Coop sets the pace for 2009 with in-store price cuts
As of Monday, 600 of Coop’s most popular branded products including Gillette shaving gel, Thomy mustard, and Lipton ice tea, are subject to an average price reduction of 12 percent. Switzerland’s second largest retailer says the nationwide price-cut is to maintain the population’s purchasing power in difficult economic times, but it could also serve as an offensive against discount supermarkets such as Denner, which belongs to Migros.
Coop has branded it the biggest price cut of all time, at least in Switzerland, and the daring promotion is costing the retail giant 100 million Swiss francs. As of January 5, the price reduction-scheme with no time limit, has marked down a large selection of recognised brands.
He emphasized that if these price reductions were effected, they would most likely apply to some 100 products and constitute a “quiet move” rather than a big announcement. When asked if Migros customers might be lured by its main competitor’s discounts in the short term, he said: “They may go but they’ll come back because they’ll realise that the price and the quality at Migros is still better.”
But Coop told Swisster that its promotion exercise in Switzerland was not out of fear of a similar rush in this country but to “give something back to our customers”. The supermarket chain's results, which were published today, showed that sales last year were up 15 percent compared to 2007. Coop spokesperson Susanne Erdös said that 2008 had been its most successful year yet, despite a global recession that began to take effect in the third and fourth quarters.
German budget supermarket Lidl is poised to enter the Swiss market and open 26 stores in March. Its Swiss website is already online. Lidl previously said it would be stocking branded products, which means that Coop’s cuts could affect the budget chain's own pricing policy.
According to the Migros owned Denner, it's too early to guage the impact of Coop’s action, and that it would analyse which products were reduced before taking action.
Meanwhile the low-cost supermarket Aldi – also from Germany and operating in Switzerland since 2005 – said it was not at all worried about Coop’s deal. “In our stores, we have our own brands which are still cheaper, even after Coop’s discount,” said Aldi Switzerland spokesman Sven Bradke. “Once you’re used to our brand names and you like the taste, you’ll stay at Aldi because we are cheaper,” he told Swisster. “We do not give numbers on our sales, but certainly economic times are not too bad for discounters,” he added.
