Retailers form largest online shopping alliance

Migros and LeShop hope to persuade customers to shop online. migros.ch

Switzerland’s leading retailer, Migros, and the online grocer, LeShop, are to join forces to create the country’s biggest online supermarket.

As of next January, customers will be able to order around 6,000 products online.

LeShop announced it had formed a strategic alliance with Migros, but the two companies will remain independent.

Under the terms of the deal, Migros will act mainly as supplier. The company said there would be no job cuts as a result of the venture.

Together the two firms hope to double online sales to at least SFr50 million ($36 million) a year.

“We believe in the future of Internet shopping for the retail trade,” said Urs Riedener, a senior manager at Migros.

“With this alliance, we are creating favourable conditions for a market breakthrough.”

The new alliance aims to establish a market share of 75 per cent.

Market potential

Migros, which launched its own online operation in 1998, expects sales to reach SFr7 million in 2003.

LeShop, which was set up in 1997 to become Switzerland’s first online grocer, predicts earnings of SFr16 million.

Christian Wanner, LeShop’s chief executive, said combined turnover needed to reach at least SFr50 million a year for the enterprise to break even by 2006.

He said there was considerable market potential, despite modest interest in online shopping in Switzerland.

Online shopping currently accounts for only 0.07 per cent of the country’s retail trade.

At the end of last year, LeShop, which was owned by the Bon appétit Group, was threatened with closure because of poor business prospects.

However, shortly afterwards the company was taken over by ShoppingNet Holding, led by a group of Dutch investors.

swissinfo with agencies