Neo-liberalism and its one-sided focus on shareholder value is a thing of the past. The new century indicates the importance of well being and this applies to Swiss retailer Migros' tradition of customer care, offering healthy products for reasonable prices in a socially responsible business annual report model. That is the conviction of Claude Hauser, president of Migros, expressed in the retailer's 2001 annual report.
Elsevier Food International, Vol. 6, Number 1, February 2003
Ava Eschwege

Despite this alleged revitalisation of traditional values, change is at hand at Migros. Organisational change, to be specific. Since January 2003, Swiss retailer Migros actively replaced its traditional collegial administrative system by a managing board led by a managing director. Regional cooperatives retain the right to launch initiatives at a local level but as a whole, the originally cooperative Migros increased its decision-making speed by separating its administration and management.

After his education in Commercial Science at the University of Geneva, Claude Hauser (born in 1942) joined Migros in 1967 as a trainee. Via the positions of Executive Secretary (1969), Head of the Trade Department (1973) and Director (1976), he became Migros' President of the Board in 2000. Claude Hauser is also board member of CIES - The Food Business Forum and council member of the HES (High School of Geneva).

Migros has just undergone significant modifications to its corporate structure. How will these changes affect the future operations of the Federation of the Migros Cooperatives?
"Indeed, the changes have given cause for significant speculation about the development of our enterprise these past few weeks. In fact, we have simply modernised our management structure by reinforcing corporate governance. We have made changes at the top - the collegial responsibility of the head of the company has been replaced by a president who will be responsible for decision making and report to the board of directors. In addition, at the board of directors' level, we have constituted standing committees, which will professionally manage the files relating to: staff and salary, finances, etc. Lastly, the assembly of delegated federate cooperatives (111 members) becomes the supreme body of the federation of the Migros cooperatives. In fact, this modernisation is a logical step, since it redefines the distribution of competencies better and facilitates the management of our company more efficiently."

Will there be a direct impact on your operation?
"These modifications will not have any direct impact on our overall strategy. On the other hand, it will facilitate the operation of the organisation. The President is in charge of the operational management of the businesses. The board of directors decides on the strategies and is responsible for monitoring and control; it also designates the members of the senior management. The deputy assembly decides on the main policy trends of the company; it also elects the members of the board of directors."

Relating to the centralisation of new processes, are they undergoing any modifications?
"Yes, we are centralising all the activities that make it possible to realise synergies and reinforce our competitive advantage. On the other hand, we are decentralising where it will benefit our customers and contribute to the motivation of management."

Did Migros know that these changes would be more significant than the changes in its legal structure?
"Indeed, three years ago, we put in place the concept of building a centralised system for the management of goods. This involves the regrouping of the purchases, logistics, including the information processing systems. The distribution of goods to the stores is now efficiently carried out from two major warehouses located at the centre of the Swiss motorway network. The one in Suhr, which we have just inaugurated, is for dry groceries and the other in Neuendorf is for non-foods. Inventory control as well as the effectiveness of the operations will be improved, from the factory to the store."

Concerning your sales outlets, are the concepts of your stores evolving?
"A distributor always listens to the needs of its consumers. Therefore our stores are continually evolving. Currently, we have come into convenience foods. Our "Food Corner" stores have been in operation for three years, in particular in Zurich and the Bern railway station."

Migros has never sold alcohol. Will this change, given the recent management changes?
"The fact that we do not sell alcohol is historical. Migros gave up for ethical reasons selling alcohol, tobacco, warlike toys and pornography. This relates to the culture of our company. There is no question for us of calling into question these values."

Aren't you afraid that consumers will shop at a competitor if they cannot find everything they need on your premises?
"A variety of stores, such as pharmacy, tobacco and wine, are situated within easy reach of our stores. The regular customers can always complete their purchases in the vicinity."

Migros sells private label almost exclusively, do you plan to make any changes in this positioning?
"More than 90 per cent of the marketed products in our stores carry our distributor label and approximately a third of them are produced at our own factories. For a great part, they are fresh products (bakery, pork-butchery, dairy, etc). It is true that today we have opened the door to national and international labelled products. The consumer does want to find in our stores some of the products that are impossible to substitute, such as Kellogg's cereals, and Oreal beauty products. Another example: We are owners of the source of Aproz, one of the best mineral waters in Switzerland, yet we sell Vittel, Badoit and soon also San Pellegrino mineral waters."

Management changes, investments in infrastructure, and your changed private label policy introducing more national brands on Migros' shelves ... Is Migros guarding itself against an unspecified competition?
"In addition to our specific focus to occupy a strong position in the food industry, Migros is a multiformat distributor, exploiting mini-markets, supermarkets, hypermarkets, great specialised surfaces, to say nothing about the restructuring of these outlets, and the distribution of gasoline (nearly 600 stores). With a 16 per cent share of the total market, or nearly 25 per cent of the food market, Migros is the leader in distribution in Switzerland and can look to the future with confidence. Moreover, if we introduce national and international products we are providing our customers with the ideal choices."

Aren't these changes linked to the advanced discussions between Wal-Mart and Denner, or to the arrival of retailers such as Carrefour in Switzerland?
"The Swiss market remains closed and complex because of working conditions which make it difficult for distributors. Today, Carrefour has some challenges to face. They were already serious competitors. With the resumption of their interest, competition will intensify but the French company has to overcome the complexity of our market."

Can you give any examples?
"Carrefour will have to exploit its stores by respecting the Swiss business conditions and regulations: real estate prices and construction costs, salaries that are twice those in France, the cost of agricultural produce of the country, etc. Carrefour will have to fight for market share on an equal footing with the Swiss distributors."

Will Carrefour not be as competitive in Switzerland as it is in certain border regions, like in France or Italy?
"In the border regions, we are faced with competition that I would qualify as unequal. Added to the reasons that I have just described, there are other constraints such as restrictive opening times, difficult road access to the stores, insufficient paid parking lots. On top of this environment, you can add the fact that Switzerland counts three, indeed four linguistic regions. It is not surprising that international distributors have ignored Switzerland for a long time."

Will Migros be able to remain independent if it concentrates only on Switzerland? Considering the European situation, which will necessarily rise from the integration of new countries in the European Union, do you think that in the long run, it will be necessary for you to grow internationally?
"Our strategy does not involve taking a "Global Player" role similar to that of Wal-Mart, Carrefour, Ahold .... On the other hand, in order to widen our field of activity, we have established a successful foothold in the border areas of France (two stores in Thoiry and Etrernbieres) and in Germany (three stores in Lorrach, Bad Sackingen and Fribourg). If opportunities arise in border regions, we remain very interested."

Rumours are circulating that there will be significant consolidation in the retail sector. Do you think you will be the target of a takeover?
"In Europe, we rank as between the 15th and 20th largest organisation in this sector. At the moment, we estimate our size as being large enough to profit from interesting purchase prices and to allow us to develop satisfactorily. Thanks to our co-operative legal entity, we cannot be the subject of a public purchase offer. However, in the medium and long term, it would be judicious to study formulas of partnership, which will enable us to remain in a leadership position."

Wal-Mart has the reputation for being interested in all geographic areas and Switzerland is, as you say, an exceptional situation. Denner already seems to have attracted some attention. What would your reaction be if the American giant were interested in you?
"We are not worried about Wal-Mart looking at Migros. Moreover, I would be astonished if such a group became interested in such a small market as SWitzerland."