Urban Outfitters Heads for Israel, a Market Tricky to Adapt To

The fussy Israel consumer wants a shopping experience, fresh collections and reasonable prices.

Bloomberg

Urban Outfitters is headed for Israel, and the anticipation surrounding the move is as sharp as it was when Swedish giant H&M got here five years ago.

The chain operates more than 240 stores in the U.S., Canada and Europe from headquarters in Philadelphia, Pennsylvania.

It sells lifestyle products — apparel, home furnishings, beauty products and more — to a young and hip clientele, although its glory has dimmed in recent years, and it is seen more as a department store for young people than as a fashion leader.

Bringing Urban Outfitters to Israel is Sakal Holdings, owned by Haim Sakal, who owns Topshop, Topman and other brands.

Although no contract has been signed as yet, reports say that about five Urban Outfitters branches will open in Israel and the brand will also be available in the group’s existing stores.

And with the impending arrival of a new competitor here, the question arises: How do fashion companies make it in Israel, anyway?

The British chain Topshop is considered one of the most successful and popular fashion chains abroad. TopShop has brought well known collections to Israel, like the collaborations with the model Kate Moss. But analysts say the chain has found it tough to get a foothold here.

“Topshop is a very successful brand worldwide,” says Natali Itzhakov, owner of the Visionary, a consultant to design and fashion firms. The stores “are like a palace, huge stores like that on Oxford Street in London, with music, clothing and accessories departments, makeup and even a restaurant. You never leave there without something. They work on all our senses, and that’s why the consumer spends money.

“On the other hand, in Israel, if you enter their store in Dizengoff Center, there’s no shopping experience and there’s not enough differentiation between it and other stores. The brand has to provide a shopping experience that will influence the clothing, like the Unique collection that they do bring to Israel, but because of the nature of the stores it looks bad. The chain is a missed opportunity in Israel.”

Liat Cohen, a buyer and fashionista who divides her time between London and Israel, says TopShop “has tremendous potential, in terms both of the fashion it offers and of its quick adoption of trends, but also in terms of price, and it’s a shame that in Israel it’s still not exploiting all its strength.”

For its part, Topshop says, “We give the Israeli consumer the best price for the fashion he likes.” New collections arrive every week, ensuring it can meet the country’s "high demand for the most up-to-date fashion in the world.”

Where competition is concerned, Topshop says it’s cut prices about 20% and offers “a wide range of sales and items with discounts of up to 70%.”

Topshop says it has opened new branches in Israel’s leading malls, beyond the flagship store in the north Tel Aviv community of Ramat Aviv, and it will be opening two new stores in northern Israel.

The branch in Dizengoff Center, in the heart of Tel Aviv, “has a charm of its own and it is a pilgrimage site for all the Tel Aviv Topshop women, and this March it will be redesigned.”

Other successful retailers in Israel include two from Spain: Inditex Group — with brands including Zara, Pull and Bear, Bershka and Massimo Dutti — and Mango, which in recent years changed strategy and cut prices.

“To succeed here, the international brands have to know who the Israel customer is,” says Itzhakov.

“They have to understand that the weather here is hot for the most part. They have to be sensitive to light and comfortable fabrics. And firms like Zara are also doing good work with local shopping, with special attention to holidays and other local events.

“On Rosh Hashana or on Passover there will always be more white and festive clothing, the gender division is very clear, and in areas where religious people live there is sensitivity to the local clientele and to the choice of clothing in those stores.”

Some international firms failed didn’t make it in Israel because they didn’t properly adapt to suit customers here, analysts say.

Benetton, for example, tried three times in Israel and failed. The Italian brand Alcott folded after eight months here.

“Benetton failed because it was a static shopping experience,” explains Itzhakov. “Nor is the brand relevant to the Israeli market because it’s based on knits and sweaters, and there’s no fast turnover, which Israelis like.”

And beyond good buying, international brands must pay close attention to factors like store design, marketing, advertising and public relations, as well as pricing.

“At brands like H&M and American Eagle, the customer enters the store and decides what kind of customer he is or wants to be,” Itzhakov says. “You immediately know in which direction to go if what you want is the unique collaboration with designer Alexander Wang or if you want to buy clothes for the office. These stores offers a tremendous selection but you don’t get lost.”

The most important point may be the shopping experience. Especially for brands such as Urban Outfitters, that evasive concept has become more relevant than ever with the wave of online shopping and the lower prices there.

“The Urban Outfitters stores offer a shopping experience that can be long, because there you encounter books, furniture and records, and several levels of prices and brands,” explains Itzhakov.

“Various types of customers can enter and find something there: My father will buy a book, my mother will buy a candle and I’ll buy clothes.

“That’s why their success in Israel depends on whether they succeed in transmitting the experience of the palace, a shopping experience in which the customer will be willing to pay the price, as in the stores of American Apparel, an international chain that succeeds in maintaining an overall shopping experience in the stores, including the nature of the salespeople, the music played in the stores, the advertising and the show windows.”