Swiss Shoppers Flock To Euro Zone, Boosted By Franc's Surge In Value
Originally published on Wed August 17, 2011 2:03 pm
The Swiss franc has emerged as a safe haven currency for investors spooked by economic uncertainty in the U.S. and the European Union's euro zone. In the past year, the franc's value has soared — and now Swiss shoppers are going bargain-hunting in Europe's malls and shops.
With the franc 25 percent higher against the euro and U.S. dollar now than it was 18 months ago, the Swiss are finding steep discounts across the border. Swiss tour buses now embark on shopping trips to malls in Germany, and French grocery stores have become a favorite destination for shoppers, as well.
As the AP reports:
The Zurich daily Tages Anzeiger recently published an index showing that an IKEA stove selling for 1,299 francs (1114 euros, $1610) - cost 130 percent less in Germany. A deodorant cost 5.90 francs (5.14 euros, $7.4) - 174 percent more in Switzerland - and a child car seat cost 239 francs (208.5 euros, $301.4) - 121 percent more.
Helping the cause even more, Swiss residents can also claim a refund on high value-added taxes they pay when buying goods in neighboring France, Germany, Austria and Italy. The VAT is usually close to 20 percent.
The new trend has brought a welcome surge of business to towns close to Switzerland. As Der Spiegel reports, these are boom times for the southern German city of Lörrach:
While Swiss shoppers contributed about one-fifth of retail and gastronomic sales revenue before, their share of purchases has spiked to 35 percent since early August. On Saturdays, every second customer is Swiss, retailers report.
All of that is bad news for many business owners in Switzerland. Most of the country's products are sold abroad — but that doesn't help the shopping malls, dairies and tourist industries that rely on money spent domestically.
As the BBC reports, the trend is taking a particular toll on the nation's more than 600 cheesemakers. Most of them are small firms that have seen their exports' prices rise because of the strong franc. And they're losing domestic business, as Swiss shoppers head across the border for bargains.
The Swiss Cheese Marketing Board's Manuela Sonderegger talked with the BBC about the problem:
"Swiss cheese is already quite expensive," she explains. "And with the weak euro, and the dollar also going down, it means we should really raise our prices, but we can't, or we will lose customers."The pressure on the cheesemakers is really high. Here in the Emmental, I know of cheesemakers who are thinking of closing down."
A number of Swiss businesses who've been hurt by the strong franc are meeting with government economics experts this week to ask for help.