Urban retailers face increasing competition through changing consumer behaviour including online shopping and greenfield shopping centres. This leads to vacant retail areas within cities, as customer footfall is channelled away from the centres.

This trend affects the commercial landscape in Luxembourg. Nevertheless, there is almost no data being collected that could help to provide a deeper understanding of the trend and how it can be counteracted. So, the General Directorate for Small and Medium-Sized Enterprises of the Luxembourgish Ministry of Economy, the Chamber of Commerce and the Luxembourg Confederation for Commerce (CLC) initiated the ‘Pakt PRO Commerce’.

The pact will help leverage the economic situation of retailers. A key part of the instrument is the Commercial Observation Register, a new tool to document and categorise businesses across the country. It can be used to analyse the commercial landscape and to inform decision-makers on where there is a large range of retailers and hence centrality as well as potential locations for additional retailers.

Rationale for action

The retailing sector is just one of the many sectors affected by digitalisation as more and more sales volume is generated online. In Luxembourg, between 80% and 90% of the population regularly shops online while only 10% of Luxembourg based shops offer products via the internet. In addition, many greenfield developments for large retailing centres are currently underway, probably decreasing customer footfall in city centres.

These trends threaten the survival of small urban retailers, as their customer base declines. Therefore, more and more retailing space risks being left vacant, which decreases the retail supply and the attractivity of city centers.

Objective

Increasing the understanding of ‘Why?’ and ‘How?’ these processes happen is the main objective of the Commercial Observation Register. This is a nation-wide database of retailers and their characteristics, enabling analysis of the commercial landscape in a city or municipality.

With the aid of data, the Commercial Observation Register can help answer critical questions for developing the urban commercial landscape, such as; ‘What trends shape and form a city’s commercial landscape?’, ‘How does the commercial landscape of a city look?’, ‘Where are the best locations for retailers currently?’ and ‘Where are ideal locations for new retailers?’. The answers assist decision making on urban development.

Time frame

‘Pakt PRO Commerce’, which includes the Commercial Observation Register, was launched in 2016. Collecting information on urban retailers in Luxembourg was completed in February 2019.

Key players

‘Pakt PRO Commerce’ was launched by three partners; the General Directorate for Small and Medium-Sized Enterprises of the Ministry of Economy, the Chamber of Commerce and the Luxembourg Confederation of Commerce (CLC). During the test phase, the Commercial Observation Register has been implemented and managed by the latter organisation.

Users of the Commercial Observation Register are municipal or national policy makers looking to make decisions that could impact the retail landscape.

Based on information from the Commercial Observation Register, the location and typology of shops could be mapped to identify the inner city area of the City of Dudelange. Source: CLC, 2018.

Implementation steps and processes

The Commercial Observation Register is a national database regrouping information on the locations and types of retailers. The CLC, in charge of implementation during the pilot phase, started designing the analysis tool in 2016. Since then, information about each retailer in the country has been surveyed, including address, name, type, size of retail space, business model and type of distribution. These results are fed into a central Geographic Information System (GIS) and can be used for further processing and analysis.

For first-hand analysis, the GIS database can provide information on all retailers in a given location at any time. For more in-depth analysis, the GIS database can be complemented with market analysis, i.e. purchasing power, location analysis and turnover forecasts.

Required resources

The first pilot phase of the Commercial Observation Register has been finalised in 2018. It is planned to make the tool accessible to decision-makers during 2021. However, information on required resources are not available. How the different municipalities and policy makers will be able to benefit from the Commercial Observation Register will be determined after first projects will be finalised, using information from the Register.

Results

With the Commercial Observation Register, municipalities and policy makers can access a versatile tool supporting decision-making. It enables appropriate strategic decisions shaping future commercial landscapes in cities and municipalities. The tool enables definitions of commercial centres, decisions on locating new retailers and understanding impacts of trends, such as digitalisation, on the urban retailing environment.

To elaborate additional benefits and applications of the Commercial Observation Register, the instrument will be tested in five cities. This will enable additional conclusions on specialised applications as well as the data and analysis required to react to specific issues, such as shop vacancy, parking and accessibility, trends in the retailing sector and more. Testing the tool will also provide insights as to when the information can be used best to shape local decision making. This helps to create tailor-made and result-oriented applications for the various retail sector players in Luxembourg.

Potential use of the Commercial Observation Register can be illustrated through development of the new district ‘am Duerf’ by the municipality of Dudelange within the city centre. This new district helped to bridge a commercially deserted area between the two main commercial centres. The number of businesses has increased from 167 to 215 (2018) in just three years, increasing the attraction of the city centre. Also, two commercial hotspots which were formerly separated could be transformed by the ‘am Duerf’ development into a single, continuous retail district (see Map).

The pilot of the Commercial Observation Register has been extended in 2019 on the cities of Esch-sur-Alzette, Diekirch, Remich and Bertrange, addressing different challenges to urban retailers throughout the country.

Map of the commercial situation before and after development of the ‘am Duerf’ district. Source: CLC, 2018.

Experiences, success factors, risks

In the future, the Commercial Observation Register will become a powerful tool to assist policy makers in shaping development of the retailing sector. Not only location, but also decisions on retail space needs can be influenced by the tool. However, the Commercial Observation Register relies on an extensive data collection procedure. Only if data is collected regularly in every municipality can there be reliable observations on trends. This might reflect on the operational costs of the tool for its stakeholders.

Conclusions

The Commercial Observation Register is an instrument with a lot of potential applications to shape retailing functions in Luxembourg’s cities and municipalities. It informs policy makers about the retailing landscape, type and development of supply so they can make decisions considering changing consumer behaviour. Even though such an instrument is not new to the set of tools available to urban planners, it is the first of its kind in Luxembourg. More initiatives like the Commercial Observation Register supporting domestic retailers and shop owners, such as the online platform “Letzshop”, have been implemented recently.

Contact

General contact address of the Luxembourg Confederation of Commerce: info@clc.lu

References

Pact PRO Commerce, 2018 (in French and German): https://www.procity.lu/fr/2018/07/16/quelle-valeur-ajoutee-le-nouveau-cadastre-du-commerce-offre-t-il/

Luxembourg Confederation for Commerce, 2018: The new Commercial observation register for Luxembourg. What’s the added-value? (in German): https://www.procity.lu/2018/07/16/das-neue-cadastre-du-commerce-welchen-mehrwert-bietet-es/

Wort, 2020: Le cadastre commercial fait attendre (in French): https://www.wort.lu/fr/luxembourg/le-cadastre-commercial-se-fait-attendre-5e4417feda2cc1784e3560fe

Nonnewisen is a development in Esch-sur-Alzette, the second biggest city of Luxembourg, in the South of the country. The development covers 30 hectares of previously agricultural and horticultural land at the northern outskirts of the municipality.

Rationale for action

In Esch-sur-Alzette, prices for housing increased continuously in recent years following the national trend. This has been boosted by the large-scale development of Belval, a former steel-production site close-by, now converted into a new city district. To address the shortage of affordable housing, the municipality of Esch-sur-Alzette in cooperation with Fonds du Logement (the national housing fund) initiated conversion of the site from agricultural land and allotments into a residential area.

Objective

Nonnewisen is a new district, integrated into the existing urban fabric. When finalised, it will provide around 900 highly modern housing units, hosting 2 300 to 2 500 inhabitants. Providing a high standard of living in the new district is one of the main objectives. Because the district is part of the existing urban fabric of the city. A high population density for the new district is envisaged. To ensure a high quality of life, emphasis was put on high quality green urban areas as recreational sites between and within buildings.

Additionally, the functional mix between living, working, recreation and consuming provides a high level of service for residents. There will be a new school for 300 to 320 students, a day care centre and a central space with shops. Blending different functions ensures that services will be easily accessible by soft means of transport and the site will also be a centre of attraction for the older, surrounding districts.

Another priority was to keep unit costs low. This was achieved by constructing high density buildings, saving material and effort. Economies of scale reduce construction costs. The municipality together with Fonds du Logement allocate residential units directly, excluding real estate agencies, which makes it possible to determine prices independently of market influences.

Timeframe

The project is being developed since 2003. Development of the district is still ongoing in 2021.

Key players

Fonds du Logement is in charge for creating a third and the Municipality of Esch-sur-Alzette is in charge of creating two thirds of the planned accommodation. A large number of planners and architects, private as well as public land land owners are also involved.

Implementation steps and processes

In 2003, the first call for proposals for an urban concept was launched, which was awarded to a Dutch firm. A key criterion was that the new area and buildings integrate well with the surrounding urban fabric. Building the new area following the state of the art construction techniques was equally important as environmental protection in the design of the concept.

For the implementation, the terrain was acquired. Around 20 hectares were already owned by the municipality of Esch-sur-Alzette and a small piece of land belonged to the state. The rest is being bought piece-by-piece from the private owners. Even though development has started in some areas, negotiations with owners of other areas are still ongoing. In 2007, construction of the first units started and in 2011 the first part with 17 apartments and 23 single-family houses was inaugurated by Fonds du Logement. In 2012, another 25 single-family houses, 4 double family-houses and 42 student residences were finalised. In 2015, the third phase provided 32 single-family houses, 24 apartments and ~500 m2 of commercial space. In 2017, 8 commercial spaces, 40 more single-family homes and 75 apartments have been completed.

Buyers of subsidised units provided by Fonds du Logement need to be eligible for a housing construction bonus from the state. This is linked to social criteria such as a below-average household income. Under this, 130m2 of subsidised housing costs around EUR 444 000, or some EUR 1 000 per m2 below the average price in Luxembourg in 2016. Such buyers can also access other financial support. Non-subsidised units can be purchased by anyone and 130 m2 of non-subsidised housing costs around EUR 472 000.

Units can only be bought for a term of 99 years. This is through heredity leasehold that costs around EUR 50 per month. People need to live at least 20 years in the units before they can sell their property again and Fonds du Logement has unconditional pre-emption right. Units sold by the municipality (2/3 of the total units built) can be purchased for a lower price. They are sold without heredity leasehold and thus do not include a usage restriction on 99 years.

Type of wooden single-family houses in the new district. Source: Fonds du Logement, 2020.

Required resources

The development of the new district is organised in stages. The project is not yet completed so total costs are still unknown. As an example, the price for the third phase (32 single-family houses, 24 apartments and ~500 m2 of commercial space) was EUR 17.5 million.

Results

The new district offers residents an attractive environment with a high quality of life. It borders many public green spaces and is close to the city centre of Esch-sur-Alzette. The new district is well connected to surrounding districts as new infrastructure has been created within and towards Nonnewisen and so far the mix of functions promises to be successful.

Nonnewisen development plan ‘urban gardens’. Source: City of Esch-sur-Alzette, Fonds du Logement, 2003.

Experiences, success factors, risk factors

The development shows how an urban environment can be shaped to provide liveable and affordable housing. All proposals submitted in 2003 under the limited competition procedure were in line with the primary requirements of the public institutions that have triggered the development (the municipality and Fonds du Logement). A cooperative competition process permitted the authorities and tenderers to find common solutions to identified problems. During the planning and implementation of the project, the municipality worked closely together with the Fonds du Logement. The stepwise approach of the developments ensures that the construction of the new district does not overburden the resources at hand.

Nonnewisen is also an innovative design concept. Issues, resulting from high density were structurally addressed in the planning process by providing areas where residents can meet and where they remain alone.

Conclusions

Nonnewisen illustrates how innovative urban forms of housing can look in the future and that high densities are no rejection to a high standard of living. A pre-condition for the development of the site was the ownership structure. Most of the area needed for the development of Nonnewisen is public property and only some areas have to be purchased from private owners. Considering future adaptions of the structure of the district, the recreational green areas are important in order to sustain a quality of life in Nonnewisen.

Contact

Ms Daisy Wagner, chief planner of the city of Esch-sur-Alzette: Daisy.Wagner@villeesch.lu