. Migros' share of the joint venture stood at 75 percent. The stores, later converted to the Metro name, provided an outlet for a rapidly growing parallel market for the company--private label products. In 1994, the company entered Germany as well, aded a store in Lorrach.

In addition to supplying its own stores with a wide range of products, Migros began supplying its own-label products to smaller, primarily independent grocers. By the early 1990s, Migros had already signed up nearly 60 grocers, who agreed to buy a minimum of 80 percent of their products from Migros. The company's success as a private label supplier led it to develop this activity further. By the late 1990s, this activity had become one of the group's most international, with supply contracts to Belgium and Holland, as well as the United Kingdom, starting in 1997.

That year market the company's largest acquisition--and the largest-ever among Switzerland's retailer--when Migros paid CHF 200 million to acquire the Globus department store group. That company, founded in the late 19th century, added 11 large-scale department stores to Migros' retail portfolio.

Into the new century, Migros continued to seek out new growth opportunities. With its leadership position in Switzerland protected--in part because the country's high real estate prices made such large-scale competitors as Wal-Mart and Carrefour wary of entering the market--Migros turned to a new--if virtual--market. In 2003, the company announced its joint-venture agreement with Swiss online grocer LeShop to launch Switzerland's largest online retail supermarket. That project got off the ground in 2004, with the launch of the Migros online shop featuring a range of some 6,000 products. With more than 75 years of success, Migros had become a true retailing institution in Switzerland.