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“We are all overwhelmed”

“So much has changed in the two years of the pandemic, the aftershock is yet to come”, says Dr. David Bosshart in the SUITS.Talk. Topics such as digitalisation and sustainability remain on the agenda at the same time. What do we have to prepare for? The trend researcher and retail expert on an industry on the verge of a nervous breakdown.

“When the Federal Chancellor speaks of a turning point in time, he meant first and foremost security policy. But the world is also changing for the economy and trade. We are moving seamlessly from one crisis – the pandemic – to the next – the war in Ukraine. Is this how we imagined the “new normal”?

We have to admit to ourselves: We are all overwhelmed. So much has changed in the two years of the pandemic, the aftershock is yet to come. Take the home office. Is it going to stay that way, that we work from home? We don’t know what will really remain. Will people rush back into analogue life? Or will the fear of war make us all stay at home again, where we are digitally bogged down? A lot is in flux. In the current situation, as a manager, I would not make any serious decisions or major strategic moves, but would first weigh things up wisely and take a preventive approach.

With the war, new issues are pushing their way onto the agenda that have not played a role for years – supply problems, price increases. The economic researchers expect inflation to continue with a simultaneous economic crisis. What consequences do you see for consumption and thus for trade?

Afterwards, one is always wiser. But actually, with minimal statistical and historical knowledge, we should have known that something like this could happen. Putin’s intentions were always clear. But we have suppressed this. In our prosperity, we have become desensitised to the dangers that exist in the world. We believed in change through trade. Now we see: The world is ticking politically, not just economically. It also needs ‘hard power’, i.e. military systems to enforce interests.

In the case of Russia, “change through trade” has proven to be an illusion. It will be similar with China. The dependence on China as a procurement market and especially as a sales market is at the same time incomparably greater. How long can we afford to ignore these dependencies?

The comparison between the USA and China is interesting. In the USA, consumption accounts for a good 70 percent of GDP. In China, the turnaround in thinking came with Deng Xiaoping, who wanted to make the Chinese rich: from 1980 to 2010, the share of consumption fell from 64 to 49 percent and is currently at 54 percent. In China, the first question they ask themselves is: how many resources or raw materials do we need to secure in order to generate growth? They are building a huge infrastructure for ships and transport routes. The American view, to which we also adhere, is: we sell as much as possible and then worry about where to get the necessary resources. Unfortunately, electromobility shows our naivety very well.

So we need to become more like China?

For me, a key question for the future is: What does meaningful, sustainable growth mean? We are now in a situation where we will again have to generate growth at any price. Green ideas will be secondary for the time being.

Robert Habeck kowtows to the sheikhs because we need their oil.

That was unimaginable until recently. At the moment, we are talking about security of supply and rising prices, about wheat and fossil fuels. It’s about “eat and heat”. Whoever has access to these resources has the upper hand. We have to try to generate meaningful, sustainable growth that gets away from that. And that is very challenging.

When the Corona crisis started, one or two experts predicted that the pandemic would now give us pause and that we, as sensible consumers, would buy sustainably more than ever. Now we are happy if we can still afford the tomatoes and the trousers.

That is true. But sustainability, especially social sustainability as a prerequisite, remains on the agenda. I am of the opinion that this issue depends very much on the insight and attitude of consumers in their everyday shopping, and that we should not regulate more than necessary by the state.

Without the state, there would be no plastic bag ban. Would that be better?

We must prevent ourselves from becoming as dirigiste as China, but we must also not become as insensitive as the Americans: Their ecological commitments are not honest because they are always oriented towards shareholder value and externalise the real costs. In China, on the other hand, the state can theoretically order sustainable consumption and clean economic activity. But the party decides according to power criteria and, in case of doubt, calculates a few percent of lung cancer patients into the progress. In Europe, we can only appeal. But consumers are unfortunately ambivalent. Look at the growth of Shein. Everyone talks about sustainability, but when there are percentages, they say “I don’t care”.

Sustainability is just one of the many major challenges facing retail and the consumer goods industry. 

The business models and thus the structures of the market are in transformation. I believe, for example, that we have reached the peak in Central Europe and other developed economies in the fashion sector. There will always be new suppliers, but this market will no longer really grow overall. Demography sends its regards. Nevertheless, I would caution against sweeping judgements. The hypermarchés in France, the shopping centres, the department stores – they have all been pronounced dead time and again, and they still exist. The centre is also regularly pronounced dead, and it still exists.

It’s just somewhere else.

Exactly. The market is much more fragmented. You can’t just make judgements from an abstract bird’s eye view. In my opinion, the micro-perspective is decisive: the proximity of suppliers and customers is what matters. The question is: what exactly are we measuring? The crisis is also a crisis of metrics.

Stationary trade is also often pronounced dead. Of course, the digital players were able to make massive gains in the lockdown. The 50 per cent market share we had in the fashion sector in 2021 won’t last for a while. But in the medium term, this value no longer seems unrealistic. Do you think it’s conceivable that at some point we will shop exclusively digitally? 

No. Much of this area is, strictly speaking, announcement marketing. How do the start-ups do it? They have a small, sometimes good idea and then they use the money from VCs to beat the advertising drum. It’s not EBITDA that counts, but EBITDAM – that is, profit before marketing costs. And when demand picks up, they take care of the product. The Germans are a bit slower, because everything has to be 100 per cent good and safe first, while the Americans are already cashing in.

In the past, entrepreneurs founded companies to sell products. Today, they found companies to sell the company and collect a billion after five years.

That is true. The so-called financialisation is also interfering more and more deeply in our economy. Start-ups are nevertheless mega-important. The economy and society need people who found companies and make them big. I see too few founders. The civil servant is the more likeable role model, even among young people. We have an ambition problem.

Yet there are also shining examples in the consumer economy: Amazon, Zalando…

I believe that the biggest technology companies have already reached monopolistic positions. It’s pretty easy to make money there. Today, it’s almost a matter of extracting pensions. They don’t have to do much anymore.

However, Amazon does not look like a pensioner group to me; on the contrary, it is highly dynamic. Or take a player like Shein, which comes out of nowhere and is valued at 100 billion after a few years.

High agility and rent extinction are not mutually exclusive if platforms and cloud are built accordingly. The compulsion to grow will nevertheless lead to consolidation and monopolisation. Like in China, you still have superapps like We-Chat or Alibaba on the mobile phone, which simplify access and thus monopolise. In the US, it’s going towards categories, and Europe is still fragmented, but with US dominance of the very big players.  There will always be niches where business can be done. But I don’t know any serious analyst who says Microsoft or Apple won’t grow in the next few years. They will go where Facebook has been for many years: a parastate within the state.

Retail traditionally takes place less on the internet than in the cities. The Corona crisis has left a nasty mark there. The vacancy rate is also conspicuous in the prime locations of the big cities. What will become of our city centres?

I am not very worried about the prime locations of cities like Berlin, Paris or Zurich. Especially in Europe, we have so many beautiful cities that have a high attractiveness in the mix of offers together with retail. But I can see that it is not so easy for medium-sized and small cities.

What can the shopkeeper do in a small town?

It certainly depends on the attractiveness of its location. And this attractiveness depends not insignificantly on the presence of flourishing companies with value-creating jobs and educational institutions, as well as on the cultural and social environment. Keyword social energy.

The individual can hardly influence this. As an answer to online competition, the stationary trade propagates the shopping experience. This concept has been around for 40 years. It has not prevented the meltdown. Are the brick-and-mortar stores fooling themselves?

We have to be honest with ourselves: Many will die. I see untapped potential in cooperation, also locally: Are retailers willing to share data? Do they do joint marketing? Do you send the customer to the neighbour if an item is out of stock? I think creativity opens up perspectives. Incidentally, I take an increasingly critical view of online retailing and the ever more comprehensive digitalisation. The social costs of convenience orientation are not accounted for anywhere. What is the real gain in quality of life? And what is the real quality-of-life loss? It has made people inert. We are becoming technocrats. Amazon has brilliantly recognised and exploited this. But the fullness of sensory experience is being accelerated away with the net. That will have social costs. Look, social media was supposed to bring people together. The opposite has happened: People are becoming more and more isolated and hostile.

One can lament that. But can it be changed? Where is the solution?

I’m not that pessimistic. People are repeat offenders and creatures of habit. As Wilhelm Busch’s widow Bolte said: “And what she particularly raves about when it’s warmed up again”. Change is important. But no one wants too much innovation. Trust needs familiarity. Counter-movements are there. A personal interaction, spending time together with all the senses is something much more valuable and anchors itself in my emotional memories much more lastingly than simply a swipe or a press of a button on a device.


Dr. David Bosshart is owner of Bosshart & Partners, Advisory Board Member in Retail and Hospitality and President of the Duttweiler Foundation. Bosshart was CEO of the GDI Gottlieb Duttweiler Institute for Economic and Social Studies in Rüschlikon, Zurich, for 22 years. He has been keynote speaker at over 2200 international congresses, summits and forums. A trained businessman with a doctorate in philosophy, he is the author and co-author of over 50 books and studies and more than 400 specialist articles. His work focuses on the future of consumption and social change, management and culture, globalisation and political philosophy.