These missed shots cost the orange giant billions of dollars: Migros boss Irminger “Focus, focus, focus!”

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Migros made a profit of 175 million francs in 2023. This is a modest figure, considering sales of $32 billion: only 55 cents of the 100 francs left in the coffers. This is not enough even for a cooperative that does not maximize its profits. If it weren’t for Migros Bank, the group would be in danger.

The root of misery is such a complex institutional structure that universities must create a separate syllabus to teach it. The orange giant is bulkier than many state-owned companies. The organizational water supply will now be reduced by 1,500 positions. However, the ten regional cooperatives remain strong. Migros is subject to much copying compared to its arch-rival Coop, which has been centrally controlled since 2001. The goal of offering consumers the best price-performance ratio is almost impossible to achieve.

Migros has made many bad investments in the past

Additionally, Migros Group has made many bad investments in the last decade. Mario Irminger (58), who has been General Manager of the Cooperative Union for almost a year, had to write off a loss of 500 million francs in 2023 alone.

In the past, Migros executives were repeatedly tempted by abundant equity capital to invest in businesses that had little or nothing to do with its core business: with M-Way they became e-bike specialists, with Sharoo a car-sharing provider. With Sparrow Ventures to a start-up investment company, with Cash + Carry Angehrn to a wholesaler – all sold due to lack of sustainable success.

The company remained loyal to its retail business with the acquisitions of Globus, Interio, Office World, Depot and Schild, but these too were sometimes sold at triple-digit million losses. Irminger also offered Melectronics and SportX, which Migros founded years ago, for sale at the beginning of February. This also applies to traditional travel subsidiary Hotelplan and cosmetics and hygiene products manufacturer Mibelle.

In doing so, Irminger sacrifices a large part of the legacy of the company’s founder, Gottlieb Duttweiler (1888–1962). A radical step he justified this week: “Focus, focus, focus!”

This doesn’t bode well for Bike World, Do it + Garden, Micasa and Obi, which are also up for grabs.

Migros Bank and the health system are untouchable

Irminger is determined to make Migros more efficient and attractively priced. As the long-time boss of Migros subsidiary Denner, he is pre-destined for the role that generates huge profits for the parent company every year, but he does not seem willing to give up all concessions.

In addition to Migros Bank, for example, Irminger is also committed to the group’s latest adventure: expansion in the healthcare sector. Migros has long become one of the biggest players in the healthcare market with its Medbase, Activ Fitness, Fitnesspark, Zur Rose pharmacy chain, dentistry start-up Bestsmile and other investments.

The healthcare market is not a surefire success

In an interview with Blick, Irminger is convinced of this strategy, which his predecessor Fabrice Zumbrunnen (54) had already put forward: “The healthcare sector suits us because there – as in the food retail sector – it is about basic ingredients in Switzerland.” It is also big there There is growth potential.

This may work, but the healthcare market is not a surefire success. Migros has already experienced this the hard way: a 60 million franc valuation adjustment had to be made in connection with the acquisition of Bestsmile, and its fitness expansion in Germany also turned into a fiasco. Elements and Injoy brands had to be sold at a loss of millions.

Expansion into Germany difficult

The Migros Zurich Cooperative (GMZ) and its busy boss Jörg Blunschi (65) were responsible for this. In 2013, it also acquired German grocer Tegut. For a long time, this commitment seemed unproblematic. However, in 2022, Tegut suffered a loss of 16 million euros.

Despite these negative experiences, the headquarters in Limmatplatz is now taking an even greater risk: Digitec Galaxus, acquired by Managing Director Herbert Bolliger (71) in 2015, has been trying to conquer German online retail since 2018.

Growth rates are impressive but the price is high. The experiment has so far resulted in a loss of between 150 and 200 million euros.

The future is uncertain in Germany

Irminger doesn’t seem very happy with this situation. Although Galaxus did not question Germany’s continuation, it raised eyebrows and drew attention by making the following statement at its annual media conference: “We are currently discussing to what extent we will continue to be involved in Germany.”

The unbridled thirst for adventure sounds different. But it remains unclear whether the new spirit of humility has also reached regional cooperatives. At least in Zurich, where many expensive experiments have been decided in the past, people do not seem to be aware of any mistakes: “GMZ has never invested in companies operating outside the core areas such as food and healthcare and hence the Migros group strategy », says the media office.

This does not give the impression of a comprehensive self-assessment. However, it is not possible for the General Manager to do much against this attitude. Regional cooperatives still have the freedom to invest independently in business areas. “Our restructuring didn’t change anything,” Irminger says.

Concentration on core areas

However, the new boss believes that everyone in the group has learned something new and has a great awareness of the need to focus on the key areas identified. “History has taught us that if we get carried away it can be very expensive for the entire group.”

Unlike the competition, Migros still generously defines what “focus” means. Executives at Aldi Suisse and Lidl Switzerland in particular can only focus on one thing every day: low prices for Swiss consumers. Completely free from banks and health.

Source :Blick