Fernand Ernster, pictured, says "The mix of types of shops in the city is not what it was"
Photo: Mike Zenari
The announced closure of two long-standing city centre stores, Tapis Hertz and Sports House Keller, sparked another debate about the viability of high street retail outlets in the face of online competition, rising rental prices, changing shopping habits and the mushrooming of malls in the grand duchy. But the death knell of the high street shop should not be sounded yet.
There is not any single reason for the failure of shops in Luxembourg city centre, says Fernand Ernster, proprietor of the bookshop chain that bears his family name and president of the Confédération Luxembourgeoise du Commerce, where he also sits on the retail commission. “Difficult accessibility limits the number of people who come shopping. Parking in the city is expensive and not always easy to find,” he tells Delano. “And the mix of types of shops in the city is not what it was.”
Nathalie Aach of Tapis Hertz cited changing consumer habits, internet sales and a lack of parking for clients for her decision to vacate the family business’s flagship store on the Grand-Rue in November after 73 years in the prime location. “The multi-brand retail business model, except for perhaps concept stores, is becoming obsolete in the city centre,” said Aach in a statement in July.
Importantly, Aach stressed that rental prices were not a main factor in the decision. But that is a different story for many other retailers. “Rental prices are still high, I’ve heard,” says Ernster, who is fortunate that he owns the building in which the books chain’s flagship store is located.
Retail rents in the city centre are the highest in the country, although pressure is on to lower prices as dozens of shops stand vacant. But in July, Reporter.lu cited Claude Bizjak of the CLC saying that many owners are quite content to just sit on their vacant property rather than reduce their asking price. Meanwhile, minister for small- and medium-sized business Lex Delles has said, in response to parliamentary question from LSAP MP Dan Biancalana about the rental problem, that he “didn’t think it is the responsibility of communes to buy up empty commercial properties with a view to renting them out at advantageous prices”.
The construction of the tram, the Royal-Hamilius centre and continuing work along the rue de la Boucherie and on place Guillaume II have limited accessibility to many shops. Benoît Schmit told Delano that uncertainty about when and how long the tram works would take place played a major role in his decision to close down his Léif furnishings and lifestyle store (previously Ben & Pepper) last year. “We felt it was commercial suicide to continue. It wasn’t like we had reserves for five years, so we decided to call it a day.” Compensation that was eventually offered to store owners along the affected route was minimal and required complex application forms that would have meant paying substantial fees to accountants, Schmit claims. And things aren’t going to improve in the near future. Back in April, Lydie Polfer told Luxembourg RTL radio that 2020 is going to be the worst for construction disruption in the city.
Fernand Ernster says that another challenge faced by retailers is that fewer and fewer people actually work in the city centre. He cites the case of Commerzbank and Dresdner Bank, whose main offices near the Ernster store at one stage employed some 350 people. “Every day, at least one of those people would buy a book or a pen or a notebook. Several ministries have also moved, and the National Library is also about to relocate to Kirchberg.” But lunchtime is still a busy peak period for the store, he says.
"We need to rethink this idea of giving away the city as an event location," says Hans Fellner, pictured. Photo: Mike Zenari
Hans Fellner, too, reckons that people who work in the city are spending less time strolling the streets and browsing, be it at lunchtime or after work. An increase in flexible working hours also means people are taking shorter lunch breaks so they can leave work in time to beat the traffic heading out of the city. But he believes that the expat community is key to surviving as a retailer. “They have reinvented strolling in the city” and account for a large proportion of passing customers, says the owner of the Fellner Louvigny bookstore and art gallery. “What I love is that the average age [of customers] is 40, and for a bookstore that is very low.”
As for the prestigious Royal-Hamilius project due to open this autumn, Fellner says that in London or Paris or Cologne, inner city malls are now what he calls “lost spaces” that have become “visual slums”. He says it might work, but he can’t imagine that it will bring additional people into the city. Malls in general take part of the cake, Fellner reckons, but he is not sure people will go out of their way to the new Cloche d’Or centre. “We feel bad shopping in these fake bling-bling places.”
But Fernand Ernster says that opening a store in the Cloche d’Or centre was essential for Ernster, which also has outlets in the Belle Étoile and City Concorde malls and a smaller shopping centre in Bascharage. The company hired 12 extra staff to work in the Cloche d’Or. “A large number of passing customers provide bookstores with a better chance of success,” says Ernster.
Big events like the Christmas market and the ING Marathon may bring additional people into the city, but they rarely take time to walk around and enter shops like Fellner Louvigny. “I think we need to rethink this idea of giving away the city as an event location,” says Fellner. “I think I am not alone in liking to be in a city with a more regular, slow walking rhythm. Events like that disrupt the rhythm.”
Ernster was among the first retailers to launch an online service, back in 1997 with a programme that Fernand Ernster commissioned himself. “We really believed in the internet back then,” he says. Indeed, in 1996, together with a friend, he wrote to Amazon founder Jeff Bezos telling him that if he ever decided to bring his business to Europe, Luxembourg would be a good place to set up. “I never received an answer,” Ernster says with a smile. “I liked his model. Amazon did not ruin the book market, on the contrary, it made books popular again.” What is true, however, says Ernster, is that Amazon grew so quickly that it really did change shopping habits.
Nowadays, Ernster’s online business, including a popular click and collect service, accounts for “maybe 5% of our business if I count B2C and B2B together”. A separate central logistics centre in Strassen handles the online orders and manages stock to avoid cutting into the already slim margins of the traditional retail sales.
But not all retailers have the resources to manage an online store. Taking professional photos, managing stock, arranging delivery, all take away precious time and even floor space. “It is bad enough organising social media. Going online is not going to save little shops. That’s too easy,” says Benoît Schmit. Hans Fellner’s business model is so far removed from e-commerce that he even handpicks his stock by visiting wholesalers and uses even social media sparingly.
Viktor Ronkin, pictured, says: "Shopping will never be an online-only experience". Photo: Mike Zenari
Over at the City Concorde mall, Viktor Ronkin, head of e-commerce at Bram and its German mother company Konen, says that online presence is much less a sales channel than an information channel. “Customers are starting the shopping experience much earlier, by getting informed before actually making a purchase. So, we have to be present at various ‘touch points’, whether that is social media, newsletters or our own website.” Bram’s newly launched online store not only has a delivery service but, like Ernster, allows for click and collect service. “People in Luxembourg, especially the generation that didn’t grow up digitally, still want personal service,” says branch manager René Weise.
“So, our e-commerce channels complement the whole shopping experience, allowing them the best of both worlds,” says Ronkin. Indeed, while Bram is seeking to reach younger customers through its social media channels, Ronkin says that the over 60s, while not particularly on Instagram, are also au fait with electronic newsletters and Google ads. Newsletters are personalised to target different customer groups, and to highlight different brands, using algorithms. But despite his enthusiasm for e-commerce, Ronkin says that predictions of online shopping replacing physical stores are wide of the mark. “Shopping will never be an online-only experience,” he says.
This article was originally published in the September 2019 edition of Delano Magazine