Israeli Businesses See Sales Slump Due to Gaza Conflict

Owner of one clothing store chain warns that state will also have to compensate stores in the center, not just those in south.

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An Ashdod man cleaning up after the window of his store was shattered by a rocket fired from Gaza.
An Ashdod man cleaning up after the window of his store was shattered by a rocket fired from Gaza. Credit: AP

As Israel enters the third week of Operation Protective Edge in Gaza, consumer spending has remained sluggish, with the number of shoppers remaining sparser at the country’s shopping malls, restaurants and cafés.

Merchants reported continuing declines in sales and customer traffic. Although the drop has been sharpest in the south, where rocket fire from the Gaza Strip has been the heaviest, the effects of the war have also been clearly felt in the center of the country, including Tel Aviv – a region that has sustained much more significant rocket fire than in November 2012 during Operation Pillar of Defense.

Major clothing retail chains report a drop in sales of about 80% over the last few days at their locations in the south, and declines of about 25% in the center of the country. In the north, which has sustained limited rocket fire from Gaza and Lebanon, and cross-border fire from Syria, the decline in business has been a more modest 10% on average.

“After prior military operations, the government only provided compensation to businesses in the south, but this time, it will have to also compensate businesses in the center,” said the owner of one clothing store chain.

“A 25% decline in sales is a lot and if they don’t provide compensation, it will be a blow to businesses.” He said the sales declines during the current fighting were preceded by a general decline in consumer spending since January on clothing, giftware and food. “Now some are sustaining an additional blow that could push them into bankruptcy.”

Yair Malka, who is one of the owners of the Café Greg café chain, said his sales were down 50% on average in the south, but were also down by a similar proportion at two major Tel Aviv entertainment centers – the Tel Aviv Port and Hatachana. Against the backdrop of rocket fire in the south and center of the country, sales at Café Greg’s mall locations have suffered less than street locations. On the other hand, supermarket sales have increased somewhat, particularly in urban locations that people can get to near their homes.

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