For years, Zurich’s shopping mile Bahnhofstrasse was hardly affected by change. But now, after Manor, another department store is being hit.
Just like people, shopping centers have a life cycle. They start usually with luxury watches à la Patek Philippe or Rolex.
Luxury brands such as Louis Vuitton, Gucci or Prada are also often present when department stores open in exclusive locations.
Luxury slowly fades
But over time, when the appropriate clientele goes missing, one jewelry store and luxury watch boutique after another then closes. Instead, stores with cheaper products come into the shopping mall.
This, in turn, no longer fits in with the rest of the luxury goods and these, too, then leave that location. And suddenly there is a domino effect.
Change of the shopping mall
The natural death of a department store is compounded by trends in addition to its life cycle, and these are clearly moving in the direction of online retailing. This is why more and more concept stores, such as Globus, Manor or even the luxury department store Jelmoli, are finding it difficult to save themselves for the future.
After the large department store Manor on Zurich’s Bahnhofstrasse, the luxury department store Jelmoli will soon close as well, as was decided by the board of directors and the group management of the owner company Swiss Prime Site (SPS).
More offices in city center location
The tradition-steeped building in Zurich’s city center is expected to be remodeled for two years starting in early 2025, SPS announced on Monday in a completely surprising move.
According to the statement, high-quality retail space with around 10,000 m2 would continue to be available on the lower floors.
The conversion would thus ensure that the Jelmoli building would remain one of the largest and most attractive shopping destinations on Zurich’s Bahnhofstrasse in the future, the well-known listed real estate company said.
However, part of the upper floors will be transformed into office space and supplemented by public uses such as fitness or gastronomy, it added.
This means that downtown Zurich will get more office space. This is surprising, because many companies actually move to the agglomeration and leave the city centers.
Nobody bidding
With the extraordinary dynamics of online trade and changing consumer behavior, the stationary trade has come under increasing pressure, SPS said about the reasons for the decision about Jelmoli.
Despite high investments by the owner and commitment by all employees, this structural change was clearly reflected in the profitability of the Jelmoli department store.
Intensive discussions with potential partners had not led to the desired success, which is why an alternative concept had been developed.
The staff itself informed the regular customers in an email noting that, in addition to structural change, the pandemic had also played its part in the deterioration of the figures.
Almost 1,000 affected
According to the communiqué, the “Jelmoli House” transformation project will have a one-off impact of around CHF 34 million on SPS’s income statement in the 2022 financial year. You can already see from the dimensions that you have to sell a lot of luxury shoes and luxury handbags to bring in such vast amounts.
According to media reports, 550 employees directly at Jelmoli and 300 employees at rented brand boutiques are affected by the closure.
The head of Jelmoli, Nina Müller, is also throwing in the towel and will hand over the management of the department store to new hands at her own request.
Details later
Despite their extraordinary expenses, SPS was able to achieve the set targets in the 2022 financial year, mainly due to positive leasing results and growth in the real estate asset management segment.
The company intends to provide more details at a later date. At that time it will also become clear as to which point in the life cycle the management has pulled the emergency brake on the Jelmoli department store.
02/06/2023/kut./ena.