Switzerland 2010: Three trends shaping the market

Date : 01 September 2010

When people think of Switzerland, their minds probably turn to chocolate, watches or neutrality. But this landlocked country is also home to a flourishing and dynamic consumer goods industry.

The Swiss grocery retail market is estimated to be worth EUR44.9bn in 2012, rising to EUR45.2bn in 2013.  The top two retailers are domestic operators Migros and Coop Schweiz, but discounters Aldi and Lidl are both gaining market share and have ambitious expansion plans.

Facts and figures about Switzerland
About the country About food and grocery
Population:  7.73 million Grocery retail market: €44.9bn
Nominal GDP per capita: €64,782 Food spend per capita: €4,919
Consumer spend per capita: €34,536 0.7 - % growth estimated in Swiss grocery retail market 2012-13
4 – the number of languages spoken in Switzerland (French, German, Italian, Romansch) 176,332 – tonnes of Swiss chocolate sold in 2011 (Source: Chocosuisse)
Source: IGD Retail Analysis Datacentre, 2012

We have recently visited both Basel and Zurich, in the north-western, German-speaking region, where we got a view on the latest trends and developments in Switzerland and an update on how the market is evolving.

Here we look at some of the major market trends.

Shopping tourism

Cross-border shopping is becoming an increasingly pressing issue, particularly for retailers with stores located close to the borders with France, Germany and Italy.  The strength of the Swiss franc has made it more attractive for consumers to travel across to the eurozone countries for the weekly shop, although it's possible also that rising petrol prices in 2012 may curb this trend. 

Aldi advertising poster in train station 'Swiss quality guaranteed'

Discounter growth

Discounters continue to grow in importance. Swiss operator Denner, owned by the market leader Migros, is looking to further adapt its stores to evolving consumer needs and to improve its approach and store design.  We visited the new Denner Express store in Zurich, which opened at the end of 2011.  The store clearly demonstrates a step forward in the retailer's strategy, and should help it compete more effectively. 

The German discounters, Aldi, with its more established presence, and recent entrant Lidl are presenting new challenges for Denner.  We saw higher levels of national Swiss brands in Lidl on our most recent visits in 2012, while Aldi was developing greater strength in fresh produce categories. 

ConvenienceMigros store front

Much like many other countries, Switzerland is time-pressured society, and the need for convenience is growing.  Although convenience store density is high in city centres such as Basel and Zurich, we believe that there are still opportunities for expansion in locations like airports, train stations and close to major road hubs, for instance. We visited a Migros city centre hypermarket in the Zurich Hauptbahnhof (main station) and a Coop Pronto convenience store in Zurich airport, which both offer a strong proposition, with a range well-tailored to their locations. They successfully meet a range of shopper needs and missions including top-up, convenience and food-to-go.


So what does the immediate future hold for the Swiss market? The country will stay in the top ten of European grocery retail markets in 2013.  For the top five grocery retailers, convenience stores remain the dominant format in terms of store numbers, although discounters, who are clearly becoming credible players, are catching up; they are the second-largest format by store numbers.

And the market isn't standing still.  In the last few years, we have seen various acquisitions; most recently Coop Schweiz strengthened its wholesale business by taking full control of Transgourmet, its former 50:50 joint venture with Rewe.  It will be interesting to see what happens next. Building and sustaining market share will be a major challenge for all retailers. The competition might be is strong, but there are still many opportunities - the Swiss market remains one to watch.