“The discount has become socially acceptable”

It snows on the plains just before Christmas. Not only do children’s hearts beat faster, Mario Irminger (57) is in a festive mood. Denner’s boss knows that many people are shopping at discounters more and more as they need to be careful with their money due to inflation. And they are ready to offer themselves something for the holidays.

Mr. Irminger, big cigars, champagne, fine wines for Christmas. If you look at your ads, you might think we’re not in a crisis.
Mario Irminger: Inflation and rising costs are everywhere. However, we realized that our customers are not saving much for Christmas and are ready to make themselves and their families happy.

A third of the global economy could go into recession in 2023. Are people really doing well enough to pop mushrooms?
Our sales do not yet show that people are restricting themselves in eating and drinking. We assume the Christmas business will be just as good as in previous years.

Have we reached the peak of inflation at three percent?
Of course we hope we’ve reached the top. Consumer prices will likely remain at their current level.

How much does a Denner shopping cart cost today?
Inflation in our country is just over 2% compared to the previous year. In the second half of the year, we had to raise prices. In November alone, the Denner shopping cart rose 3.5 percent. But remember: Grocery prices in Germany rose 20 percent in October. The Baltic States and Hungary are even higher.

Denner has recently been working more on animal welfare and climate compatibility of its brands. Isn’t inflation no longer pushing consumers back into the cheap neighborhoods?
In the fresh food sector, with the IP-Suisse label and Ener-Bio (Editor’s note: German organic brand), we have a more sustainable and relatively inexpensive alternative for consumers. Even our less affluent customers are currently willing to pay additional costs of 10 to 15 percent compared to traditional Suisse guaranteed products.

Customers notice that Denner sometimes has one and the same assortment, such as chicken, which costs much more at Migros. Why privacy?
Just because we don’t shout doesn’t mean it’s secrecy. We have a say in our product range and prices, as in the supermarkets of our parent company Migros. We make the prices competitive with other discounters.

Are discounting customers very sensitive to price cuts and -does it raise?
Price is priority for the majority of customers. With the introduction of our two German competitors, Aldi and Lidl, discounting has become socially acceptable today. All of the market growth from population growth was actually absorbed by us three discounters.

Discounters are an indicator of the solvency of certain segments of the population. To what extent has shopping behavior changed?
Price is priority for the majority of customers. In this year of increasing inflation, we can clearly see that our customers are increasingly turning their backs on branded products and turning to cheap products and Denner’s own brands. Also, more promotional items are purchased. Of course, how close we are to the customer also determines the sales within the country.

When it comes to being close to the customer, Aldi and Lidl step on the gas, buy the shops at the train stations and head towards the city centres. Why are you watching this without doing anything?
Denner gained market share. We are also a part of Migros Group. And there are Migrolino little shops for places that are used very often. We keep our distance here. But that doesn’t mean we stand still.

How do you hold yourself against two discounters?
At the same time, we are opening new branches. Our network of 850 Denner stores and partner branches has grown by 10 this year. We want to continue to grow with 10-15 branches on the net next year. At the same time, as of April, we will expand our new store concept, which offers added value to our customers, throughout Switzerland.

For example?
We are fundamentally reshaping our branches. Fresh baked goods and vegetables are on the rise, and there is now a chilled out space for fish and plant-based meat substitutes. The stores are no longer filled with pallets, there is more space for children and shopping carts to navigate. All prices will be written digitally in the future.

Do prices now change 24 hours a day depending on the time of day?
This may be technically possible, but the so-called dynamic prices depending on the time of day in the stores are not planned. However, we are currently in an inflationary period that will be with us for another year or two. Digital price tags have the advantage of making weekly price changes much more efficient and put our employees at ease.

But why not use direct payments, which are now standard everywhere?
The final word has not yet been spoken here. It is not yet clear whether we will register one payment in favor of payment machines or stick with the two-pay system.

Such a massive transformation swallows up a huge amount of money.
A major refurbishment is required every ten years as customers’ needs change during this time. We’re talking about a significant investment in the low three-digit million range over the next four to five years until the transformation of our network is complete.

Denner once taught Coca-Cola, Nestlé and Co. to be afraid by boycotting brand suppliers in Switzerland and buying goods abroad cheaper than on the gray market. Why are you so domesticated?
We are very actively fighting with our suppliers for lower prices. Almost all brand manufacturers are currently trying to push higher prices with us. However, I believe that the reputation we have built over the last decade is that we no longer have to do parallel imports.

Are you saying that suppliers are afraid of Denner buyers?
(laughs) Suppliers now know that we are consistent.

Are you boycotting the manufacturers and removing the products from the series?
There are suppliers who want to seize the moment. They push the general inflation and make exorbitant price demands, the content of which we cannot understand. Therefore, we do not respond to such requests. This leads to the fact that the product of the respective brand supplier is no longer on the shelf.

Who is the Denner boycott targeting?
For example, Mars Switzerland has recently applied prices that we do not accept. As a result, we canceled orders and no longer sell Mars products, for example, from the confectionery and snack area. Products were out of range until we reached an agreement.

They start the new year with a price war. This is probably also necessary when you consider the upcoming increase in costs for your customers from health insurance companies, homeowners and energy service providers?
We can see that medium-sized companies now look at prices more often while shopping and have to save money. We have quite a number of low-income households in Switzerland who are already dependent on low prices and are already hit hard by inflation. While fuel prices are falling, the increase in health insurance premiums and additional rental costs will only really kick in in the next few months and will have to be shouldered by the Swiss population.

Also, do you expect customer growth in the long run?
In the coming years, the population will continue to increase due to immigration. These people tend to have lower incomes. Then baby boomers like me will retire in the next ten years. Between the last income everyone has and the first pension, there is a loss of purchasing power. Houses are getting smaller. All this works for us discounters.

You’re already talking about your retirement. Are you going to give up your chief job soon?
(laughs) It’s not very far though. I love my job at Denner and I am happy. I would also like to accompany the major renovation of our branches in the coming years.

Are you staying in Denner and are you happy with the way things are going this year?
We gained market share, opened new branches and increased our sales. In addition, the high sales days around Christmas and New Years are also nearby.

Is the big cigar at the end of the year already ready?
I don’t smoke, so I’d rather stick to a nice glass of red wine at Christmas. As every year Fondue Bourguignonne is eaten with my family.