Migros: Is health care the remedy for retail?

As Switzerland’s largest retailer, Migros is operating in an industry with negative growth, sales developing towards online and fierce competition. The Swiss healthcare industry on the other hand is growing with an average growth of 3.0% over the last 10 years, with a growing importance on household budgets, making up for 12% of GDP. Migros operates with an organically grown structure, regrouping 10 regional cooperatives, which are owned by 2.2.m 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 is pursuing a social mission and profitability targets are set defensively. Since 2015, with the acquisition of Medbase, the group started building a footprint in healthcare, gradually expanding with the acquisition of paramedical services and pharmacy chains. The company announced to further expand its footprint by organic expansion whilst it started a strategic partnership with a health insurer. The company disposes of key capabilities such as reach and brand awareness which 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 direction to minimize damage to the Migros brand in case there is a strategy shift 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 as compared to the retail industry and also comes with the potential to position Migros as the provider of a single-owned, health insurance solution which could serve as a catalyst to a necessary transformation of Migros.

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