Ger­mans go fes­tive to lure buy­ers into de­part­ment stores

The Pak Banker - - Front Page -

BERLIN

Af­ter years of de­clin­ing sales, store clo­sures and job cuts, the coun­try's big re­tail­ers see the hol­i­days as a chance to re­cap­ture some of the magic.

Step in­side a Kaufhof, Karstadt or other Ger­man de­part­ment store this hol­i­day sea­son, and you'll find your­self in sen­sory over­load. There are roast goose and fresh pas­tries. Kids can get free bak­ing lessons. And at one store a top de­signer will read Christ­mas sto­ries.

Af­ter years of de­clin­ing sales, store clo­sures and job cuts, the coun­try's big re­tail­ers see the hol­i­days as a chance to re­cap­ture some of the magic. Ger­man shop­pers will in­crease Christ­mas spend­ing more than other Euro­peans this year, ac­cord­ing to con­sul­tant Deloitte.

"Christ­mas can't save a dy­ing for­mat on its own, but it is a key op­por­tu­nity to earn money," said An­to­nia Branston, a se­nior an­a­lyst at Euromon­i­tor In­ter­na­tional. "When it comes to gifts, peo­ple don't want to nec­es­sar­ily get the cheap­est op­tion. They want to go some­where nice."

The trou­bled in­dus­try could use a lift. The num­ber of Ger­man de­part­ment stores de­clined to 247 at the end of last year, down a third from 2006, ac­cord­ing to Euromon­i­tor. In France, de­part­ment store num­bers re­mained sta­ble in the pe­riod, while in Bri­tain they have risen by about 20 per­cent.

Even as Ger­mans are ex­pected to spend more this Christ­mas, de­part­ment-store sales in the coun­try are forecast to fall in 2012, their third year of de­cline, Euromon­i­tor pre­dicts.

A key rea­son is that on­line pur­chases more than dou­bled from 2006 to 2011, the re­searcher re­ports. While on­line pur­chases are also ris­ing fast in Bri­tain and France, shop­pers there will spend more at de­part­ment stores this year, Euromon­i­tor says.

In Ger­many, "the gen­eral en­vi­ron­ment for de­part­ment stores is not healthy," said Nik­las Rei­necke, an an­a­lyst at Planet Re­tail in Lon­don. "Rev­enue will most likely keep on de­clin­ing" as shop­pers turn to more spe­cial­ized re­tail­ers such as Zara, H&M and Es­prit.

De­part­ment stores are find­ing it in­creas­ingly dif­fi­cult to com­pete with Web re­tail­ers for ba­sics. And when shop­pers in Ger­many look for some­thing dis­tinc­tive, they of­ten turn to the tra­di­tional mar­kets filled with sea­sonal treats and booths sell­ing hand­crafted toys that pop up on town squares across the coun­try ev­ery De­cem­ber.

"If you want to get peo­ple a spe­cial Ger­man gift, it's not some­thing that you are go­ing to find at a de­part­ment store, it's some­thing you're go­ing to find at the Christ­mas mar­ket," said Kristy Lutz, a 30-year-old mother of two who moved from Wis­con­sin to Stuttgart eight years ago.

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