Bleak Preholiday Sales to Mar Retailers' September Numbers

Revenues stung as this year's High Holidays fall in midweek.

Dismal sales leading into Rosh Hashanah will cast a pall on retail numbers for September, with store chains and mall operators pointing the finger at the overall economic climate and timing of this year's holidays.

"Holiday sales were 15% lower than last year's," said an executive at a fashion chain, citing the lack of normal shopping days just before the holiday. "Israelis are last-minute shoppers, and Friday through Sunday were only half-day shopping days. The cash registers were crowded those days during opening hours, but is wasn't enough time."

Rosh Hashanah and Yom Kippur fall this year in the middle of the week, depriving businesses of several workdays. "I don't think there's one retail chain that won't finish September with a loss," the executive said. "The banks will have to behave responsibly because it will be catastrophic for the market if they don't."

Hay Galis, vice president at BIG Shopping Centers, foresees holiday sales dropping between 3% and 5% against last year's.

"There wasn't any week-long spike in sales as we're accustomed to, only three days of very strong sales - which isn't enough," he said. "The holiday also fell on the heels of August, catching consumers after big summer-vacation and back-to-school spending."

Not everyone associated with the retail sector, however, found reason to bellyache. "Holiday sales began late - in the middle of last week - but sales volumes are similar to those of last year and concentrated mainly in housewares and gifts," said Peer Nadir, CEO of Azrieli Malls.

According to Yaron Eshel, deputy CEO of Gazit Globe, "Shopping only began on Wednesday, but once it got under way it was quite brisk. The economic situation and headlines kept people on the sidelines until they realized the need to buy holiday-related items and went out to the malls."

Eshel said retail chains rightly expected shoppers to be looking for bargains. "If anyone thought shoppers would buy less because of the increased VAT they were mistaken, maybe because the increase was swallowed up in promotions," he said.

The fashion-chain executive, however, didn't agree. "Mall operators are merely trying to calm the market to somehow justify the high rents they charge," he said.

SuperPharm reported increases in the use of coupons and purchases of items on sale. "We generally encountered consumers showing more awareness, comparing prices, being knowledgable about special offers and arriving equipped with coupons," said Danny Luzon, the drugstore chain's vice president of commercial operations.

Luzon cited sales of NIS 250 million during the two-week period before the New Year holiday, up 30% over last year for the entire chain and 22% higher for same-store sales. "People didn't give up buying holiday gifts despite the economic situation," he said.

Supermarkets reporting higher sales also point to changes in consumer habits.

"We experienced 20% sales growth from last year and 150% through our website - which needed to be shut down until after the holiday due to overload," said discount supermarket mogul Rami Levy. "Most of the growth came from our many new customers who switched at the expense of more expensive stores. I would think this reflects a trend shared by other discount chains."

Another food industry executive said the real test would come after Sukkot: The fact that the holidays fall in the middle of the week this season increases the number of large family dinners.