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SHOPPING

Why Swiss farmers and retailers demand stricter ‘shopping tourism’ rules

The so-called ‘shopping tourism’ is very popular among Switzerland’s public, as food and many other goods are cheaper in neighbour countries. But moves are under way to make this practice much less attractive.

Published: 23 February 2024 10:45 CET
Why Swiss farmers and retailers demand stricter ‘shopping tourism’ rules
Food is a major driver in inflation. Photo by Ina FASSBENDER / AFP

For years, many people living near one of Switzerland’s borders have been shopping in neighbouring countries to save money.

Even though the Swiss inflation rate is well below that of other nations, prices for many products are still lower in France, Germany, Italy, and Austria compared to Switzerland – especially considering that Swiss salaries are much higher and therefore have a higher purchasing power abroad than at home.

Right now, if you shop abroad, you are allowed to bring back products worth up to 300 francs which, if you shop in France, Germany, Italy, or Austria, amounts to a lot of groceries (certainly more than you would be able to buy in Switzerland for the same money).

If you exceed 300 francs, you must declare your purchases at the border and pay Swiss Value Added Tax (VAT) on the amount over 300 francs. 

However, responding to several motions filed to this effect in the parliament, Finance Minister Karin Keller-Sutter wants to cut the tax-free allowance on foreign purchases by half — from 300 to 150 francs.

This proposal, however, is not dissuasive enough for Swiss farmers and retailers, who are now lobbying to lower the tax exemption even further — to 50 francs.

READ ALSO: Why cross-border shopping could become less lucrative for Swiss consumers

‘Competitive advantage’

The Swiss Farmers’ Union and the Swiss Retail Federation argue that the current system is unfair.

They say that both the 300-franc and the 150-franc exemption amounts “give competitive advantage to retailers abroad” at the detriment of local businesses, according to Dagmar Jenni, ‘president of the retailers’ group.

‘Exorbitant prices’

For the Foundation for Consumer Protection, the reason that shoppers from Switzerland buy their products abroad is because of ‘exorbitant prices’.

“Identical products are, for no reason, much cheaper in neighbouring countries,” the group said.

However, as the retailers’ association points out, there is, indeed a reason for price differences.

Costs are significantly higher for Swiss retailers than for their competitors in border regions, Jenni said.

For instance, employees in Swiss shops earn considerably more than their counterparts in Germany, France, Italy, or Austria.

In fact, “if we include travel costs or expenses for gasoline, Swiss retailers are often not more expensive than the ones abroad,” she added.

The Swiss Farmers’ Union points out that an average Swiss household devotes only 6.2 percent of its available budget to food.

“Food is therefore cheap compared to salaries,” according to spokesperson Sandra Helfenstein.

What do Swiss consumers say about the effort to stem cross-border shopping?

In a survey on this subject carried out by 20 Minuten news portal, 84 percent of the respondents were not at all happy about the government’s move to make shopping abroad less profitable. 

“I am going to shop in Germany just out of spite,” one person wrote.

“I will continue to drive across the border at every opportunity and buy everything I need,” another commentator said.

And yet another pointed out that the government “should hold Migros and Coop accountable” for high prices in Switzerland.

“If they didn’t charge such high prices, then people wouldn’t have to go shopping abroad,” they argued. 

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SHOPPING

REVEALED : Are ‘discount’ supermarkets in Switzerland really cheaper?

Lidl, Aldi and Denner claim their prices beat those of large Swiss retailers. But is this really the case?

Published: 18 April 2024 11:40 CEST
Updated: 1 May 2024 06:35 CEST
REVEALED : Are ‘discount’ supermarkets in Switzerland really cheaper?

Common consumer goods (except one) are typically more expensive in Switzerland than in neighbour countries — sometimes by much.

This includes food.

READ ALSO: Why Switzerland is the most expensive country in Europe

That is especially the case of largest Swiss chains, Migros and Coop, while Denner, Lidl, and Aldi say their food prices are significantly lower.

To find out whether this claim is actually true, journalists from RTS public broadcaster’s consumer programme went shopping in each of these supermarkets. 

They purchased the same 30 products in each of the five supermarkets on the same day, to ensure that the price comparison is as accurate as possible.

Not what you’d expect

In each of the stores, the investigators purchased only the lowest priced items from the supermarkets’ budget lines.

It turned out that most money was spent at Denner, widely considered to be one of the lowest-priced supermarkets.

The total for the 30 items came to 181.67 francs — more than was spent at the country’s more expensive stores, Migros and Coop, where identical basket of goods cost 170.37 and 167.82 francs, respectively.

(That, in itself, is surprising as well, because Migros typically has lower prices than Coop).

As for the other two supermarkets, these purchases cost 166.59 francs at Aldi and 162.05 at Lidl.

So the difference in price between Migros and Coop versus Aldi and Lidl is minimal. But what is even more surprising is that the cost of groceries at ‘cheap’ Denner is actually highest of the lot, by between 11 and nearly 20 francs.

Migros and Coop performed quite well in the comparison survey because most of the items purchased in those stores came from their budget lines, M-Budget and Prix-Garantie, respectively, both of which were introduced to compete with Aldi and Lidl.

But how important is price? Patrick Krauskopf, a professor of anti-trust law, told RTS: “German, French, English, Spanish and American consumers pay a lot of attention to price. In Switzerland, consumers place more emphasis on quality of service. Price is almost secondary.

“Distributors have realised this and have stopped competing fiercely on price.”

Big versus small

While this particular analysis focused on supermarket chains, another survey, conducted at the end of 2023, looked at prices in small grocery shops. 

Common logic has it that it is cheaper to shop in supermarkets than a local corner store, because big retailers purchase products in large quantities, which means lower prices for consumers.

However, prices in some local shops were found to be “up to 30 percent cheaper than Migros and Coop.” 

The reason is that in order to cut costs, small grocers may buy their products from the most cost-effective suppliers, a tactic which includes importing some items.

Another reason for lower prices is that unlike major supermarkets, which ‘pretty up’ their stores for better presentation of products, these small retailers are ‘no-frill’ shops. This means little money is invested in décor, so there are no extra costs to pass on to consumers.

 READ ALSO: Why it might be cheaper to avoid the big supermarkets in Switzerland
 

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