Coop swoops on electronic giant Fust

Fust will be an independent within the Coop group Ex-press

Coop - Switzerland's second largest supermarket - is set to buy Fust, the home electronics chain, from the retailer Jelmoli in an almost billion-franc deal.

The takeover is the latest in a long line of consolidations in an already shrinking retail market.

Despite the deal – which is subject to regulatory approval – it will be business as usual at Fust, the country’s largest seller of household appliances, which will continue trading under its own name.

Coop is also buying Jelmoli’s 80 per cent stake in netto24, dubbed the leading online shop in the non-food area in Switzerland.

It will pay SFr990 million ($806.5 million) to Jelmoli for the entire package.

Coop said none of the nearly 2,000 employees at Fust will lose their jobs as the business will function as an independent subsidiary of the supermarket giant.

Nearly 60 per cent of Swiss households are regular customers of Fust, which had a net turnover of SFr825 million last year.

Consolidation

Marco Strittmatter, an analyst with the Zurich Cantonal Bank, told swissinfo that the deal was par for the course in the consumer-electronics sector in Switzerland.

“It means that the consolidation in this sector is continuing. It was only last year that Jelmoli bought [electronics’ discounter] Eschenmoser and netto24,” Strittmatter said.

As to why such a consolidation was taking place in this sector, Strittmatter said that there were two reasons: cheaper prices and the Germans.

“Whoever buys in bulk can demand better prices from the supplier and then sell them on at a good price to the consumer,” he explained.

“There are also German discounters who want to or have entered the Swiss market [driving prices down]. It’s an uncomfortable time to be an electronic retailer [in Switzerland] and those who get out by selling are doing the likes of Coop a favour, which in turn increases its buying power with suppliers,” Strittmatter added.

The German chain, Saturn, had been interested for some time in a Swiss presence, Strittmatter mentioned, adding that buying Fust would have given it a readymade chain of shops.

Online

As for the competition posed by Swiss online shops in the electronics sector to conventional stores, Strittmatter said that consumers would not buy all their goods online.

“Shops like Fust are very strong when it comes to customer advice and service in person, which is something that an online shop can’t offer and that’s why there will always be ‘bricks and mortar’ shops,” said Strittmatter.

For Jelmoli’s part, the divestments came as no big surprise. The retailer had announced earlier this year that it was looking into selling off parts of its portfolio.

It now seems to be concentrating on its property portfolio. It currently owns and manages prime-location sites on the upmarket rue du Rhone in Geneva and the Bahnhofstrasse in Zurich. Commercial rents at the latter can reach SFr7,000 per square metre.

The future of Jelmoli itself is currently under speculation with rumours of German retailer KarstadtQuelle being interested in acquiring its retail and property divisions.

However, the Swiss retailer is remaining tight-lipped about any potential buyout.

swissinfo, Faryal Mirza

In brief

Coop is number two behind Migros on the Swiss retail market.

Both groups sell a mix of brand names and their own products.

In January Migros announced plans to acquire a 70% stake in the Denner discount chain.

Timeline

1833 Johann Peter Jelmoli-Ciolina opens the first Jelmoli store in Zurich.

1967 Walter Fust opens the first Fust shop in Olten.

1994 Jelmoli buys a majority stake in Fust from its owner.
1994 The German discounter Media Markt opens its first two Swiss branches.

1996 Walter Fust acquires the majority of shares in Jelmoli.

2003 Walter Fust sells most of his shares in Jelmoli to Georg von Opel, the automobile heir.

2006 Jelmoli buys Eschenmoser and netto24; Eschenmoser disappears and becomes Fust.

2007 Jelmoli sells Fust and netto24 to Coop.