When France’s Socialist government opened up the possibility of Sunday trading last year, it looked as if Paris’s world renowned department stores were on the brink of winning a long and painful battle. The law, initiated by economy minister and former investment banker Emmanuel Macron, established “international tourist zones” in the French capital within which businesses could strike deals with unions to open every Sunday.
While France is grappling with persistently high unemployment, Galeries Lafayette says that Sunday trading would create 1,000 new jobs at its Boulevard Haussmann store alone. “It’s something we had been asking for the past 10 years,” says Philippe Houze, chairman of Galeries Lafayette. “It opened the door.”
Today, however, that door remains stuck. In December, unions rejected an offer from department store owners, whose terms included double pay for working on Sunday, remuneration for transport costs and some day care facilities for employees’ children. Many labour leaders say that resisting all-year Sunday trading is a matter of principle.
The breakdown of talks could hardly have come at a worse time for the grands magasins, as the department stores of Paris are known, whose belle-epoque architecture and decor are testament to the city’s glitzier past. In the days after the November 13 terrorist attacks, business plunged as tourists stayed away and Parisians stayed at home.
Houze says sales were down about 50 per cent in his group’s flagship store on the city’s famed Boulevard Haussmann — and 20 per cent in the group’s provincial stores — in the immediate aftermath of the attacks. Family-owned Groupe Galeries Lafayette has annual sales of 3.8 billion euros from its network of 280 stores. It employs 15,000 staff.
Paolo de Cesare, president and chief executive of Printemps, Galeries Lafayette’s rival and next-door neighbour, says that the grands magasins, now have to negotiate with unions on a store-by-store basis, potentially complicating and delaying talks. He says that regular Sunday trading would allow his store to capture additional revenue of between 7 per cent and 10 per cent per year — no small number considering that the combined annual sales of the two groups’ Boulevard Haussmann stores are an estimated 2.5 billion euros.
“In Paris, most of the additional business would come from international customers, who happen to be in the city on a Sunday,” says de Cesare. “We are talking about a lot more incremental business than, say, in other cities.”
Printemps has 18 stores but the Boulevard Haussmann property, with its gilded domes and magnificent stained-glass canopy, accounts for roughly 60 per cent of group sales. In 2013, Divine Investments, a Qatari-backed investment fund, bought the department store chain for an unconfirmed 1.6 billion euros from Deutsche Bank and Maurizio Borletti, an Italian businessman.
France’s Sunday trading laws have long baffled international travellers, particularly those who come from Asia to spend their money on luxury items and other goods. Galeries Lafayette, for one, has hired dozens of Chinese-speaking staff to deal with the sheer numbers.
Visit the side entrance of Galeries Lafayette on any given day, and it is difficult to walk past for all the Chinese tourists, who arrive by the coach-load and leave laden with shopping bags emblazoned with logos from the world’s best-known brands.
Return on a Sunday, however, and the same corner could be mistaken for something out of a ghost town. “In China, commerce is the biggest on the weekends,” explains, Jean-Francois Zhou, who runs the Ansel tourism agency. “Saturday and Sunday are the biggest days so when they come to Paris, they are astonished to find the shops closed.”
Houze argues that the implications are obvious. “There is competition today between the European metropolises,” he says. “To attract tourists, especially Asian tourists, we need to open on Sundays.”
Meanwhile, de Cesare of Printemps is in little doubt about where the tourists go. “You only have to visit the station on a Sunday to see,” he says. “They head for London, Milan and Madrid.”
In recent years, Chinese shoppers have become the singlemost important group for sales to international travellers at the city’s department stores.
De Cesare and Houze insist that the environment is challenging enough as it is. For one thing, France’s grands magasins, which originally prospered thanks to the country’s once-growing and increasingly wealthy middle-class, have had to face down competition from online retailers, which have captured almost all sales of white goods as well as televisions and other electrical devices.
Then there is the importance of being in the heart of cities, which attracts customers but means higher rents. Other fixed costs include an army of well-trained staff. “We rely on quality of service so labour is very intensive,” says Houze.
The lack of progress on Sunday opening is particularly important for Galeries Lafayette’s BHV/Marais store, the impressive building occupying an entire block on the city’s Rue de Rivoli, opposite the Paris town hall. The group reopened the store in 2014 after a two-year, 35 million euro makeover. But Houze says that the business model depends on Sunday trading. “We need volume,” he says.
Both Houze and de Cesare are quietly confident that they will eventually broker respective deals with their unions. But they are not holding out much hope that it will happen quickly. In the meantime, de Cesare says: “France has very strong peculiarities, which makes running a business more complicated than in other markets.”
The battle over Sunday trading is taking place as Paris contends with the devastating economic fallout from November’s terrorist attacks in and around the capital, which left 130 dead and more than 300 injured.
MKG Group, the hospitality research firm, estimated that French hoteliers stood to lose 270 million euros in revenue between November and March as a result of the attacks — with 146 million euros of that in Paris alone.
Tourism has been hit particularly hard. The city’s renowned Louvre museum was all but empty and popular attractions deserted. The operator of the Eiffel Tower confirmed that visitor numbers fell to 6.91 million last year — down 2.5 per cent even though numbers were up 1 per cent on 2014 until the attacks.
In a worrying sign that things are still not back to normal, Japan Airlines said that it would extend a suspension of flights between Narita airport and Charles de Gaulle because demand remained depressed following the November attacks. The airline had originally planned to cancel flights until the end of February but the suspension will now continue until March 15. “This is due to the decrease in demand after the terrorist attack,” JAL said.
France is the most visited country in the world, with 83.7 million international arrivals in 2014, according to the UN World Tourism Organisation. Tourism contributes about 7 per cent of France’s GDP, or 147 billion euros, and accounts for 1.1 million direct jobs.
Restaurants, bars and cafés have also suffered. A survey by Synhorcat, the French hotel and restaurant operators’ union, in the week after the attacks suggested that sales were down 44 per cent compared with the same period a year earlier. “There is a strong economic impact for the whole sector,” Didier Chenet, the union’s president, said at the time.
Analysis by the French treasury, and first reported by RTL radio, suggested that the attacks could cost France’s economy as much as 2 billion euros, or roughly 0.1 per cent of gross domestic product — a number the treasury described as a “first estimate”.
In the immediate aftermath, sales at Galeries Lafayette and its competitors fell 50 per cent at flagship stores, just as the critical Christmas shopping period was supposed to be in full swing.
MKG Group said that it saw the potential for a recovery in the hotel sector starting February. It also pointed to the positive effect of forthcoming events such as the Euro 2016 football tournament, which France will host.
But Paris, and France more generally, is not back to normal yet.
Financial Times
