France may stir spending by adding more sales

10th January 2006, Comments 0 comments

PARIS, Jan 9 (AFP) - France's twice-yearly retail sales, strictly regulated periods of price reductions that drive a buying frenzy among locals and tourists alike, may be extended in a bid to woo even more shoppers into stores and boost consumer spending.

PARIS, Jan 9 (AFP) -  France's twice-yearly retail sales, strictly regulated periods of price reductions that drive a buying frenzy among locals and tourists alike, may be extended in a bid to woo even more shoppers into stores and boost consumer spending.

Finance Minister Thierry Breton suggested the idea of adding more sales periods, which until now have been limited to two end-of-season stretches in January and July.

On Sunday, only days from the launch of this winter's sales period on Wednesday, Breton said on television it "wouldn't be a bad idea" to consider adding more sales periods to the official calendar.

The move is "definitely meant to boost consumption", the main motor for France's economic growth, said Eric Heyer, an economist with the French Obsevatory of Economic Conditions (OFCE).

Unlike the United States, which gives retailers free rein to fix their sales, and Germany, which has abandoned sales but allows for occasional "promotions" and deals, France has kept retailers to a strict schedule.

But the possible reform has retailers divided, with smaller boutiques warning their profit margins will shrink and mega-chain stores enthusiastic about moving merchandise out more quickly.

The union representing department store workers (UCV) hailed the suggestion.

"Anything that stimulates business, which can boost spending, we are in favor of it", said UCV chief Jean-Luc Bathares.

For the government, which has little room to maneuver on salaries, more discounting would give French shoppers more buying power and more desire to spend their euros, economists said.

Some even called for deregulation, leaving merchants free to lower their prices when they want, as in the US, which would be an ever greater stimulation for consumption.

The other side of more spending could be rising household debt, "which can only be supported if employment rebounds," said Marc Touati, an analyst at Natexis Banques Populaires.

However, other analysts warn that the government may be seeking economic growth down the wrong route.

"Consumption is not the problem in France today," said Nicolas Bouzou, an economist at Xerfi. The areas of business investment and exports are "where there is a real lack of growth," he said.

Copyright AFP

Subject: French news

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