The most beautiful department store in Switzerland is located in the centre of Zürich. 185 year old Jelmoli has only one branch these days, but it is an exceptional one! The owner, Swiss Prime Site, has invested heavily in the iconic building and CEO Franco Savastano conducts a distinctive and successful course.
Black Friday
We meet Savastano on ‘Black Friday’, but he does not feel concerned at all: Jelmoli has decided to ignore the bargaining madness. “I know people are crazy about bargains, but we do not participate in Black Friday,” he says. “Why should we? I see no reasons for it. It is precisely during the end of the year that we have to make money in our sector. Zürich is now full of atmospheric Christmas lights. Last year we experienced 40 % growth during the end-of-year period, without having to discount one piece. We sell top brands such as Moncler, Brunello Cucinelli and Santoni… If we discount them, we disappoint our shoppers and damage our brands. It is like a race: today we have to give a 10 % discount, tomorrow 20 % and next week 50 %? Where is the credibility of our business?”
Distinctive food market
Savastano has been in charge of Jelmoli since 2012. The Swiss luxury department store has only one branch, in the centre of Zürich, so how can it continue to grow in that one location, without expanding the sales surface? “It is teamwork. The board of directors must believe in it. People do not come to us only to buy things, we also want to inspire. We organise exhibitions and you can rent our roof terrace for parties. An important role is reserved for our food offer.”
The CEO does not have to think long when we ask him what is his favourite department in the store. “At the time I started in the men’s fashion department and I have always been a fan of that, but ever since we have a food market, that is my favourite department. Food becomes the new fashion, in a sense. It is very exciting. A relevant food market must distinguish itself, that is important. We have ten large and small restaurants. People like to sit down and have a nice moment for themselves. An eye-catcher is Fauchon – Le Café, but we also have an authentic Japanese restaurant of high quality and a grill restaurant inspired by the American originals. We grill your steak for 90 seconds at 800 degrees: this makes the meat crispy on the outside and tender and juicy on the inside. And our Cheese Humidor is unique: a cheese cellar where as many as 250 cheeses from Switzerland, England, Italy and France are stored and presented under the very best conditions. Customers stand in line in order to buy cheese from our well-trained sales staff!”
Focus on experience
There is however quite some competition on the Swiss market. “There are many department stores in Switzerland, but our strategy is clear: we want to be a real destination store. If you come to Zürich, you should visit Jelmoli. Many other retailers in Switzerland are rather positioned in the middle segment. And there are too many stores in small towns. Given the growth of e-commerce, it is better to have fewer stores at the best locations. Not every city needs a department store. I am afraid that a major market cleanup will take place… We are well off with our high end approach.”
What are the success factors that make Jelmoli such a strong player? “These are very difficult times, partly due to the growth of e-commerce. We are not yet ready for an online offensive ourselves. At the moment, our webshop is comparably small and we do not aim to cover all our departments online or to grow internationally with it. Nevertheless, we are working on a large-scale digitisation process. In 2020 we will reveal the new jelmoli.ch which will meet our high in-store quality standards.”
“Very important are our 280,000 customer cards. We want make better use of that. But we mainly focus on physical experience and we have a competent team with a nose for the right products. Your people need to understand what retail is, how a department store works and how people shop. We have room for creativity and local ideas. Together with the city of Zürich, for example, we are currently celebrating the sixtieth anniversary of the Märlitram. We have converted the entire store to the image of that historic tram. People can order tickets for a tour in the old vehicle, we have published a jubilee book, customised Christmas cards and much more…”
Experience is essential, but Savastano’s best idea was the decision to skip discounts altogether. “Our sale periods are very limited and we do not really advertise bargains. We rather focus on selling everything at full price.
Local character
What does Savastano think about the merger that is currently taking place in Germany? Should we expect a consolidation wave in the industry? “I think customers are different everywhere. We are a real Swiss department store, with Swiss customers. Tourists represent only 8 % of our business. Our purchasing team is also in Switzerland, we adapt our product range to our local clientele. And even within Switzerland you can see big differences. We speak four languages here, the German-speaking part sometimes looks like a different country compared to the French-speaking region for example. The Swiss love that local character, they are proud of their heritage, their cities, their stores…”
Would the CEO have some good advice for us? “I would say that you always have to focus on quality. If you sacrifice on quality, you lose. Furthermore, I think you should be there for all the customers. When a customer enters your store, you cannot see whether they are rich or poor. Treat every customer equally well, regardless of whether they spend 5 euros or 5,000 euros. Also be aware that Europe is very small. Customers can quickly go to London or to Milan if they wish.” Employees are therefore very important in the store. “We employ around 700 sales staff at Jelmoli. They each have the particularly important task of treating the customer well. If the waiter kindly delivers your cup of coffee, it will have a positive effect on the whole department store.”
Where does his love for the industry come from? “It is thanks to American films that I became acquainted with the world of department stores as a child. The beautiful images of the Christmas atmosphere on Fifth Avenue in New York made a big impression on me. My favourite department store is Selfridges, without a doubt, but I am also charmed by Le Bon Marché. I find both examples very inspiring. I myself regularly visit foreign department stores: twice a year I travel to London, Paris and Milan. Those cities are culturally closest to us. The department stores in the United States are impressive, but obviously not everything that works for the customers over there is suitable for the Jelmoli client.”
To the airport
Jelmoli exists since 1833 and has just celebrated its 185th anniversary. Founder Peter Jelmoli-Ciolina had the idea to open a department store with fixed low prices, where there was no bargaining. The business became a success and moved in 1899 to the current address at the Bahnhofstrasse. Following the example of Le Bon Marché and Selfridges, Jelmoli wanted to bring the whole world into the store. At that time the retailer also delivered orders at home, with horse and carriage.
There was strong growth in the 1950s and 1960s: the store count grew rapidly from 1 to 65 branches, but the new stores were all closed again in the course of the 1970s and 1980s. Only Zürich remained. “The other Swiss cities are too small for a full-fledged luxury department store.”
Today, Jelmoli is owned by real estate company Swiss Prime Site. The department store underwent a repositioning as ‘The House of Brands’ and now sails a clear premium course. “We invested in the building, put together a strong portfolio of top brands and put more effort into services and innovation. At the top of the market we see more opportunities than in the middle segment,” says Savastano.
Expansion is now on the agenda again. There will not be a new department store, but a 1600 m² Lifestyle House and a 700 m² Sports House in The Circle, the ambitious complex at Zürich Airport, with retail, offices, university buildings, a conference centre and leisure. “It is an excellent opportunity for us to bring the best of what we have from the city to the airport. The passage there is huge, with 30 million passengers a year. The new complex is almost a city in itself, and what is important: the shops will also be open on Sundays, which is not allowed in the city centre… We are planning to open luxury stores with premium brands, with a lot of attention for the digital aspect, inspired by the example of Nordstrom. At the same time we will relaunch our webshop. Our presence on that site will greatly increase our brand awareness.”
About the project
With the interview series ‘A Love for Department Stores’, retail expert Erik Van Heuven and journalist Stefan Van Rompaey (RetailDetail) set out to explore the world of department stores. Discussions with international investors and managers will identify the challenges and opportunities for this retail industry. In the digital age, department stores are not relics from the past, but the ultimate example of retail as entertainment. The interviews will appear on the RetailDetail websites in the coming months, in RetailDetail Magazine and will result in a book about the history and future of department stores in Europe.
As a former top manager at, among others, Galeria Inno and Karstadt, Erik Van Heuven knows the sector through and through. As chief editor of StoreCheck and RetailDetail, Stefan Van Rompaey has been following developments in the retail sector for decades.
