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In the following contribution Claude Lewin, chief executive of Jumbo-Markt AG, describes the special features of the Swiss DIY market and clarifies the aims his company has set itself for the future in the area of DIY retailing
The Swiss DIY market, like any other market, will not remain untouched by the process of change. It is well known that various foreign DIY chains are trying to obtain locations in Switzerland. It took a year and a half for OBI, in cooperation with Migros, the biggest Swiss retail concern, to succeed in opening an OBI store in Switzerland. This example demonstrates that moving into the Swiss market means mainly one thing: the exercise of patience.
With the existing network of outlets operated by Migros (Do It & Garden) and Coop (Bau + Hobbymarkt), together with our Jumbo Bau & Freizeit branches, the good locations in this small country are 95 per cent occupied already. Furthermore, the official authorisation procedures are becoming more and more complicated.
An extreme change in the market, such as was the case in Austria for example, is not to be expected in Switzerland in the medium term. There are as yet too many differences in customer requirements between Switzerland and Austria, Germany or even France for this to happen.
An important point in this context is that no Swiss citizen builds his own house, if he actually wants to build a house at all. (At approx. 30 per cent Switzerland has the lowest proportion of home ownership compared with the EU countries). The long working hours in Switzerland (40-45 hrs/wk) provide little motivation for the Swiss to take matters in hand themselves. Nor should we forget that Switzerland has the lowest proportion of people working illicitly, a significant clientele that “unfortunately” is absent from our stores.
Also not to be underestimated is the breakdown of home ownership costs: the price of the building plot can often amount to two thirds of the total outlay. Which means there is little motivation to save between one and three per cent through doing the work yourself and using up your relatively small amount of free time into the bargain.
A significant conclusion to be drawn from all this is that the “do-it-yourself project” of a Swiss consumer will be relatively modest. Even given a more extreme price war he will only be able to save a few francs. The customer will then decide whether to taken upon himself the trips to the store and the stress involved for this small saving.
Focus on the customer
Our customer orientation at Jumbo gives us a head start. This affects our product ranges first and foremost. We are in a position to offer our consumers a “CH” range of goods. But what does that mean, a CH range? When a Swiss citizen does something himself, quality is very important to him. He works with great care and precision – with the idea that the object must last for at least 25 years. Therefore it is important that what he screws to the wall or elsewhere is a high-quality product.
We are adapting our product ranges even more rapidly to the wishes of our customers and have greatly increased the level of quality required from our suppliers. Through an intensification of internal training our staff are achieving the level of so-called “specialist retailers” with no trouble at all.
Further expansion
We want to complete the expansion of our network of branches within the next few years, so filling in the blank areas on our map. This expansion will occur in two size formats, 3 500 m2 and 7 500 m2. In Switzerland there are unfortunately too few locations with the requisite customer potential for genuine large-format DIY stores.
In early June we shall be starting the first pilot outlet within our new merchandise management system. Despite a fully centralised computer system the responsibility for merchandise is almost entirely made over to the separate branches. Our intention in this respect is to reinforce the branches in their responsibility and not give our employees an invitation to apathy through a centralist system.
Just this March we started up a range test in a pilot store. We regard this as a matter of reinforcing the efficacy of our Bau & Freizeit stores in key areas. In particular the stores with retail areas around 3 500 m2 are not to be “polluted” by ranges alien to DIY stores.
Claude Lewin, the author of this contribution, is chief executive of Jumbo-Markt AG at Dietlikon.
With the existing network of outlets operated by Migros (Do It & Garden) and Coop (Bau + Hobbymarkt), together with our Jumbo Bau & Freizeit branches, the good locations in this small country are 95 per cent occupied already. Furthermore, the official authorisation procedures are becoming more and more complicated.
An extreme change in the market, such as was the case in Austria for example, is not to be expected in Switzerland in the medium term. There are as yet too many differences in customer requirements between Switzerland and Austria, Germany or even France for this to happen.
An important point in this context is that no Swiss citizen builds his own house, if he actually wants to build a house at all. (At approx. 30 per cent Switzerland has the lowest proportion of home ownership compared with the EU countries). The long working hours in Switzerland (40-45 hrs/wk) provide little motivation for the Swiss to take matters in hand themselves. Nor should we forget that Switzerland has the lowest proportion of people working illicitly, a significant clientele that “unfortunately” is absent from our stores.
Also not to be underestimated is the breakdown of home ownership costs: the price of the building plot can often amount to two thirds of the total outlay. Which means there is little motivation to save between one and three per cent through doing the work yourself and using up your relatively small amount of free time into the bargain.
A significant conclusion to be drawn from all this is that the “do-it-yourself project” of a Swiss consumer will be relatively modest. Even given a more extreme price war he will only be able to save a few francs. The customer will then decide whether to taken upon himself the trips to the store and the stress involved for this small saving.
Focus on the customer
Our customer orientation at Jumbo gives us a head start. This affects our product ranges first and foremost. We are in a position to offer our consumers a “CH” range of goods. But what does that mean, a CH range? When a Swiss citizen does something himself, quality is very important to him. He works with great care and precision – with the idea that the object must last for at least 25 years. Therefore it is important that what he screws to the wall or elsewhere is a high-quality product.
We are adapting our product ranges even more rapidly to the wishes of our customers and have greatly increased the level of quality required from our suppliers. Through an intensification of internal training our staff are achieving the level of so-called “specialist retailers” with no trouble at all.
Further expansion
We want to complete the expansion of our network of branches within the next few years, so filling in the blank areas on our map. This expansion will occur in two size formats, 3 500 m2 and 7 500 m2. In Switzerland there are unfortunately too few locations with the requisite customer potential for genuine large-format DIY stores.
In early June we shall be starting the first pilot outlet within our new merchandise management system. Despite a fully centralised computer system the responsibility for merchandise is almost entirely made over to the separate branches. Our intention in this respect is to reinforce the branches in their responsibility and not give our employees an invitation to apathy through a centralist system.
Just this March we started up a range test in a pilot store. We regard this as a matter of reinforcing the efficacy of our Bau & Freizeit stores in key areas. In particular the stores with retail areas around 3 500 m2 are not to be “polluted” by ranges alien to DIY stores.
Claude Lewin, the author of this contribution, is chief executive of Jumbo-Markt AG at Dietlikon.
