Big names are on board: Migros is stirring with a big ladle, with up to 450 bikes in the stores, including Trek, Scott, Giant, Flyer, Haibike, Ghost, Tour de Suisse, Diamant, Creme, Radio and Puky.

Up to ten Migros Bike World stores in five years

Migros opened its first large-scale bike store in Volketswil at the beginning of March, followed by two more stores in Muri near Bern and Winterthur in the coming weeks. Over the next five years, Migros plans to spread up to ten of these large-scale stores, which will operate under the name Bike World by SportXX, across Switzerland.

The Swiss media are currently picking up on Migros' expansion into the specialist bike retail sector. Radio Energy and Radio SRF are reporting on the effects that the orange giant's market entry is having on the Swiss bike industry.

David vs Goliath

In an interview with Radio Energy, Peter Sommer, President of the Swiss bicycle industry, says: "Migros is one more player in the market. And is taking unit numbers away from the smaller companies". Sommer draws attention to another possible market movement caused by Migros' purchasing power on Radio Energy: "The smaller companies can no longer reorder, as Migros has already bought everything together". Sommer also concludes that the smaller bike stores will continue to lose customers due to the inability to reorder bikes.

A bigger disaster

The SRF radio program Echo der Zeit also takes a look at Migros' expansion into the bike trade. In an interview in the evening background program, Peter Sommer expresses his concerns that small bike shop owners could be squeezed out of the market. "For us specialist bike dealers in Switzerland, this is a medium to major disaster". As Echo der Zeit reports, around 80 percent of the bicycle market is in the hands of specialist retailers, which are characterized by small structures. And Sommer expresses concern that the market share of specialist retailers could be greatly reduced in the future. Sommer is particularly concerned about businesses with one to five employees. Their owners are often older and would no longer have any prospects if they had to close their bike store.

Specialist retailers have no chance against Migros

Christoph Lechner, Professor of Strategic Management at the University of St. Gallen, also has his say in the SRF report. Lechner can understand the anger of small bicycle retailers. If Migros were to compete against a specialist retailer in a village, the latter would not stand a chance in the long term. Migros can offer many more brands than the specialist retailer and the specialist retailer has no chance against Migros in terms of purchasing policy; Migros has much more leverage to obtain reductions in purchasing. Migros is also ahead in terms of know-how on how to ride a store, says Lechner in the SRF interview.

Market is big enough, says Migros

Migros press spokeswoman Monika Weibel countered Lechner's comments succinctly: "The market is actually big enough". According to Weibel, there will also be enough potential for specialist retailers of all sizes in the future, from small one-man businesses to Migros stores with over 1000 square meters.

Why is Migros doing this expansion?

Interesting in the SRF report are HSG Professor Lechner's explanations as to why Migros is expanding into the bicycle trade. Migros has "600 to 800 million francs to spare every year". Due to the cooperative structure, no shareholders have to be compensated, but the money is available for investments or expansion into new business areas. Another reason for the domestic expansion is Migros' failure abroad.

Grow at any price?

But does Migros, as a cooperative, have to grow at all costs and threaten the existence of local businesses, as it is now doing to bicycle dealers? This is the question SRF business editor Denise Schmutz poses at the end of the report. "I don't think Migros really needs to be in there now," comments Lechner. If Migros were to stop expanding, it would stagnate as a group and build up a larger capital base, which would increase by up to 800 million francs every year, Lechner continues.

Does the Competition Commission have a veto?

The Competition Commission Weko also has the expansion course on its radar and is monitoring the situation, reports Echo der Zeit. Patrik Ducrey says in the SRF interview: "We cannot control such organic growth with the Cartel Act. We can only intervene if Migros were to take over a previously independent company and the turnover thresholds stipulated in the Cartel Act were to be exceeded"

The Bike World in Volketswil is offering a very generous discount right from the start. This is an opening offer with a 2016 discontinued model.

Topic-related interests of the author: Tobias Gütlin rides a bike store in Binningen/BL and works as an editor for Ride / Swiss Sports Publishing.