Israeli Retail Sales Plunge Amid Coronavirus Outbreak and Merchants Fear the Worst

The exceptions – electronics stores and supermarkets – fare well as families stock up on food and refrigerators to store it

Closed shops in a street in Ashkelon during spread of coronavirus disease, Israel March 20, 2020.
AMIR COHEN/ REUTERS

Malls and shopping centers have suffered from a dramatic drop in traffic and business for more than a week.

But the latest tightening of restrictions, with the Health Ministry ordering retailers apart from supermarkets and pharmacies to shut their doors and even more stringent movement restrictions imposed on the public just before the weekend have brought sales to a new low.

Indoor malls have been shuttered since the start of last week, but for some exempted retailers, but the newest orders for Israelis to stay home except for work or urgent reasons have shut down many strip malls and downtown shopping areas as well. Many shoppers won’t risk entering the shops that are nonetheless open.

“Traffic is very, very thin today at out centers,” Hay GalisCEO of Big Shopping Centers, one of Israel’s largest mall owner/operators, said in an interview a day after the stricter restrictions went into effect.

“Even those who do choose to come don’t stay long. They come, buy what they need and go.”

Big has kept its shopping centers open on the grounds that the ministry has only recommended they close their doors, rather than outright ordering them to do so. Galis said that apart from apparel stores, most retailers have chosen to open for business. But they are not seeing much business.

“I think they’ll stay open as long as they are allowed to because people need things besides food and medicine,” he said.

Big has an edge on the larger indoor malls which rely heavily on apparel stores to generate traffic. Big’s shopping centers have a wider mix of electronics, toy, pet and book stores and optical stores many of which are still drawing shoppers.

Big has sought to persuade the ministry to widen its list of essential businesses.

Tzomet Sfarim, the bookseller chain, has kept its stores open in downtown and strip mall locations, or at 40 of 100 outlets. But on Wednesday, it reported daily sales of 55% less than usual.

A Fransiscan friar checks his mobile phone in front of closed shops, in the Old City of Jerusalem on March 16, 2020.
AFP

Housewares stores are facing the same problem.

“Another day or two like these, it won’t make any business sense for us to operate stores. We’ll close all our outlets and out our staff on unpaid leave,” said an executive at one chain, who asked not to be identified.

The big fear for the large retailers is that they will soon be forced to close their stores altogether, including online sales.

“Our online site is working nicely for us, but it may be closed as well. If the government orders it shut, I won’t be able to put workers to work online either,” said Tzomet Sfraim CEO Avi Schumer.

The extent of the sales decline can be seen in data from RIS, a market data company that collects turnover figures from the big chains. Sales per square meter in the first four days of last week were down 43%, compared with the first week of December – or 29 shekels ($7.55) a square meter on average. Even compared with the week before, when the coronavirus outbreak was already beginning to affect business, sales were 18% lower than usual.

The sharpest drop was felt by the biggest shopping malls, which traditionally enjoy the biggest sales. Compared with the first week of December, the week before the latest directives were issued they were down 45%.

Even at power centers, outdoor shopping malls that usually include three or more “big box” stores, turnover per square meter was down 42% the week before the Health Ministry orders. Presumably, they fell much more sharply last week.

Not all chain stores are hurting.

The electronics retailer Mahsanei Hashmal said its sales were up 20% the week the restrictions were issued.

“There’s been an insane increase in purchases of freezers, 10 times what we see in a normal week because people are stocking up on food supplies for the long-term and they need a place to store it. They’re also buying refrigerators, washing machines and ovens,” said Yoram Badash, the chain’s CEO.

“After the Passover holiday, we’re going to see a widespread rise in prices for electrical goods of at least 10%,” he said. That’s mainly because the dollar and euro have strengthened so much against the shekel in recent weeks.

Even good inventory will be affected because importers and retailers haven’t fully paid for them, he said.

Citing the big rise in its sales, Mahsanei Hashmal has asked the Economics Ministry and treasury to classify appliance retailers as essential businesses and allow them to remain open. Most are still open becuae they’re not located at indoor mall.

Supermarkets are also ringing up higher sales and, with it, crowded aisles and checkout lines, that have sometimes led to police being called in. At this stage, the police have let them go with warnings to enforce social-distancing rules – which the supermarkets say they are not in any position to do.

“Last Tuesday, it appeared that sales were starting to grow more moderate, but then on Wednesday shoppers again stormed into our stores,’ Said Rami Levy, founder and controlling shareholder of an eponymous chain of supermarkets.

“It appears that shoppers are worried that soon they won’t be able to leave the house and they wanted to be ready for the weekend,” he said.

Data from the market research firm Storenext, which tallies sales of the leading food retailers, found that in the week before the ministry directives took effect, supermarket sales had jumped 44.8% to 1.33 billion shekels.

On Thursday, three supermarket chains announced that they would keep some of their outlets open for extended hours, including 24 hours a day in some cases, except for Shabbat, to accommodate shoppers. Shufersal, Israel’s biggest chain, said it would immediately start with 23 stores and ad another 11 starting this week.

Rami Levy said half its stores would remain open every day until 2 A.M. and from next week some would stay open for 24 hours a day. The Yohananof chain it was opening six outlets for 24-hour-a-day shopping