In the UK in 2021, more than 10,000 chain store shops closed permanently. In the same year, there was also a net decline of around 10’000 retail stores in Britain. That equates to 47 closures a day. This is primarily due to the way customers now buy products and it reflects a massive shift to online shopping.
What is happening in the UK is not an isolated case. And it should come as no surprise that the founder and CEO of Amazon, the largest global online retailer – Jeff Bazos, is today worth over USD 180 billion.
Switzerland, with a population of just over 9 million, is naturally a much smaller market than the UK, but relatively speaking, the stakes are just as high. Migros, the biggest retailer and private employer in Switzerland with around 100’000 staff, has just announced major changes to its strategy, thereby affecting some of its divisions.
- According to recent reports the Migros holiday division, Hotelplan – the largest retailer of vacations in Switzerland – and Mibelle – the personal beauty and wellbeing division are affected. Reports indicate 1’500 jobs are to be cut.
- The revised strategy of Migros is to focus on its core retail, financial and healthcare services – or put into context – the “necessities” versus luxury products.
eCommerce figures for Switzerland
Switzerland is actually the 25th largest market for eCommerce globally, with an estimated revenue of around US$13 billion in 2023. This is more than Poland which has a population of almost 4 times that of Switzerland.
e-Sales Revenue is expected to show a compound annual growth rate (CAGR 2023-2027) of 6.2%, resulting in a projected market volume of US$17 billion by 2027.
The Swiss eCommerce market contributed to the worldwide growth rate of 8.7% in 2023. And like in Switzerland, global eCommerce sales are also expected to increase exponentially over the next few years.
There are several important sectors in the Swiss eCommerce market. These are:
- Electronics is the largest market sector and accounts for 26.4% of total Swiss eCommerce revenue. This is followed by:
- Fashion with 24.6%.
- Hobby & Leisure with 15.4%.
- Grocery with 13.7%.
- Furniture & Homeware with 9.1%.
- Care Products with 6.9%.
- DIY with the remaining 3.8%.
eCommerce vs Swiss mentality
The motives of online shoppers are changing and just having best price is no longer an important consideration. A 2021 report from NEXI illustrated that convenience is nearly three times as important as offering a lower price.
In fact, avoiding long queues, and the offer of comfort and convenience, are now the new key reasons why Swiss people shop online.
The opportunity to shop 24/7 and save time are also key for the Swiss, who are after all, are all about efficiency, and it seems eCommerce is a perfect fit!
The effect on Jobs
As we have seen in the UK, and now indirectly in the case of Migros, eCommerce can also lead to job losses. Creating part or full time jobs for those workers who lose their posts due to eCommerce – perhaps trained in one specific field such as travel, or those not highly skilled, could be challenging indeed.
- Does more thought need to go into how we all engage with eCommerce versus the brick and mortar world of physical shops?
- Can the government do more to encourage entrepreneurs to establish physical shops in towns to attract footfall?
- Could Switzerland’s towns end up mirroring those once thriving – now deserted towns in the UK. Given that many of Switzerland’s towns thrive on tourism, that scenario seems unlikely, but the fact remains, that an increase in shopping via eCommerce can lead to job losses in other channels. And creating new jobs for all levels and age groups could be challenging.
- Should retailers develop new service models around eCommerce. For example ordering online and collect in store?
Like in other countries, eCommerce is growing rapidly in Switzerland and along with the obvious advantages, there are questions around job losses in certain scenarios and sectors. Does more thought need to go into ways of ensuring this trend delivers on the opportunities, without creating reverse negative effects such as closures and jobs losses?
Maybe physical store owners should follow Jeff Bezos’ example as he famously said: “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”
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