After another month of lockdown, the doors are finally open again at Paris’s flagship department stores. The Christmas lights are on and the festive window displays are in place, but, with tourists noticeably absent, there might not be much for the stores to celebrate this Christmas.
Non-essential shops were finally allowed to reopen across France on November 28. With Christmas fast approaching, these major stores are looking forward to welcoming their old customers back in an attempt to save a disastrous economic year and hopefully look forward to 2021 with some optimism. But the dearth of tourists will have a serious impact on their annual revenue.
On one of Paris’s most famous shopping streets, Boulevard Haussman, the landmark Parisian department stores are already dressed up in their Christmas finery. The annual festive window displays show no traces of the coronavirus scrooge and the giant Christmas tree is in pride of place at the heart of the Galeries Lafayette.
“Reopening four weeks before the Christmas holidays is very good news for our members,” says Yohann Petiot, general manager of Alliance du Commerce, which brings together department stores and clothing and footwear retailers. “Now we’re going to do everything we can to save Christmas”.
“2020 has been very difficult for department stores,” Petiot explains in an interview with FRANCE 24. Over the course of the year, these key Paris shops have had to contend with three full months of shuttered windows.
The CEO of the Galeries Lafayette group, Nicolas Houzé, estimated the loss to be as much as half of the sales for the entire year in an article in Le Monde. That company did at least benefit from the earlier opening of the BHV DIY department, the Lafayette food shop and the Italian delicatessen Eataly, as they fell into the category of essential shops.
The situation is much gloomier for neighbouring store Printemps, which this week announced a redundancy plan aimed at ensuring its survival. Seven stores will be forced to close in the coming months, threatening 430 jobs out of the 3,000 staff the group currently employs.
This restructuring comes not only as a result of the Covid-19 crisis: the group has been losing momentum for several years and the clothing market has fallen by 15% over the past decade. “Added to these economic challenges, there were the terrorist attacks, the Yellow Vest demonstrations, the transport strikes,” explains a spokesperson for Printemps. “Covid aggravated an already dire situation.”
Tourists contribute 40%-50% of trade
State financial aid – including a partial unemployment grant and help with commercial leases for the month of November, when department stores were forced to close – has helped to absorb some of the losses due to the crisis. “But there is no contingency plan for all the stock we already have, we must somehow sell what we’ve got,” says Petiot.
Petiot hopes that customers will flood back to the big stores “out of solidarity” to help reduce the stockpile. But Paris luxury goods shops will have to rely on a local clientele for the meantime, as international tourists are still not allowed to travel to France. “This represents a huge loss of income. Tourists represent 40% to 50% of the sales,” he says. “The exceptions are the shops BHV and Bon Marché, which are more oriented towards a Parisian clientele”.
Since the 1980s, Paris’s landmark department stores – which have existed for more than a century – have always relied on a high-end foreign clientele, says Sabine Heitz-Spahn, a marketing professor at the University of Lorraine who specialises in city shops. “This clientele is motivated by the pleasure of buying luxury goods at a lower tax rate, certainly, but they also come to discover the majesty of these shops. It’s a key tourist experience.”
These classic department stores are now suffering as a result of this strong dependence on foreign consumers, having failed to invest sufficiently in online retail.
“Management did not realise the importance of digital in recent years. As a result, they have invested little in digital tools,” Heitz-Spahn explains. “This was a huge strategic mistake, even before the arrival of Covid-19.”