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Business

Shopping for a Bargain

Last year's changes in retail law offered German stores more freedom to offer discounts and gave consumers a chance to bargain over prices. But retailers say nothing much has changed since last July.

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Shoppers have been looking forward to the summer sales, which begin on Monday.

On Monday, shoppers throughout Germany will be on the lookout for bargains during this year’s annual summer sale.

It seems not much has changed since last year, when the future of both the summer and winter sales was called into question with the adoption of a landmark amendment to Germany's retail sales laws.

The repeal last July of the German Price Discount Law, which limited discounts to no more than 3 percent except during two two-week periods of winter and summer sales, and a related ordinance, which forbade deals such as "buy two, get one free," was considered one of the most significant changes in Germany’s marketing laws in the past 50 years.

But one year later, major discounts are rare outside the official sales weeks, and "shops are getting ready for the annual summer sales, in the same way as every year", Karstadt spokesman Elmar Kratz says.

No "bargaining mentality"

Last year's changes sparked fears among retailers of widespread haggling at German shop tills – a scenario that has not, however, materialized.

"Most consumers haven’t resorted to haggling after the law amendment", Kratz says. Indeed, "most Germans have never bargained before, and don’t have the "bargaining mentality" that consumers in other countries may have".

And retailers, for their part, are not encouraging it. "Imagine what would happen if the 2.5 million consumers who shop daily at Karstadt stores started haggling at the shop tills?" Kratz says.

Coupons and customer cards

According to Stefan Schneider, vice president of the Association for German Private Businesses, "nationwide companies cannot offer individual prices in each seperate branch". Therefore, they tend to resort to price reductions that they can offer in all branches, including coupons and customer cards.

Since the change of law, an increasing number of larger retail chains have begun including coupons in daily newspaper advertisements.

And the customer card has become increasingly popular, especially with larger retailers. Seven million of Karstadt’s customers already have the Karstadt Club Card, with which holders can collect premiums such as magazine subscriptions or trips abroad. "34 percent of our turnover is done with customers who have a customer card", Kratz says.

But despite price reductions and bonus points – the change law has not benefitted all retailers. "The discount campaigns help shop chains in particular to attract attention", Schneider says. "The price reductions offered by smaller, local companies, however, are easily overlooked".

German shopping blues

Germany’s current economic slump has hit private businesses hard and dampened consumer confidence considerably. Figures released last month showed that 150,000 private business are facing bankruptcy this year.

"The consumer is bombarded with bad news", said Hermann Franzen of the Association for German Private Businesses. "That’s no atmosphere in which to buy himself a new suit".

Germany's unemployment rate hit 9.5 percent in June. That means many consumers have less money to spend and many businesses face hard times, according to Franzen. One-third of the private businesses polled by the association in June are due to report a drop in annual income of 10 percent – despite the change in the price discount law, which last year was heralded as a major step forward for German retail.

In times like these, retailers are reluctant to bargain with customers over prices, and shoppers can only expect major discounts during the winter and summer sales. But will the bargain price offers in this week’s summer sale tempt German consumers to start haggling over further price cuts? Elmar Kratz thinks not: "The thought of holding up queues is not one every German shopper may relish", he says.