Coop is closing the gap on its rival Migros as the two Swiss retail giants continue to battle for market share.
Fierce competition is being intensified by a lack of consumer spending, a stagnating market worth SFr84 billion ($60 billion) and consolidation in the trade.
The two players, which dominate the Swiss retail sector, are looking to expand their businesses with acquisitions, more surface space and other strategic measures.
Both Migros and Coop have said they expect their turnover to increase by around two per cent this year, despite the poor market conditions.
Coop: best year ever
Despite the weak economic environment, Coop on Tuesday reported the best year in its history, with a profit in 2002 of SFr331 million, 9.6 per cent more than the previous year.
It increased its market share to 15.6 per cent (+ 1 per cent), which includes integration of the EPA stores, bought last year. Excluding EPA, the increase would have been 0.3 per cent.
"We intend to continue to increase our market share over the next few years," Coop president Hansueli Loosli commented in Basel.
Apart from the acquisition of EPA, Coop is waiting for approval by Swiss competition authorities of its planned purchase of the Waro chain, which would add another 74,000 square metres of sales surface.
Migros: expansion plans
Market leader Migros on Monday reported a 37.5 per cent fall in profit to SFr178 million, while increasing its market share by 0.2 per cent to 18.1 per cent.
Migros, dubbed the "orange giant", is not taking the situation lying down. It has announced plans to increase its surface expansion by an annual 50,000 square metres, double that at present.
And it plans to push its labels promoting ecological and fair trade values.
Although Migros, with a turnover of SFr1.74 billion, claims to be market leader in the sector, Coop has played a pioneering role in championing organic products.
Its Naturaplan label, which is ten years old, achieved a turnover of just over SFr1 billion last year.
Coop is by far the leading distributor of organic products, with sales of SFr526 million in 2002.
And Loosli expects a growth rate of 20 per cent this year alone in Coop's four ecological and fair trade labels
In response to its rival's challenge, Migros has just introduced one umbrella label "Engagement" (Commitment) to push its ten added value product lines, considered unfamiliar to its customers.
These are not only organic products but also cover, for example, the sale of wood or fish that are sustainable, or textiles produced at fair prices
"We are the clear leader in the area of ecological and social products. We have seen that we can further increase our share in that area and we have also seen that our consumers are very responsive to those concepts," Urs Riedener, Migros head of marketing, told swissinfo.
"We were looking for a new umbrella brand to better communicate to the consumers and make access to those labels easier," he said, commenting on the new "Engagement" promotion.
To boost its appeal to customers, Migros has also been introducing an increasing number of brand labels to its shelves, the latest being Kellogg's breakfast cereals.
Sales have increased as a result, but Migros has set a limit so as not to harm its own interests.
"The potential is about ten per cent of our turnover in the supermarket and this is something we have almost reached. There's a potential of two per cent left," explained Riedener.
"We think that our main strategy has to be to maintain our strength in private labels," he added.
Migros and Coop have periodically been attacked by farmers for dominating the market and dictating terms.
Consumer organisations argue that the power of the two retailers results in less competition in the marketplace, higher prices and less choice.
The dominant position of the big two shows little sign of being undermined: apart from Migros and Coop, there are small fry trying to swim with the big fish.
The world's number two retailer, Carrefour of France, entered the Swiss market in 2001 but is still considered as yet a marginal player with a turnover of around SFr1 billion in its 11 hypermarkets.
There are also discounters including Denner and Pick Pay but they are no match against the clout of the big players.
swissinfo, Robert Brookes in Basel
Migros was founded in 1925 by Gottlieb Duttweiler.
It does not sell alcohol or tobacco. Duttweiler said they were a threat to the family.
Migros is jointly owned by 1.9 million Swiss.
Migros sets aside about one per cent of sales for cultural activities, including adult education and events. In 2002, this amounted to SFr123 million.
The ten regional cooperatives of Migros run 581 stores.
Migros is the biggest employer in Switzerland, with a staff of 83,100.
Coop has 1,649 shops around Switzerland covering a shopping area of 1.36 million square metres.
It is waiting for Swiss competition authorities to rule on its planned acquisition of the Waro chain.
Both Migros and Coop publish free weekly newspapers that are read by millions throughout Switzerland.
Coop profit increased by almost ten per cent last year to SFr331 million.
In the "best year" in its history, Coop increased market share by 0.3 per cent (1 per cent including EPA)
Migros profit in 2002 fell by 37.5 per cent to SFr178 million. It blamed the economic situation and the poor performances of its travel concern Hoteplan and the Globus group for the decline.
The ten regional Migros cooperatives increased their market share in Switzerland by 0.2 per cent to 18.1 per cent in 2002.
Both Migros and Coop says they expect turnover to increase by 2 per cent this year.