Reopening Brings Joy for Israelis, but Concern for Businesses

Israel Fisher
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Ayalon mall with COVID restrictions.
Ayalon mall with COVID restrictions.Credit: Eyal Toueg
Israel Fisher

Just four days into Israel’s post-coronavirus normal, consumers are responding with gusto, crowding shopping malls, boosting turnover at stores and keeping waiters busy taking orders at restaurants and cafés.

But for businesses, the joy of being open as usual has been dimmed by a shortage of workers, uncertainty over the government assistance that many businesses are supposed to be getting, and doubts about what many business people say are absurd COVID regulations.

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Figures released on Wednesday by the Bank of Israel, since the first easing of lockdown rules in the middle of February, consumer spending as measured by credit card use has recovered in sectors that had been the hardest hit by pandemic restrictions, including tourism, education, leisure and restaurants. Nevertheless, spending remains much lower than pre-COVID levels.

In tourism, for example, the moving average for credit card spending in the seven days through March 8 was 55% lower than it was in January 2020, the eve of the pandemic. Spending at restaurants was 19% lower. Overall, however, credit card spending was 14% higher than in January 2020.

In some business segments Israel underwent lockdowns that cut into sales and reopenings that saw a rebound. In the seven days through March 8, turnover in apparel was 32% higher than in January 2020.

Managers at malls, retail chains, factories and restaurants, nevertheless, expressed optimism.

Rami Shavit, who controls the retail group Hamashbir Lazarchan, said sales had risen 20% since street-front stores and malls were allowed to reopen in the idle of February. “There’s been a drop in the number of people coming in, but when people come they are coming to buy and they are buying more,” he said.

Shavit said he had seen a change in shopping habits, for instance, they spend less time trying on clothes or comparing products, preferring instead to exchange an item they end up not wanting. In response, Hamashbir has made its exchanges policy earlier.

Rental and other terms had been a source of friction between retailers and mall owners during the pandemic, but with everything reopened Shavit described his relations with his landlord as “excellent.” In some cases, mall owners had offered help, making up for the fact that the government had not compensated retailers with turnover in excess of 400 million shekels ($120 million) for the coronavirus losses.

Shavit said he expected the recovery in retail to be quick. “We think it’s going to be a good year. We’re a green country, there’s no reason they should be closing businesses again. Also, people won’t be traveling overseas – they are still afraid to fly and that (the government) won’t let them back in the country,” Shavit said.

Moshe Rosenblum, CEO of Ofer Malls, spent Wednesday visiting several of his properties and said that turnover was good. “The traffic is very nice, like any ordinary day, maybe even a little more. There are still cafes and restaurants that haven’t reopened because of personnel problems, but those that are open are full,” he said.

Labor shortages are also hurting book stores and fashion retailers, Rosenblum said, “Some stores haven’t been able to provide optimal service and haven’t opened up dressing rooms,” he said.

But, he added, retailers have gotten used to operating with slimmer staff. Customers are understanding and there haven’t been complaints.

As to the remaining coronavirus restrictions, Rosenblum said the malls were enforcing them, but he said he was at a loss to explain many of them, for example, the ban on cinemas selling refreshments, which has caused many of them to refrain from reopening, “It’s absurd,” he said.

The malls spent the months they were ordered close to gear up for their reopening. Rope barriers limit the number of people who can enter each shop and automated counting technology has been installed to keep track of the number of customers. Rosenbloom said mall managers had resumed charging full rent to tenants with the reopening.

Manufacturers share the optimism of their retailer colleagues. A survey by the Manufacturers Association found that members expected to see a 1% increase in turnover in the first quarter over the same time in 2020 – albeit first-quarter 2020 turnover was down 9% from the same time in 2019. The survey also found that manufacturers expect to increase capital spending by 4% and increase staffing by 3% year on year in the first quarter.

They also fret over manpower problems, but the sector with the biggest personnel issues is restaurants and bars. They only fully opened this week, but their employees now on unpaid leave can continue collecting unemployment benefits until June.

Others aren’t reopening due to cash-flow issues. Smaller businesses are struggling to meet the Purple Badge standards for social distancing, said Shai Berman, CEO of the Israel Restaurants Association.

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