MIGROS: IS HEALTH CARE THE REMEDY FOR RETAIL?

By Professor Stefan MichelStefan Michel, Renaud Falgas, Jan Kundert, Ashmeet Singh and Hermance de la Bastide

As Switzerland's largest retailer, Migros operates in an industry with negative growth, increasing online sales and fierce competition. The Swiss healthcare industry, by contrast, has grown at an average of 3% over the last 10 years, with increasing importance in household budgets. It accounts for 12% of GDP. Migros has an organically grown structure, grouping 10 regional cooperatives, which are owned by 2.2 million members (Swiss residents) and gathered under the Federation of Migros Cooperatives (MGB), which acts as headquarters. According to the vision of its founder, Gottlieb Duttweiler, the group pursues a social mission and profitability targets are set defensively. Since 2015, with the acquisition of Medbase, the group had started building a footprint in health care, and gradually expanded by acquiring paramedical services and pharmacy chains. The company planned to further extend its footprint by organic expansion while entering a strategic partnership with a health insurer. The company has key capabilities such as reach and brand awareness that can be leveraged to make an impact in the health industry. In its current form, the health arm is being developed as a separate vehicle (Medbase) and kept away from the Migros brand. There is a conscious decision to minimize damage to the Migros brand in case strategy shifts in the future. The healthcare industry is growing rapidly, but the market has significant inefficiencies and needs an overhaul to remain sustainable. It is a high margin business compared with the retail industry and also has the potential to position Migros as the provider of a single-owned, health insurance solution that could serve as a catalyst for the necessary transformation of Migros.