As Coop shows in the race with Migros
Coop is better positioned in its core business with specialist and supermarkets. In the department store business, the retailer defies the downward trend.
The latest business figures from Coop show little of the currently difficult market situation in the retail sector. A cheerful Joos Sutter, Managing Director of Coop since 2011, announced last year’s result in Muttenz yesterday: The Coop Group generated a profit of CHF 531 million in 2019. This is an increase of CHF 58 million compared to the previous year (plus 12 percent). However, special effects due to lower provisions also played a role. Without these, the profit would only have increased by CHF 11 million. Coop already published sales of CHF 30.7 billion in January.
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In the race against the main competitor Migros, Coop should again be a bit ahead. Migros will not communicate its winning numbers until March. However, with sales of CHF 28.7 billion, it still lags behind Coop. Migros also had to contend with shrinking sales, particularly in its core business with specialist and supermarkets. Coop, on the other hand, also saw slight growth in the retail business overall, by 1.4 percent to CHF 18 billion. Coop is also ahead of Migros in online business. At Coop, online sales grew 16.3 percent to 2.6 billion. At Migros it is 2.3 billion.
Customer frequency has increased by 2.5 percent
The high profit does not hide the fact that the turnover of the entire Coop Group remained practically at the previous year’s level. The growth in the retail trade, in which Coop was able to increase by 1.9 percent in 2018, slowed down in the past year. “More and more market players are fighting for a short cake,” said Sutter. “The retail trade had a difficult year due to factors such as shopping tourism. In this environment, Coop has nevertheless managed to assert itself. » The company also wins customers. In 2019, the frequency increased by 2.5 percent.
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The wholesale division contributed to the slight growth. Sales there rose by 2.5 percent to CHF 14.1 billion. “Our strategy of focusing on these two segments has proven itself,” said Sutter. The wholesale trade includes production companies such as the Bell Food Group and the Transgourmet Group, which supplies large customers from the catering and commercial sectors. The Transgourmet Group operates in Germany, Poland, Romania, Russia, France, Austria and Switzerland.
Yesterday, the performance of the Coop City department store was also of particular interest. Because last year there was a lot of rumbling at the Swiss department stores: Migros sells the traditional Globus store to the Austrian René Benko and the Thai Central Group, Manor has closed its flagship store on Zurich’s Bahnhofstrasse and even smaller department stores like Loeb are complaining falling sales for years.
Food as the engine of the Coop City branches
So how is the 31 Coop City branches doing? Sutter’s answer was surprisingly positive: “Coop City was able to gain market share and defies the general downward trend.” For example, the textile business in Switzerland has slumped. In contrast, Coop was able to increase sales of textiles. He believes in Coop City’s success, Sutter said. Therefore, there are absolutely no plans to get out of here. A look at the business figures puts this euphoria into perspective: Overall, sales fell by CHF 0.6 million to CHF 764 million. However, Sutter emphasizes that, after restructuring, there is an increase of 0.4 percent. Among other things, Coop has invested in the St.Annahof branch in Zurich. In 2010, the turnover of the department stores was CHF 949 million.
However, the recent relatively stable sales show that Coop City is slightly better off than other department stores. This is mainly due to the high proportion of food in the branches. Coop thus confirms that the department stores generate around half of their total food sales. Now it can be objected that the other department stores also rely on food in their branches. However, these often move in a higher price segment – above all Globus – and attract fewer customers to shop regularly on a weekly basis. “Food is a very powerful engine in our department stores,” said Joos Sutter. “Thanks to this, the other areas such as accessories, cosmetics and textiles will also work.”
In the future, Coop City will also benefit from the expected consolidation in the industry. Experts predict that Globus buyer René Benko will close smaller branches. Coop City is already benefiting from the closure of the Manor branch in Zurich: “It wasn’t much in January, but now we’re feeling the closure.”