French pay a price for rules on sales

PARIS —  On the first day that nearly everything in France went on sale, employees of the upscale Bon Marche were stationed at the entrances offering cookies to customers as they stormed the glass doors.

The shoppers were ravenous -- but not so much for sweets.

After months of planning, saving and strategizing, they couldn’t wait to be set free in the most luxurious department store in France with prices slashed on every rack and in every bin. The same was true later across town in more pedestrian shops on Boulevard St. Denis, where Silvia Atisso and her sister were pawing through racks of winter coats priced at $29.35 each.

“We wait for the sales so that we can buy everything that we’ve seen during the year for a much lower price,” said Atisso, 37, who had come that morning on the Eurostar train from London to find bargains.

In America, merchants hold sales whenever they like. In parts of Europe, it’s the government that makes the rules. Twice a year, in January and June or July, French law allows retailers to post the word “sale” in their windows and significantly cut prices.

The government sets the dates, and for four to six weeks, there is mayhem. The usual French decorum is dropped as shoppers, who on an ordinary day wouldn’t dream of eating lunch or drinking a cup of coffee on the streets the way Americans do, gobble baguette sandwiches as they race from shop to shop.

Which sort of explains why Bon Marche was giving out treats at 8:30 the first morning.

“People get so worked up anticipating the low prices,” confided a worker as she gingerly handed cookies to the incoming herd. “The last thing we want is for them also to be hungry.”

Not only are out-of-season sales banned in countries including Belgium, Italy, Spain, Greece and France, but a jungle of regulations also keeps European retailers in lock step: In most countries, they can’t sell below cost; in others they can’t advertise reduced prices in advance of sales or discount items until they have been on shelves more than a month.

A recent study in France explained that these bans were conceived to preserve “le jeu loyal de la concurrence,” or “the loyal game of competition.” Almost like a duel at dawn, fair competition isn’t considered possible without regulation to set a time and place for it.

This may seem ludicrous in the competitive 21st century, but these laws are aimed at preventing big stores from driving smaller ones out of business. Some are said to have originated in the mid-1930s in Germany, when the Nazi Party wanted to protect the public from what it regarded as overly competitive “Jewish” practices by some shopkeepers.

In France, they have long been intended as an orderly orchestration by the state to allow merchants to clear out old stock and bring in new collections.

But such restrictions help explain why in France and in the euro zone, consumer spending is expected to account for about 56% of the gross national product in 2007, compared to 70.3% in the U.S., according to the Organization for Economic Cooperation and Development.

Yet change is afoot. Germany scrapped the last of its sales restrictions in 2004, freeing retailers to offer discounts any time. Now, France looks poised to make some changes.

New President Nicolas Sarkozy appears to be as ravenous for structural reform as shoppers at Bon Marche were for bargains, and he has promised to lift sales restrictions and other regulations. Although they were intended in part to preserve France’s quality of life and inhibit cutthroat competition, they have contributed to economic stagnation. France’s gross domestic product growth fell from 2.2% in 2006 to 1.9% in 2007.

On the first day of the January sales, Economy Minister Christine Lagarde went shopping for ties in a Printemps department store and told a reporter about her plans to liberate French retailers by making sales “general” and “permanent” through the year.

But many small merchants and some shoppers are not happy at the prospect. Paolo de Cesare, head of that Printemps, said: “Sales should stay a special event. Two sales periods are largely sufficient.”

Vivian Lautte, a 42-year-old teacher, couldn’t conceive of random sales at random times.

“How will I know the real prices of things?” she wondered.

Since last summer, she’s been skimming 10- and 20-euro bills from her household budget and stashing them in a drawer. (This is in addition to the 10% her husband saves of their salaries each month.)

Within the first few hours of the January sale, she’d run through the entire stash, buying, among other things, black patent leather boots for herself, a desk set for her 9-year-old son and a made-in-China tablecloth with 12 napkins, all discounted 30% to 70%.

“I’m always embarrassed to be seen on the Metro with so many bags, so I stuff everything in one bag together,” she said. “I don’t want people to think I’m a materialist.”

But recent polls show most French consumers are eager for more opportunities for bargains and shopping hours. Despite the high value of the euro, prices of staples like bread, gas and milk have been rising, and the French have been complaining that their euros don’t go as far as their francs used to.

Fears of declining purchasing power have the French so worried that recently the left-leaning Liberation newspaper featured a giant baguette on its cover as well as a story about a family from Lyon struggling to stay within a budget that allowed for using only two tanks of gas a month.

Many aspects of shopping that Americans take for granted are rare here. Credit card use is much lower than in the U.S. Instead, the French rely on debit cards, which give them the convenience of plastic with less risk. American consumers have been more willing to spend rather than save: French workers on average were expected to save 13.1% of their income in 2007, while the European average is 9.8%. Americans saved 0.7% on average.

And while many Americans check their Sunday newspapers for sales, then head to the mall, the French can’t shop much that day -- because few stores are open, thanks to a century-old labor code that decrees a day of rest for all workers. (Moreover, newspapers aren’t allowed to run department store ads, out of concern about unfair competition.)

Lagarde was recently able to circumvent the ban on Sunday trading at certain furniture stores by labeling them “tourist destinations.”

Now, Sarkozy is pushing a bill in parliament to loosen the ban everywhere, but it faces resistance from unions and Socialist politicians. When hundreds of workers who favor working Sundays held a rally near Paris this winter, a union leader labeled them “collabos,” a term for Nazi collaborators during World War II.

Nicole Bricq, a socialist member of the Senate, is fighting Sunday openings. She worries about the effect on low-paid clerks, particularly single parents who might leave children at home unsupervised.

“Nobody asks what becomes of these children,” she said. Moreover, she noted that Sunday shopping isn’t a panacea. “In Japan, stores are open night and day and it hasn’t stopped them from having economic troubles. And you, the Americans, you have a recession right now!”

A few retailers have found ways around the Sunday ban, but their arguments border on the comical: After unions tried to shut down the flagship Louis Vuitton store on the Champs-Elysees when it opened on a Sunday, the company persuaded a judge that a fashion museum on the second floor was a “place of cultural significance.”

Sarkozy appointed a committee of economists and businessmen to come up with ideas to revolutionize the country into more of a free-market society. It presented its controversial plan, titled “300 Decisions for Changing France,” last week.

But France has been down this road before. Two years ago the government, of which Sarkozy and Lagarde were members, set out to reform the twice-yearly sales regulation and ended up changing little. Last month another “working group” was brought together to study the same set of laws.

They are, indeed, complicated. Grasping the difference between an official “sale,” an occasional “promotion” and a sanctioned “liquidation” may take a law degree -- and the laws are constantly litigated.

“It’s subtle, no?” said Pierre Chambu, the director of the government bureau that regulates fair trade. “I know this is all hard for people from America to comprehend. But really, all you need to know is . . . The sale season is more like Christmas than Christmas.”

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Special correspondents Rebecca Ruquist and Devorah Lauter contributed to this report.