GENEVA — The city bus is packed as it leaves downtown, winding away from the sparkling waters of Lake Geneva and through neighborhoods sitting hard along the border with France.
Hardly anyone gets off. Then, 20 minutes later, the bus stops just on the other side of the frontier near a Carrefour supermarket in the town of Ferney-Voltaire, France, where the parking lot is awash in Swiss license plates. Dozens of Swiss pile out, shop and return loaded with groceries half the price of those in Switzerland.
The value of the Swiss franc has soared 18 percent against the euro in the past 12 months as global investors buy up billions of francs as a safe haven from stock and bond values battered by the U.S. and European financial crises.
The cost of goods in Switzerland was already high compared to other European countries thanks to the booming Swiss economy. Now, the prices are astronomical, driving down tourism, curtailing exports and sending hundreds of thousands of Swiss across their small country’s borders with France, Germany, Italy and Austria in search of euro bargains.
The Zurich daily Tages Anzeiger recently published an index showing that an IKEA stove selling for $790 in Germany cost $1,669 in Switzerland. A deodorant selling for $3.10 in Germany cost $7.58 in Switzerland, and a child car seat selling for $151.12 in Germany cost $307 in Switzerland.
The Swiss franc was gaining - again - against other major currencies after the Swiss National Bank tried to weaken the currency Wednesday, but it stopped short of pegging the franc’s value to the euro. The franc had reached near equal value with the euro earlier this month, but then fell in the past week as speculation mounted about an intervention.
The Swiss Cabinet announced plans last week to spend $2.57 billion from an expected surplus this year to counter the rise of the franc and keep jobs from heading across the borders, in what Johann Schneider-Ammann, the economics minister, called “a bold and impressive step” aimed at propping up exports and tourism.
Outside Carrefour, software engineer Marco Bonifazi grappled with four bags brimming with prosciutto, broccoli and pasta. He carried a backpack that was stuffed with couscous, melons, canned corn and a huge plastic jug of dish detergent strapped to the outside.
“It’s just great to save money,” he said, as he and his wife, Marta, headed back to the bus.
As many as a half-million Swiss in this country of 7.8 million cross the borders for bargains at least once a month, costing the economy close to $3.86 billion a year, said Thomas Rudolph, a professor of marketing and retail management at the University of St. Gallen.
It’s a bitter lesson in the interconnectedness of the European economy for a nation that proudly has rejected integration into the EU.
“Everyone just told us, ‘Don’t bother shopping in Switzerland anymore. Go to France. Because the franc goes a lot further,’ ” Claire Till, a British woman who works at a marketing company, said as she closed her Peugeot wagon’s trunk, filled with grocery bags.
Strong exports, low unemployment and moderate government debt have buoyed the Swiss economy since it bounced back from a 2009 downturn, particularly when compared with its neighbors struggling with massive national debts that have eroded confidence in their stock markets and in their ability to repay their government bonds.
Geneva and Zurich are consistently ranked among the priciest cities on the planet, and the International Monetary Fund ranked Switzerland last year as the 19th biggest economy in the world, with a gross domestic product of more than $626 billion.
Switzerland maintains open borders with its neighbors, and more than 2 million people live close to the frontiers.
But since the Swiss live outside the EU’s economic union, they’re eligible for refunds on the 19 percent to 20 percent value-added tax they pay in German, French, Italian and Austrian stores. They come out ahead even after paying the 8 percent VAT that Switzerland requires on items brought over the border.
All the Swiss have to do is drive a few minutes past the Stuecki Shopping Center to get to the eurozone, where their potent franc can buy the same trousers, detergent, contact lenses, stoves and magazines for half the price.
“The Swiss people are doing a little bit of cherry-picking. Of course, we feel it,” said Jan Tanner, the mall’s director and board president of the Swiss Council of Shopping Centers and director of the mall.
Inside the mall, which cost more than a quarter-billion francs to build and boasts climate-friendly heating and cooling, the lunch crowd swelled the fast-food court, but there were few other customers wandering its stylish glass and steel corridors, where new BMWs were parked on display.
Zurich-based Location Group declared the mall a “disgrace” in a retail market study earlier this year, saying at least one-third of all tenants would move immediately if they could because sales “fall well short of the worst-case hopes.” It partly blamed the franc.
“It’s really a very, very serious moment for some of those retailers,” said Mr. Rudolph, the professor at St. Gallen. “Some of the stores will be killed. Probably the smaller ones. If you’re near the border, and the price difference was 10 percent, and now it’s 30 percent - it’s not going to work.”