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The opening was a success: queues formed in front of Globus and Jelmoli in Zurich on Monday. But the consumer temple faces difficult times. You have to reinvent yourself.
The Loeb department store in Bern also reopens. However, distance and safety rules must be followed.
Shortly before the reopening, queues formed in front of the Jelmoli and the Globus in Zurich. After almost eight weeks, life returns to the department store. Jelmoli’s boss, Nina Müller, greets customers at the entrance entering the department store two meters away. “It’s good that customers come back to us,” she says. At Jelmoli and Globus department stores in Zurich, customer frequencies shortly after the store opens are as high as on any other day, as reported by vendors. A saleswoman in Coop City says there are even slightly more customers than on a typical Monday.
Depends on the mood of the consumer
Some clients wear masks, others do not. The same applies to sales staff. “I feel a little uncomfortable,” says a vendor wearing a mask and gloves. You just have to slowly return to normal. A customer who is about to pay for children’s clothes at the cash register says, “I don’t want cities to be deserted.” In the past few weeks, he had deliberately ordered little online and waited for stores to reopen. They want to support stationary trade.
Department stores depend much more on the mood of consumers than retailers who cover basic needs with their products. Customers will only stay in department stores if they feel comfortable and safe; Therefore, it is crucial that the protection concepts developed by the industry work. Department stores have adapted the measures with which supermarkets and hardware stores already have experience in their circumstances. Customers will now have to get used to the new situation.
Treat yourself again
Manor, the largest department store in Switzerland, invites you to reopen with discounts on various products. Berner Loeb department stores offer discounts on part of the spring collection. In contrast, Globus does not offer a discount. The big question is how consumers will behave. A look at the neighboring countries of Germany and Austria shows that the pleasure of shopping does not come back so fast.
In this country, consumer sentiment is as low as it has not been since the early 1990s. According to the Secretary of State for Economic Affairs, the question of whether now is a good time for major purchases has never been It was answered with as much caution as in April. Department stores hope that after weeks of isolation, people will catch up and do something again.
Difficulty before stopping
The stalemate hit department stores hard. Manor and Jelmoli had opened the food departments during this time and are satisfied with the sales achieved, but most of the store space is only accessible again this week.
Even before closing, the situation for department stores was anything but easy. The trend toward online shopping and changes in shopping habits are particularly difficult in the consumer temple. They cut jobs around the world, close branches, sell or merge. But there are also groups such as the British Selfridges or the Italian La Rinascente that are growing and making profits despite the adverse market environment.
From one economic round to the next
The general trend in Switzerland is abruptly declining. While Manor, Coop City, Globus, Jelmoli and Loeb department stores achieved sales of around CHF 5 billion in 2010, they were estimated to be CHF 4.1 billion or 18% less in 2018. Last year, Coop City challenged the weak market trend. Adjusted for the cost of renovation work, its sales increased 0.6% to CHF 764 million. Since February, the Coop department store in Zurich has benefited from the closure of the competitor Manor location.
At Manor, the largest department store in Switzerland, a round of savings has been going on for a long time. It wasn’t until early 2020 that the group announced that it would close a department store and two grocery stores. Sales have fallen from less than CHF 3 billion to an estimated CHF 2 to 2.5 billion since 2010 and the number of branches has dropped from 70 to 60.
Radical realignment on Globus
Globus has been writing losses for years. In February Migros announced that it was selling the department store group to Signa Holding by Austrian businessman René Benko and the central Thai group. Two months later, around 100 jobs were announced at the Zurich headquarters.
Further restructuring is expected. The new owners want to position the department store chain in the luxury segment and thus attract brands such as Gucci, LVMH or Dior. For this purpose, shopping experiences will be organized along the lines of foreign luxury department stores. Smaller and medium-sized branches, as well as Globus fashion stores, no longer fit this concept.
A department store for the general public.
Unlike Globus, Manor wants to remain a department store for the general public. The middle price segment is competitive and is particularly affected by the advancement of online commerce. To prepare for the future, Manor is investing the funds released in the course of the restructuring, among other things, in the online business. So far, however, the group has only achieved around 5% of sales in the digital area. Globus has a stake of around 10% and Jelmoli less than 1%.
However, according to industry experts, in order to position itself correctly in the future, department stores would have to generate at least a quarter of sales in online businesses. British high-end department stores John Lewis or traditional German Breuninger demonstrate that this can be successful. The latter already generates more than a quarter of its sales with the online store.
However, making the range available online is not enough. Rather, the on-site experience must be intelligently linked to the online channel so that customers can combine the two channels according to their preferences. Many department stores strive for such an omnichannel strategy, but implementation is demanding and expensive.
Changed consumer behavior
Behavioral changes occurred during the shutdown. For example, online orders have skyrocketed, especially for food. In contrast, fashion was less popular. Instead of hanging out with friends, people cooked at home. The trend towards online commerce should accelerate with the crisis, especially since many consumers have rediscovered online shopping in recent weeks.
The prospects for department stores are also clouded by the new daily shopping routine, which is characterized by queues, admission controls, cleanliness, hygiene standards and the least possible contact with the surface of objects. Department stores want to stand out from online retail, in particular by offering customers an emotional experience in the real world, surprising and inspiring them. After reopening, this is now a special challenge.
