Jan 16, 2009

Some more competition for the swiss supermarkets

We all agree that Switzerland is a fascinating country. Beautiful countryside, a well functioning and established represantative democracy, excellent institution for education...on the other side, there also some clear market distortions which make it very hard for people (especially economists) to understand how this country can function so well. An established fact is the lack of competition among supermarkets.

Here I provide some statistics about number of retail stores per capita. While Switzerland is close to the median value with 6.51 stores per million inhabitants, as shown in the table below, the problem is that there's only Coop and Migros.








Numb.of stores







Source Euromonitor

Just to give you an idea of how to interprete the numbers,the value for the USA is 3.14 (think about Walmart). The value for Germany is 3.32, and Aldi is very much like Walmart. The value for France is 6.62, and if you go to Champion in Ferney Voltaire it looks also very much like Walmart (ok, now I'll stop mentioning Walmart). Italy has a value of 15.8, and is instead dominated by small-sized retailers, with a very limited range of products, but easily accessible evervwhere (drogherie, salumerie, etc.).

As reported in this article, Migros and Coop represent one third of the entire market, but 70% for the food market. In Geneva is pretty common to cross the border for a little shopping, making sure you don't exceed the custom limits. It is a patent fact that there is an important price differential across the borders. In the article is said that quality matters more for the Swiss consumers. I don't often find a striking difference of quality across the border, but instead a lower variety of products. I believe that the price differential across the border, whose said to be 10% on average, is mainly reflected by different rental costs, since Coop and Migros seem consolidated strategically within the cities, but I am open to listen to other opinions.

Finally, the news is that german retailer Lidl will soon enter the Swiss market. Lidl is a giant in retail distribution and should provide a beneficial boost to competition. Coop has already announced a reduction in prices as a response to this threat from a competitor (and in response to falling food prices). Good news for Rigot (and Sebastian).

1 comment:

cosimo said...

Do you want to discuss opening hours? Only place I can shop is Manor on thursday night. No way to find a cheap supermarket open on Sunday, except at the airport. Where if I go by car I have to pay I-dunno-how-much for parking. No way to go to IKEA, either (IKEA is open on Sundays in all big neighboring countries). All this in violation of sound economics, which says that people should be free to choose their labor supply, and the state should only regulate max working hours and working conditions. Am I wrong? (The Swiss among you will certainly say yes, and I'll continue NOT TO UNDERSTAND...)