It’s been an especially hot summer, and that has driven the masses into Israel’s shopping malls. The parking lots are packed with cars occupying authorized spots and not a few unauthorized ones. The arcades are crowded and the shops filled with people inspecting the wares. Mall managers say traffic is up tens of percent over the same time last year – but they’re not buying very much.
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“We expected an increase in sales because the malls are full, but it’s not happening. Sales are about average and in general it’s a slow market,” said Pini Partok, CEO of the women’s apparel chain Zebra, whose sales are up only moderately from last year.
But a moderate increase isn’t much to celebrate: The summer of 2014 saw a big drop in retail sales as Hamas rockets raining down on much of Israel during the 50-day Gaza war discouraged people from leaving home.
“People have a little less money and a little more in the way of choices, so they are holding onto their purses There’s no doubt there’s a sense of a slowdown,” said Partok.
Shopping mall managers talk about a 20-40% increase in the number of visitors in July-August compared with June, and a 10-15% increase over July-August 2013, a non-war year. But a manager at a nationwide chain, who asked not to be identified, said that doesn’t add up to more sales.
“There are a lot of people in the malls and the chain stores are offering big discounts and good prices, but it’s not enough – people aren’t buying,” he said. “It’s not a good time.”
RIS, a market research company that tallies sales at more than 2,000 stores, said sales per square meter were up 1.8% so far in August from the same time in 2013.
“People are coming mainly to look around and not with any plans to shop. They want to pass the time in air conditioning or they come for the video games or children’s activities,” said a shopping mall executive, speaking on condition of anonymity.
That spells bad news for downtown apparel and shoe stores, and those at strip malls. According to RIS data for July and the first 10 days of August, sales at apparel, shoe and gift stores were down 3-3.5% on a per-square-meter basis from June.
They were up 7% from the same time in 2014, but that was little cause for cheer because downtown and strip mall stores were especially hard hit by the Gaza war.
The hot weather and growing number of Israelis travelling abroad has also taken a toll on cafes and restaurants this summer. Thanks to the onslaught of low-cost airlines flying Israel routes and pent-up demand from last year, when many people cancelled reservations due to the war, the number of Israelis flying abroad in July was up 20% from the same month in 2013 and 2014.
“Since the start of August, turnover has been weak, mainly after news reports about the big heat wave,” said Ronen Afflalo, who manages the Emilya café and chocolate shop in the Tel Aviv suburb of Givatayim.
“Mid-week you see very thin human traffic on the street and the neighboring businesses say they aren’t getting much business. We brought in portable air conditioners, but it didn’t help. The heat simply keeps people at home,” he said.
Even cafes and restaurants serving office workers in places like Ramat Hahayal and Rothschild Boulevard in Tel Aviv say turnover has been down 30-40% in recent weeks as temperatures rose sharply. Part of the reason is that many businesses take organized vacation, where all employees take off at the same time.
The one exception to the downturn is the mall branches of the big café chains, which have benefited from the big increase in shopping center traffic. People aren’t buying, but they are eating and drinking while they trawl the malls.
Yaacov Luzon, one of the principals of the Ilan’s café chain, says turnover at his mall branches is up 20% on average this summer, but at his street-side cafes hasn’t shown any growth at all. “People aren’t wandering the streets,” he said. “I think it’s a combination of the heat and the fact that this year a lot of people are flying abroad.”
Another café owner confirms this, estimating that turnover is down 20% at street branches and up 15% at the malls.
“On balance, turnover is higher because we have more outlets at malls. These days those cafes are filled to the gills from opening to closing time,” he said. “The malls are investing a lot of money bringing performers and attractions, which is a proven formula. This year even relatively small malls are putting money into activities, so the cafes are always filled.”