Business / Economy

Paris shops' sales halved as strikes bring chaos to the city

Reuters

Five weeks into strikes crippling French transport, Emile Sebbag is agonizing over how to keep afloat his two Parisian clothing stores, deserted by shoppers as the backlash against France’s pension reform drags on.

The start of winter sales on Wednesday — traditionally a big event for French retailers — is unlikely to make up for a dismal Christmas period, when he took home half of what he’d projected, Sebbag said, echoing growing alarm among retailers as travelers face more chaos this month.

“It’s been hell since December,” Sebbag said. One of his stores, where he sells jeans, hoodies and handbags by midprice brands like Guess and Replay, is particularly dependent on commuters in the basement of Paris’ Les Halles shopping center, which is built around a major local train and metro terminal.

“It’s killing us. I have to pay rent. We risk going bust,” he said.

Paris shops’ sales were down 30-50 percent or more in the December holiday period, when many earn a large share of their annual income, according to the French Federation of small retailers.

While central Paris has borne the brunt of the disruptions, signs of the potential strain for the broader economy in France are starting to emerge as tourists book trips elsewhere, consumers shun shops and commuters struggle to get to work.

The union-led protests and strikes against President Emmanuel Macron’s plan to overhaul the pensions system add to the misery many businesses suffered during months of “yellow vest” demonstrations against the high cost of living.

French consumer confidence fell more sharply than expected in December, hitting a five month low, data showed on Wednesday, in the first pointer on economic sentiment since the strikes began.

And while independent retailers like Sebbag — who had already struggled to break even for several years due to competition from chains and online rivals — may suffer more than others, larger companies including luxury goods makers like Hermes also rely on Paris as a major shopping hub.

Some like Cartier-owner Richemont, set to report sales next week, had already felt the pinch during the height of the “yellow vest” protests in December 2018.

Even high-end department stores like Printemps were cautious, although its many Chinese tour group visitors were less likely to have canceled travel plans as air traffic remained stable.

“I don’t think the sales period is going to allow us to make up (for December),” said Pierre Pelarray, who manages the group’s main store in Paris. Footfall there was down 20 percent in December, with revenues falling around 8 percent from a year earlier, he said.

Unibail-Westfield-Rodamco, which owns Les Halles shopping centre and others in France, said the strike impact varied a lot from one mall to the other, with only “a very limited number” affected.

Foreign tourists cancellations in the capital have so far left hotels, cafes and restaurants nursing losses of €740 million ($823 million), the GNI-HCR industry association that represents them estimates.

Sebbag, whose other store is just off the Champs Elysees avenue, said that for now he was holding on in the hope that the strikes would end soon and steeper discounts might drive sales, adding he feared for his 14 employees.

At 62, and after 30 years in the business, he said he felt close to the brink, however.

“I only think about one thing, selling out,” he said.