'Benign giant' in Swiss retailing collides with local loyalties
The Zurich-based Migros conglomerate, the largest retail establishment in Switzerland, is an economic powerhouse with a social conscience. But its prowess troubles some Swiss who complain that Migros is contributing to the decline of small, private village food stores.
Migros owns a chain of 500 supermarkets, 12 food-processing factories, a bank , a travel agency, several insurance companies, and a communications empire - and spends 1 percent of its net income to satisfy the cultural needs of its employees. Retail sales for 1983 were more than 8.2 billion Swiss francs ($3.6 billion).
Founded in 1925 by Zurich businessman Gottlieb Duttweiler, Migros was aimed at revolutionizing the retail food trade - which was rigidly bound to outdated and inefficient structures. Over the ensuing half-century, Migros followed the strategy of ensuring the lowest possible gross margins to obtain optimal efficiency in the operational flow. Now some 4,000 shops (large, medium, and small) offer their goods to Swiss consumers.
In recent years Migros has been criticized because its low-cost, efficient operations have contributed to the decline and often disappearance of small, private food stores in small villages. These shops were deeply rooted in the community and were often a key fixture of the local social life.
Francoise Michel, head of the powerful consumer group Federation Romande des Consommatrices, says: ''The Swiss people on the whole feel very sympathetic toward Migros. Having said that, Migros is not altogether the knight in shining armor it claims to be.
''Small stores in remote villages have been crushed by Migros and Coop (Migros's main rival), and as a result some people now have to drive 20 miles to buy their food,'' she explains. ''Migros also pays the price of its success. Because of its size - it represents 35 percent of the Swiss food distribution market - it does tend to give precedence to its business concerns over its social concerns.''
''In a nutshell,'' she adds, ''it slowly turns into just another big corporation. In fact, perhaps it is already too large for Switzerland and may eventually turn into a multinational.''
Two years ago some 113,000 Swiss proposed a national referendum to ban the building of shopping centers if local shops could satisfy regional consumers. The referendum was later withdrawn, but there is still opposition to the giant chain.
Migros's officials do not deny this, but they see the disappearance of small, local stores as a Europe-wide tendency. The Council of Europe noted in 1981 that the new methods of distribution in industrial countries were eliminating the small storekeeper. ''We are part of this structural change, not the cause of it, '' a Migros spokesman says.
Migros's 50,000 employees are co-owners, inasmuch as the enterprise shares a proportion of its annual proceeds with them. They also determine, directly or through representation, Migros's managerial decisions. Migros's capital is owned by the entire body of cooperative members.
This is in line with its founder's concept of the ''social capital.'' Planned state capitalism has no future, according to Migros executives, but an economic order based on unfettered capital power is dangerous.
There is a third way, they believe: ''cooperatively managed capital oriented toward ethical principles and conscious of its social responsibilities,'' says Bernard Claude Gauthier, a Migros manager in Zurich. Mr. Gauthier points out that annual sales would jump by 1 billion francs ($442 million) if Migros sold alcohol and tobacco. Andreas November, professor of sociology at Geneva's Institute for Development Studies, praises Migros's achievements, particularly its low prices, but points out that some employees have wanted the company's growth to slow and to renew its ''social conscience.''
''Migros's top leadership did not, however, take their views into account. Neither did it agree, as they would have wanted, to buy its bananas directly from small Central American producers - and thus raise their revenues - rather than from United Fruit,'' Mr. November continues. ''Basically some people resent the fact that Migros introduces itself as a consumer organization when, basically, it is a commercial enterprise.''