Revolutionizing Retail

All-Consuming Happiness

Berlin mall-dpa-CHANGED
Shop till you drop.
  • Why it matters

    Why it matters

    While a wave of retail bankruptcies have shaken the retail sector in Germany, savvy companies have found new ways to attract shoppers, particularly in large cities.

  • Facts

    Facts

    • Twenty-five years after stores in Germany weren’t allowed to remain open past 6:30pm.
    • Consumers are either going online, or shopping in places that turn retail into entertainment.
    • The revival of city living and the investment in new shopping centers like the Mall of Berlin are also driving the retail revolution.
  • Audio

    Audio

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A quarter of a century ago, Germany broke with long-standing retailing conventions.

From October 5, 1989, stores in Europe’s largest economy were allowed to keep their doors open until 8:30 p.m on Thursdays. Consumers suddenly had two additional hours to shop, and inner cities suddenly filled up on “Long Thursday” each week.  It  was a historic day celebrated across the country. For more than three decades, thanks to Germany’s restrictive shop closing law that dated from 1956, retailers had been forced to close by 6:30pm at the latest.

At the time, critics saw long Thursdays as the first step on a slippery path to the complete liberalization of opening times. Today, we know they were right. The longer workday would determine the rhythm not only of the retail sector, but of banks and government offices as well.

Workers’ councils and trade unionists fought hard against longer working hours, which in their opinion, only served to “make life easier for a couple of yuppies.” They argued hundreds of thousands of employees should not be forced to work late into the night. The center-left Social Democrats soon joined in efforts to block longer shopping hours solely for the benefit of consumers. Even members of the conservative Christian Democrats stood shoulder-to-shoulder with the alliance against longer hours. While one of the parties didn’t want employees to have to work longer, the other didn’t want firms to pay higher labor costs. And for those not otherwise convinced, the issue became a matter of protecting the German middle class, particularly in the suburbs and outlying areas.

The actual revolution, however, was yet to come.

Retailers are enjoying boom times in Germany’s prime city locations from Hamburg to Munich, while smaller cities and towns are fighting urban decay.

No one could have predicted there would be a tidal wave of bankruptcies among major retailers in the future. Karstadt, Quelle, Neckermann, Hertie, Woolworth, Sinn-Leffers, Wehmeyer, Praktiker and Schlecker have since bitten the dust and they won’t be the last closures. There’s an old saying in German that trade is change, meaning businesses must adapt, and as hackneyed it sounds, it’s true. But it wasn’t the easing of the shop closing law that transformed the German retail trade. It was the customers themselves that forced the change.

Whoever goes shopping today wants to experience something new, be entertained, derive some pleasure from the process and relax. Shopping has become a social happening — often for the entire family — including dining, window-shopping, checking out what’s interesting and, yes, even buying something. The motto driving people into the city centers is less and less “Shop Till You Drop” and more and more “Shop Yourself Happy.”

That’s why retailers are enjoying boom times in Germany’s prime city locations from Hamburg to Munich, while smaller cities and towns are fighting urban decay. People are drawn to centers like Berlin, where a temple of consumerism called the Mall of Berlin has just opened in the heart of the German capital. Or to Düsseldorf, where Kö-Bogens shopping center was designed by the star U.S. architect Daniel Libeskind. In short, business is booming wherever customers are offered something many small and mid-size shopping centers and online competitors can’t offer: atmosphere and inspiration. No one is interested in monotone high streets, where omnipresent franchises stand next to phone shops and discount stores.

Customers can take care of their basic needs by shopping in easily accessible shopping centers with huge parking lots out in the green countryside. Or, increasingly, they can shop the Internet around the clock – even on Sundays – when most German stores are still closed.

The retail sector is in a state of radical change, but ultimately, this has little to do with changes to longer shopping hours. It has to do with the comeback of the cities. The renewal of inner-city neighborhoods has encouraged real estate developers and retailers to invest and make shopping a fun experience that will draw crowds. Otherwise, it’s hard to beat the Internet for satisfying raw consumer appetites. At some point, online retailers likely will be in a position to offer a more attractive shopping experience with virtual dressing rooms and other technological advances. And shoppers will be able to shop around the clock.

“Zalando introduces opening hours,” the popular Berlin-based website for shoes and fashion announced in an April Fool’s joke last spring.

But the online retailer’s mockery of its bricks-and-mortar competitors is merely another sign that shopping is now the pursuite of all-consuming happiness.

 

The author is an editor in the Companies and Markets department at Handelsblatt. To contact the author: ludowig@handelsblatt.com.

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