Franc Surges Against Euro Swiss Shoppers Storm German Border Towns
The euro and the dollar may be tanking, but the Swiss franc hasn't been worth as much in years. Switzerland's economy is suffering under the high-value currency, but German cities across the border are enjoying a flood of shopping tourists from the Alpine country taking advantage of the exchange rate.
Store clerks in the southern German city of Lörrach have noticed a significant increase in customers like Swiss native Alice Wasserfallen. Standing at a shoe store checkout, she is asking about the value-added tax so she can receive a refund after she gets a form stamped by the customs office.
The procedure is routine for some Swiss shoppers who have been taking weekly trips to Germany for years. But until now Wasserfallen has only made purchases in the neighboring country two or three times per year. "It was always too troublesome," she says.
In recent weeks, however, the euro has tumbled against the franc, even temporarily falling under 1.04 francs last week. The value of the Swiss currency has strengthened in the face of market jitters over the United States and European debt crises. On Wednesday, the euro was trading at around 1.14 francs, amid efforts by the Swiss National Bank to stem the franc's appreciation.
As the dollar and the euro become less attractive to investors, the security of the Swiss franc has driven up its value. Everyday products such as deodorant and olive oil now cost up to three times as much in Switzerland as they do on German shelves.
"Now it really is worth it to shop in Germany," Wasserfallen says.
After buying several pairs of shoes for her two daughters, Wasserfallen plans to head to a nearby travel agency and book the family's next vacation, which will also be significantly more affordable in Lörrach. The border town is experiencing a boom. 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.
The provincial community of just 48,000 in the tri-border region with France and Switzerland has become a shopping stronghold. Not a single storefront stands empty in the city center, and one property for rent recently had more than 30 interested parties, Mayor Marion Dammann says.
While the surge in Swiss shoppers has pleased Lörrach residents, they are also concerned about how long the trend will last. Horst Schmiederer, boss of a clothing store called Kilian, reports a considerable increase in turnover, though he won't provide exact numbers. "I'll say only this: It is much more than normal," he says.
Not only are there more Swiss people buying his goods, the items are "mainly high-value things," Schmiederer adds. "The Swiss are already buying a lot of autumn fashions, so I can't say if sales will continue in this manner."
Talk of a potential devaluation of the franc isn't of much concern to him, though. "Even if the exchange rate rises again to 1.30 francs, it's still good for us," he says.
Customer Base Broadens
Even frequent shoppers from Switzerland have been stunned by the price differences just a short drive over the border. "This wallet costs 29.90 ($43) here. At home it costs 70 francs -- almost double," says Basel resident Yvonne Widmann, who can reach Lörrach by car in just 10 minutes.
"I'm not actually looking for anything in particular, but the prices are really unbeatable -- especially because one can also claim the sales tax back," she adds.
But the boom in Lörrach and other German border cities such as Weil am Rhein and Konstanz has another side to it -- Swiss merchants are suffering. Their stores are empty, particularly on weekends, as customers go deal-hunting in Germany, France and Italy.
The practice is endangering Swiss jobs, according to Max Buholzer, deputy leader of Swiss retail association SDV. "I advise those who are bothered by the prices in Switzerland to seek a job abroad and then shop more cheaply there," he says.
'Every Man For Himself'
But some Swiss shoppers feel no loyalty to the shops back home. "It's every man for himself," says Sabine Knösels after receiving her sales tax reimbursement at the Karstadt department store in Lörrach. "As long as everything in Switzerland is so expensive, I don't feel guilty at all."
Knösels comes from nearby Reinach, but the strong franc has started luring shoppers from as far afield as central Switzerland, such as Fredy Müller, who drove three hours on Saturday from Lucerne with his family. He bought clothing and toys for his children.
People like Müller are key to the recent boom in his city, says "Pro Lörrach" city trade association head Horst Krämer. Some 20 percent of shopping revenue was already coming from Switzerland even five years ago when the euro exchange rate was at 1.65 francs, he explains.
"The difference today is that we also have customers from Zurich and Lucerne. That provides a two-digit plus in turnover," he says.
Despite enjoying the affordable prices abroad, family man Müller insists the franc must lose value before the Swiss economy is thrown into crisis.
But even if there is a financial crisis, the Swiss still shouldn't consider adopting the euro, he says. "No way! We are proud and happy that we have the Swiss franc."