Jelmoli Prepares for a New but Different Chapter in Its Retailing Legacy

Jelmoli is a Swiss department store in Zürich well-known to residents and visitors of the city. Last year (2023) the retail brand celebrated “190 Years of Jelmoli” with the tagline “Full of Stories” (e.g., posted on the store’s front windows). However, this celebration also marks in all likelihood a conclusion of its function as a department store. At the end of 2024 the Jelmoli department store will cease to operate. Jelmoli is actually owned (since 2009) by the real-estate investment firm Swiss Prime Site, which plans to redevelop the building compound of the department store into an ‘urban hub’ of shopping, business and leisure, yet the firm intends to honour and retain the name Jelmoli for its new concept. The re-modelled complex will include a form of ‘shopping centre’ and other service amenities, but it will no longer be in the known format of a department store.

The founder Peter Jelmoli-Ciolina started his retailing business with a store in Zurich in 1833. The store was not distinguished so much as a ‘department store’ in its early years as for its pricing approach. Peter Jelmoli is reckoned as a pioneer in leading a ‘fixed pricing’ policy, that is, no haggling or negotiating on prices with staff sellers in stores [1]. It should be noted, nevertheless, that the modern retailing firm Jelmoli of department stores was initiated by his family successors (mainly grandson Anton Franz Jelmoli) in 1899, together with the foundation of its flagship department store in its current location right next to Bahnhofstrasse, at the shopping and business heart of Zurich. The building, a city landmark, was designed as a ‘glass palace’ in inspiration from department stores in Paris and London and became a huge success [2]. The store was expanded several times since then during the 20th century and has grown into a large compound that exists today.

The prime years of Jelmoli were seemingly in the 1940s to 1980s. In the 1940s it carried out a major expansion of its flagship store by adding the building flank on Löwenstrasse (an impressive modern building of that time), on the backside of the original store. It took over more space in the 1970s and added underground parking. In the 1950s and 1960s Jelmoli expanded as a chain of department stores, from just one to 65 store branches across Switzerland (e.g., Orlikon, Lausanne, Geneva, Lugano). However, all those new stores closed down during the 1970s and 1980s [3]. Since the 1990s Jelmoli has been running again only its flagship store in central Zurich, focused on upgrading and improving it.

Over the years, increasingly so after the Second World War, Jelmoli has advanced its image as a chain of premium department stores through its stores’ design and high quality of product offerings. The ‘premium’ status has become entangled with a ‘luxury’ image. A former CEO of Jelmoli, Franco Savastano (2012-2019), suggested that the Jelmoli stores located out of Zurich had to close because most cities were too small for a “full-fledged luxury department store” [4].

The luxury image has become furthermore apparent at the department store in Zurich in the 21st century. Particularly, the Jelmoli flagship store was redeveloped into a luxury store with the adoption of its House of Brands strategy (2012). The branding strategy for the store meant highlighting premium, famed, high prestige and luxury brands in its product variety (e.g., cosmetics and fragrances, fashion and accessories), and organisation of the store accordingly. The store also was renovated, including re-modelling its interior design, to fit better a contemporary style and a luxurious image. Attractions of the store include a food hall and a rich food store in the underground floor.

The design of the store in recent years is elegant and overall pleasant, with good lighting and comfortable pathways. The visual display of merchandise — in clothing and accessories for example — is also appealing, presented in a convenient way, and often delightful in colours. Markedly, the prices of some products are not necessarily more expensive than in other stores in the area. One can find quality products for reasonable prices that provide “good value for the money”. However, the overall image of the department store, through its design and ‘brand portfolio’, created the impression of a luxury expensive store. In the past decade it seems that the attraction of glamour to shoppers declined, and luxury has become less of an advantage or strength, at least for a department store.

A number of factors are candidates in contributing to the difficulties of Jelmoli. The problem cannot be attributed solely to the department store format, nor to its premium-luxury image. The department stores of the Swiss Coop chain are more affordable (‘for everyone’), and the flagship store on Bahnhofstrasse (St. Annahof) seems to remain popular and to enjoy a greater footfall of shoppers. On the other hand, the Manor department store on the main shopping street, orientated closer to a discount store, closed down about three years ago. At the same time, Jelmoli as well as the Globus department store nearby, competing on the same premium-luxury spot, are losing customers to specialty premium stores and the standalone stores of famed and luxury brands (some of them also represented in the department stores). Hence, the problem seems to be rooted in the combination of a department store and a luxurious positioning. This situation may be attributed to changes in consumers’ shopping tastes and preferences — for a department store, a place that is more affordable yet of good quality is preferrable; for a premium store, a department store is less appropriate or convenient.

In February 2023 Swiss Prime Site (SPS) issued an announcement of their plans for the store site of Jelmoli [5]. Main reasons leading to the need for a new concept were structural changes in the market, primarily a boom in online retail and changes in consumer behaviour, which implied greater pressure on profitability of the department store. Its concept, it was therefore argued, had to be adapted to our new times. An additional reason proposed in Swiss media is the rising costs of operating a store in properties located in the centre of Zurich [6] — this is a likely cause driving stores of several retailers, Manor among them, out of Bahnhofstrasse (since 2010). One also cannot ignore the effects of the coronavirus pandemic on consumer buying behaviour (e.g., recession, digital shift) that brought many retailers to the edge. In its statement SPS explained that the firm could not find an entrepreneur or partner willing to undertake the operation of the retail business and thereof decided to take a different course.

According to the plan announced by SPS [7], the Jelmoli (compound) building will be divided into two ‘layers’. On the lower levels (expectedly the ground, basement and first floor), an area of 10,000sqm will be dedicated to “refurbished premium retail floorspace”. This redevelopment is meant to ensure that “the Jelmoli building remains one of the largest and most attractive shopping destinations on Zurich’s Bahnhofstrasse“. On the upper levels will operate high-end offices and public amenities such as a fitness centre and restaurant facilities. Overall, in the words of the CEO of Swiss Prime Site René Zahnd, the goal is to make Jelmoli “a unique destination and an open meeting point in the city centre“. The owning firm SPS plans to invest 100 million Swiss francs in redevelopment for two years from early 2025, with opening of the new Jelmoli complex scheduled for early 2027.

The model adopted by SPS for Jelmoli would seem to reflect a shift from a concept of department store to a shopping centre. Yet, it looks a bit ambiguous whether it is going to be more of the former or the latter. On top of it, the model is incorporating a mixture of different uses of spaces for business, retail and service (work & leisure). It is interesting to note its resemblance to another project that is nearing completion these days, the Swiss Life Brannhof {see * below} on Bahnhofstrasse. It is established by the asset management firm Swiss Life, owner of the building which formerly housed the Manor department store and the adjacent building. The Swiss Life Brannhof will comprise three lower floors of retail (4,600sqm), hosting shops and stores, and the upper floors allocated to offices [8].

• Note *: This new complex is named after Julius Brann, founder and owner of the original department store on location (established 1912). Brann partnered in a group with Nordmann and Maus Frères, consolidated later into the Manor chain of department stores, owned currently by the latter.

From the description of SPS, it sounds, however, that the firm intends to organise and manage the retail operation in a more integrative and ‘organic’ way than seems to be the case of upcoming Brannhof. It is yet to be seen what layout and structure will be chosen at Jelmoli for introducing products: independent shops and stores as in a shopping mall or in another arrangement? It is also not clear which product categories will be available to visiting shoppers. Additionally, except for the tribute to Brann, it appears that the Brannhof is a venture of Swiss Life not associated to Manor anymore, whereas the venture of SPS is conceived as a new ‘lifeform’ of Jelmoli, fully identified with the Jelmoli retail brand name (i.e., signalling continuity). Swiss Prime Site asserts that the department store will be “adapted to market demand and operate under new model”. They may try to avoid the perception of the planned retail site as a ‘shopping centre’, but it is neither likely to fit the description of a ‘department store’. We could be anticipating a sort of hybrid model.

Two other examples might shed more light on the changes in the ‘retail-scape’ in the centre of Zurich. On the one hand, following the re-modelling and new design at Globus department store (2022) adjacent to Bahnhofstrasse, its ground floor at street level looks set as the scene of a luxury shopping centre. A broad glimmering avenue crosses the store with ‘shops’ (apparently brand concessions) located on its sides. Other department floors retain more closely the scene of a department store, though divided by brands. On the other hand, it is worth noting the Migros City centre (on Löwenstrasse) which is more of a shopping centre but organised around and by the retailer Migros. The Migros City hosts independent shops or stores and other venues on the ground floor (plus two more floors); on a higher floor resides the main large store of Migros for food and drinks, home maintenance and improvement (DIY); a self-service restaurant is found on the top floor. The question is how Jelmoli by SPS is going to differentiate itself from the competition and reposition the retail model on a range spreading from ‘department store’ to ‘shopping centre’.

• In the past decade Jelmoli made investments in digital transformation to accommodate itself to new customer expectations and shopping styles. In a major investment, with the help of tech firm Onedot, Jelmoli aimed to enhance its e-commerce capability, turning into an omnichannel retailer that combines offline and online retailing. Moreover, they worked out a model to integrate the offline and online shopping experiences in a more seamless manner. A key manifestation of this project is the launch of the digital Jelmoli Concept Store at Zurich Airport (including three stores in the airport’s terminal and the nearby Circle mall) [9]. It is yet to be seen if and how the digital retailing initiative will be intertwined into the new, transformed Jelmoli model.

Franco Savastano is a chief managerial link between Jelmoli and Globus. As CEO of Jelmoli he presided over the implementation of the House of Brands strategy. Next, as CEO of Globus Savastano has been leading a “paradigm shift” and plans of design re-modelling at Globus stores, following the acquisition of Globus retail chain by Thai Central Group and Austrian Signa, and in the aftermath of the coronavirus pandemic. In an interview as Jelmoli’s CEO (March 2019), Savastano offered a bright description of the state of business for the retailer and optimistic projections. He talked most positively about the elevation of food & delicacy departments, shopping and dining [10]. Conspicuously, yet, he has given this interview a few months before leaving to serve as CEO of Globus (end of 2019) while the retailer was changing hands. In view of the recent developments, some of his statements seem puzzling in retrospect. In another interview later (July 2022) Savastano was already explaining convincingly and proudly the strategic and conceptual changes he had carried out at Globus [11]. Key moves taken by Savastano about positioning and marketing at the departments stores of both retailers have been put to a test of time — Jelmoli is changing course, which may require Globus to follow with its own reform.

The Jelmoli flagship department store in Zurich has been an anchor of shopping and leisure to residents and visitors (Swiss nationals and international tourists, business & leisure) for many years. Swiss Prime Site is facing a considerable challenge to protect and maintain the attraction of Jelmoli as an anchor destination. Patience will be needed to wait and see how they resolve the issues considered above, and henceforth what shape their new model of Jelmoli centre takes.

Notes:

[1] ‘About Jelmoli‘ in Jelmoli’s website (translated to English by browser’s translator). Also see brief information on Jelmoli in official tourist website Zuerich.com and Switzerland Tourism (myswitzerland.com).

[2] “Iconic Department Store Jelmoli Will Close Its Doors in 2024”, I AM EXPAT, 23 February 2023 (info & news website for Swiss ex-patriots). The article refers to news stories published in 20 Minuten and Neue Zürcher Zeitung (see also an article on the complex history of the many owners of Jelmoli).

[3] “Food Becomes the New Fashion” (interview with Franco Savastano, CEO of Jelmoli), RetailDetail EU, 14 March 2019 (information on the historic stores of Jelmoli was found also in Jelmoli entry by Wikipedia).

[4] Ibid. 3.

[5] “Modernization and Repositioning of the Jelmoli Building“, Swiss Prime Site, media release issued on 6 February 2023

[6] Ibid. 2.

[7] Ibid. 5 (details also in 2)

[8] “Swiss Life Brannhof” (in place of Manor department store), Immobilen Business, 24 June 2021

[9] “Jelmoli Success Story” (Jelmoli transformation into an omnichannel retailer, Onedot, viewed 11 January 2024 (the tech firm specialises in building digital product data platforms for commerce).

[10] Ibid. 3

[11] “In the Lap of Luxury: Franco Savastano” (interview with CEO of Globus), CEO Magazine, 27 July 2022