Swiss supermarkets enjoy big margins

Europe's top-grossing grocers Keystone

Leading Swiss retailers Migros and Coop are the most profitable supermarkets in Europe, sparking criticism from price watchdogs.

In 2015, both grossed well above their international counterparts. For Migros, the gross margin was 40.2%; for rival Coop, 29.8%. In 2016, the two grocery giants each had about CHF28 billion ($27.7 billion) in turnover, dwarfing their local competition.

swissinfo.ch

Price watchdogs are keeping an eye on the retailers. Patrick Ducrey, vice director of the Swiss Competition Commission, says that the two supermarkets have a “de facto duopoly”. This means they have more negotiating power when buying products to line their shelves.

“The gross margins are a black box,” Ducrey told the SonntagsZeitung newspaper on Sunday. Both Migros and Coop have explained that producing goods in their own factories helps boost their earnings.

However, the profit margins are much lower than the gross margins. As Coop spokesman Ramón Gander told the newspaper Baselland Zeitung on Monday, “At 1.7%, our profit margin is rather low in comparison to our international counterparts”. This can be attributed in part to Switzerland’s higher wages and retail space rents.

Migros spokeswoman Luzi Weber told Baselland Zeitung that being a cooperative, Migros was not allowed to maximise profits. “We don’t pay dividends to shareholders or bonuses to managers,” Weber said.