Apparel and Footwear Specialist Retailers in Israel

2021 DEVELOPMENTS

Apparel and footwear sales remain weak as early 2021 continues to be impacted by restrictions

Apparel and footwear specialist retailers suffered significant losses in terms of sales and outlet numbers in 2020 as a result of the pandemic. These stores were considered non-essential and therefore were forced to close during all lockdown periods, and even when they were permitted to reopen, there were limits placed on the number of customers allowed in the store at once.

Online sales unable to compensate for store-based losses

In sharp contrast to store-based specialists, apparel and footwear e-commerce recorded double-digit value growth in 2020 as tech-savvy Israelis moved online with stores closed during the lockdowns and consumers searched for comfortable clothing to wear in the home, including sportswear due to higher participation in outdoor sporting activities. However, this was a continuation of a trend already emerging in Israel prior to the pandemic in line with increasing demand for convenience.

Store numbers continue to decline, with pandemic further impacting shopping centre woes

The number of outlets in apparel and footwear specialist retailers was already declining over the review period prior to the emergence of COVID-19 due to the ongoing switch towards e-commerce and high rents, especially in shopping centres, a scenario that was exacerbated by the pandemic, with these locations closed during the lockdowns. Many shopping centres offered discounts to retailers during the lockdowns in order to retain stores; however, apparel and footwear specialist stores located in shopping centres suffered more than standalone stores on the high street.

PROSPECTS AND OPPORTUNITIES

Full recovery in value sales terms predicted, although independents are likely to struggle

Apparel and footwear specialist retailers is expected to continue to gain growth momentum heading into the forecast period as consumers regain their confidence in returning to physical stores as the country reopens, with value sales (at constant 2021 prices) set to fully recover to pre-pandemic levels by 2025. However, the channel will continue to be outperformed by apparel and footwear e-commerce in growth terms, and therefore it is essential that retailers adopt an omnichannel strategy to expand consumer reach.

Pure online players identify need for a physical presence

In line with the need to adopt an omnichannel strategy in Israel, pure online retailers have also identified the importance of having a physical presence as many local consumers still value the experience of trying on clothing or footwear before making a purchasing decision. Apparel and footwear e-commerce platform Adika, opened a temporary pop-up store towards the end of the review period before opening permanent stores in Dizengoff Center and Azriel Mall in addition to other locations, while Terminal X announced in 2021 its intention to open its first bricks-and-mortar store in the Sharona Tower in Tel Aviv to provide customers with a more immersive shopping experience.

Fox Wizel likely to retain overall leadership due to wide brand portfolio

Fox Wizel Ltd retained its overall leadership of a fairly fragmented competitive landscape in 2021, where it offers a wide range of popular apparel brands on offer for all ages including The Children's Place, American Eagle Outfitters, Yanga and Mango. In line with ongoing improvements to its Nike stores, as well as the launch of Foot Locker, Fox Wizel Ltd spent considerable effort in developing its sportswear offering at the end of the review period, in line with greater demand for sportswear or sports-inspired pieces as part of the casualisation trend in Israel, particularly during the pandemic.