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The French government has announced that it will extend the country’s state-controlled sales period by a week until 1 August, to mitigate some of the impact of the recent riots. Retailers will also be permitted to open on 9 July, in a one-off exception to France’s normal Sunday trading rules.
The decision comes after unrest erupted throughout French cities in response to the fatal police shooting of Nahel Merzouk, a French 17-year-old teenager of Algerian and Moroccan descent, on 27 June in the Parisian suburb of Nanterre. There was a collective national shock at the shooting and days of rioting unfolded. After the human tragedy and the social chaos, the country is now counting the economic consequences.
French employers’ organisation Mouvement des Entreprises de France (Medef) estimates that the damage caused by the unrest has cost the local economy more than €1 billion. Some 200 businesses across France have been looted and 300 bank branches and 250 tobacco stores destroyed, it said on Tuesday. Large chains including Nike and Zara have been affected, alongside smaller independent retailers – though the stores of luxury megabrands seem to have escaped largely unscathed. Still, the riots could have a “material impact” on luxury sales in France in the third quarter as high-spending tourists are put off visiting the country, warns management consultancy Bernstein. The magnitude will depend on how long the protests linger.
The decision to extend the all-important sales period comes after French retailers and trade associations called for government support with the cost of damages and lost sales. On Wednesday, Olivia Grégoire, minister for small— and medium-sized enterprises, said that over 1,000 stores were affected by the protests and agreed to extend the discounting window by one week (it was originally due to run from 28 June to 25 July). This, together with the temporary relaxation of Sunday trading limitations, should help businesses “make up for the shortfall suffered in recent days as quickly as possible”, says business association Alliance du Commerce.
“The first few days of sales are critical for merchant success,” said Alliance du Commerce managing director Yohann Petiot in a statement. Some areas were hit hard on the opening day of the sales, the association’s data shows: retailers in Strasbourg reported year-on-year turnover declines of up to 36 per cent, and in Marseille up to 24 per cent. “The terrible riots of recent days have brought the summer sales to a sudden halt,” said Petiot. “Our merchants, who have faced crisis after crisis for years, must once again face the destruction of their working tools in a crucial period for their activity.”
Last weekend, the French government asked insurance companies to extend their deadlines for store owners to make damage claims that were a result of the looting and riots from five to 30 days. As of Tuesday, insurers had estimated the cost of claims associated with the riots at approximately €280 million. That same day, president Emmanuel Macron said the “peak” of the riots had passed and restoring the economy was his top priority.
The fallout for luxury fashion
For the fashion industry, there have been practical issues to consider. Celine cancelled its menswear show that was scheduled to take place on Sunday, 2 July, at at Paris cultural centre La Gaîté Lyrique, on the eve of couture week. “The uncertain evolution of these extremely serious disorders requires us all to exercise the utmost discernment,” said creative director Hedi Slimane in a post on Instagram. “From my point of view alone, a fashion show in Paris at a time when France and its capital are bereaved and bruised seems inconsiderate and totally out of place.”
Courrèges postponed a summer party slated to take place in Romainville outside Paris on 1 July “due to the recent tragedy in France”, while Chloé and Balenciaga also cancelled events. However, the majority of scheduled shows went ahead.
Beyond couture week, Bernstein compares the potential impact on the industry to that caused by the protests that took place back in 2005. This time round, the impact on tourism is a cause for concern: 20-25 per cent of tourists cancelled planned trips to Paris within the first week of the protests, according to the Office of Tourism in Paris.
Bernstein’s note highlights security warnings by foreign embassies, including the US Embassy of Paris, which in late June advised US citizens in the country to avoid “mass gatherings and areas of significant police activities as they can turn violent and result in clashes”. The Chinese Foreign Ministry reinforced its security warning after a bus of Chinese tourists was attacked by rioters on 29 June in the southern city of Marseille. On 2 July, China’s consulate-general issued a formal complaint to the French government calling for better protection of Chinese citizens and property.
France has become a key destination for tourist spend in Europe, particularly after the UK’s tax-free shopping scheme was scrapped in 2021. In May, duty-free sales in France were 1.5 per cent higher than pre-pandemic levels, according to Bernstein analysts, as the country reinforced its status as a top luxury shopping destination for Chinese and American tourists.
The luxury industry is heavily dependent on sales to tourists in a select number of global cities, led by Paris, Hong Kong and New York, according to Bernstein. “Serious problems in any of the top luxury cities would be its sector headwind – partially compensated by consumers shopping elsewhere and – increasingly – online,” it said in a note this week.
However, others pointed out that France has a long history of civil unrest. “This is not a new problem in France,” says fashion critic and writer Louis Pisano. “It s something that has been going on for a long time and the big conglomerates know how to deal with it.”
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