Raising the Bra: Israel's Underwear Industry Is Facing Tempest in a D Cup

More competition from abroad and online means lower prices and better selections for Israeli consumers.

As Israel's clothing and fashion industry contends with increased competition from both local and international players, so too is the Israeli underwear market becoming ever more competitive.

The entry of foreign brands; seasonally changing styles and collections; and the relatively new trend among customers to do their shopping online – all these up the level of competition in the Israeli clothing market, and the battle over who gets to sell you your unmentionables is no exception.

"If in the past we would come out with two collections a year, today we already have six new collections each year," says Zvika Schweimer, the CEO of Delta Israel, the leading manufacturer of underwear and socks, whose customers include international brands such as Ralph Lauren, Nike, Hugo Boss and Calvin Klein.

"In this field there is constant innovation," Schweimer says. "When I sell a fashionable patterned panty hose, for example, that increases purchases. If once a woman would wear shapewear only on a special occasion like a wedding, today it's already a product that she wears to work every day."

In 2012, Israel's underwear industry reported revenues of NIS 1.95 billion, a 5 percent increase compared to 2011, according to a survey by the business information company BDI.

The biggest Israeli players are Delta and the Hamashbir Lazarchan department store chain. They are responsible for about 56.4% of revenues among the leading chains, and in 2012 their revenues from underwear sales totaled NIS 463 million.

Given the increased competition, Hamashbir and other Israeli chains are making sure to keep their finger on the pulse of this growing market. A recent survey by Hamashbir, for example, found that Israeli women purchase on average one to three bras a year.

"We discovered that there is a significant shortage of high-quality products in large sizes in Israel," says Dudi Cohen, vice president of marketing for Hamashbir Lazarchan. "Almost 70 percent of the women who were asked claimed that it's hard for them to find comfortable bras in large sizes, one reason [for the increased demand] being the popularity of breast-enhancement operations in Israel. We identified this need and have come out with a series of products that meet this need."

Indeed, Israeli clothing chains have found that you can't get by in the underwear market if you don't offer a decent selection of bras.

"Up until about a year ago, we sold only underpants, but until you start selling bras, you're not really part of the underwear playing field. A year ago we started selling bras too," says Adi Daichovsky, the marketing director of the Israel fashion chain Castro.

"The fashion market is very competitive, and today underwear is much more fashionable," adds Daichovsky. Case in point: Castro recently filmed a commercial featuring Israeli model/actress Gal Gadot – popularly known from the "The Fast and the Furious" action films – strolling along a Tel Aviv boulevard with other male and female models in their underwear.

Daichovsky says consumer habits have changed as a greater variety of price points have been introduced to the market. "There is much greater variety, the consumers buy more often, and the prices reflect that," Daichovsky says. "Once, buying a bra was a project. Today we're talking about bras costing NIS 60 or NIS 80."

"It's no secret that in the textile market, and in the underwear market as well, the prices are retreating all the time," says Ilana Kaufman, CEO of Golf and Co., which sells underwear through the Intima chain. "You have to be much more efficient, the buying has to be much better, [and] you have to launch collections far more frequently."

The veteran companies in the industry are convinced that not all the new players will survive, however. "Companies that enter without understanding this world will find it harder. In order to succeed in manufacturing a good and high-quality bra for women, you need far more expertise. It's not like manufacturing a T-shirt or a fleece," says Schweimer, Delta's CEO.

Meanwhile, as in other consumer industries, online shopping has affected the underwear market as well. According to BDI, more and more people are buying their underwear online, and today Internet purchases make up about 3 percent of the industry's revenues.

"For the most part, the prices of underwear on the Internet are lower than what is common in the industry," BDI reports.

One prominent online brand is under.me, the underwear brand of Israeli supermodel Bar Refaeli. The brand, which caters mainly to foreign markets, was started by businessman David Balsar, who was himself a successful underwear model in Israel.

"As we have little overhead and no physical stores, we can offer attractive prices that our customers can benefit from," says Balsar. "Our main market is currently Europe and the United States."

At present, however, the chain stores don't appear to feel threatened. "Internet purchases are negligible in terms of numbers," says Cohen, of Hamashbir Lazarchan. "Buying a product when you don't know how it will fit you is problematic."
 

Eyal Nevo and Dudi Hasson
courtesy
Guy Kushi and Yariv Fein
Yariv Fein and Guy Kushi
Goran Ljubuncic