Israeli Retailers Join the Global Black Friday Frenzy

Local merchants have embraced the concept, and shoppers can expect big discounts on popular products

Shoppers descend on Macy's department store in New York for Black Friday sales, November 28, 2019.
AFP

https://www.haaretz.com/israel-news/business/.premium-amazon-is-taking-israel-by-storm-here-is-what-this-means-for-the-market-1.7758012In the United States it’s a tradition: On the last Friday of November — the day after the Thanksgiving holiday — media outlet are filled with images of lines outside store and mall entrances stretching into the streets and parking lots. Videos show shoppers climbing over each other to get to goods being sold at steep discounts. Sometimes, they even come to blows.

It’s Black Friday, the biggest shopping day on the American calendar and the start of the pre-Christmas buying frenzy.

Until three or four years ago, no one in Israel took the event seriously. The few retailers that did offered modest discounts on inventory they wanted to unload before the end of the year. Israelis looking for real bargains turned to overseas websites that offered delivery to Israel. Black Friday shopping records were broken in Israel year after year.

According to the national postal service, Israel Post, in November and December 2018, some 13.5 million packages were delivered to Israel, compared with an average of 5.5 million a month in the previous months. If less dramatic than crowds in America, Israel’s online Black Friday also garnered media attention, and gradually local retailers have caught on.

Today Black Friday sales in Israel resemble the real thing. Discounts of 30% to 70% are offered on categories such as electronics, shoes and clothing, housewares, baby products, even pets. But “resemble” is the right word here.

“Black Friday in Israel developed in a different way. In the United States it started in bricks-and-mortar stores and later came to the internet, but here people learned about it via globalization and the internet and from there it was adopted by bricks-and-mortar stores,” said Ofer Yarom, the CEO of Azrieli.com, the online shopping site of the shopping mall owner and operator.

“Five years ago, the first Israeli Black Friday occurred at Azrieli but it was a lot less aggressive than what happens today. There were discounts only on a limited selection of products, not on entire collections as there is today,” he said. “Now it’s developed into something powerful and everyone plays it big and holds big and quality sales. It’s become the biggest sales days of the year.”

Yarom said sales turnover at stores begins growing in the run-up to Black Friday, by 300% the week before. By the time Black Friday arrives, sales can be 600% their usual volume.

“A few years ago, retailers engaged in all kinds of tricks, like raising prices a little beforehand and then lowering them on Black Friday and saying, ‘Look, I’m giving you a 50% discount,’” recalled Gili Bruchim, CEO and owner of M. Bruchim & Sons, a consumer electronics importer.

He said that attitude started to change two or three years ago. “Customers aren’t stupid and they know what prices are in Israel and on Amazon. They know what the prices were a month ago and half a year ago and they’re always comparing, so the game is over,” Bruchim said. Now the discounts are real and the profit margins of retailers are a slim 2%-3%.

Avichai Schachter, head of business development at the KSP chain of cellphone and computer stores, says retailers who are still using Black Friday to sell off inventory are probably in difficulty. Nowadays, stores have no choice but to offer discounts on top-selling goods.

“We try to offer the most attractive prices in order not to lose sales to overseas or competing brands. Anyone who doesn’t offer a good price will lose a sale,” he said.

Credit card data point to the growing presence of Black Friday on the Israeli retail scene. Black Friday 2018 saw an 8.2% increase in the value of purchases compared with the same time the year before and a 9% increase in the number of transactions, according to the credit card processing firm Shva. At its peak last year, 10,000 purchases were being made every minute. At one point, the high volume of transactions caused Shva’s system to crash briefly.

Still, the biggest growth last year was overseas. The credit card issuer Max, formerly Leumi Card, said Black Friday turnover last year grew 40% on Israeli websites from 2017 but 70% on overseas ones. According to Israel Post, two-thirds of the Israelis it surveyed said they still preferred to shop on foreign websites.

In fact, the Black Friday phenomenon in Israel lasts more than one day. It’s just one day (albeit a big one) in a month of sales that begins with ShoppingIL, an event launched by Google for the local market on November 6-7. It’s followed by Singles Day, a Chinese sale day that has since become a worldwide phenomenon. The Monday after Black Friday is Cyber Monday, a day for smaller online retailers to showcase their wares.

For retailers, the shopping frenzy requires them to spending months readying their inventory and logistics and hiring staff. They invest huge amounts of time in analyzing the prices of competitors at home and abroad.

KSP’s Schachter said he hires scores of temporary workers and runs operations from 7 A.M. to midnight during the peak selling season, to make sure that customers get their orders promptly. “Because we’re price players, we employ full-time analysts, who from morning to evening check sites in Israel and abroad to make sure we are the most competitive,” he said.

Stocking up on inventory is also critical. “No one wants to be caught without merchandise. It’s a guessing game what will be the hit products on Black Friday each years,” said Azrieli’s Yarom.

“There are some categories where you know in advance, like a new model of Dyson vacuum cleaner will certainly sell a lot, and so will new smartphones from Apple and Samsung,” he said. "In fashion it’s a gamble. Once a certain style of Adidas was a hit and another time it was Converse .... The winner is the one who scores a bull’s-eye and has the right sales on the right products.”

Schachter said Facebook groups play an important role in figuring out consumer trends. “A good special reverberates through the network. It’s enough for someone to put up a post in their group and you can break sales records.”