Department Stores in Israel

PROSPECTS

Department stores struggles to compete with low-price retailers

The retail environment in Israel has seen several changes over the past few years. In particular, consumers have become increasingly budget-conscious and shoppers are placing a higher value on low prices, sales and promotions and finding bargains.

Department stores channel continues in its traditional ways, resists innovation

Factors contributing to declining value sales in the department stores channel are not all related to price. Indeed, the perception of many consumers is that department stores are simply outdated and not innovative enough to capture the attention and interest of modern shoppers.

Changes in shopping behaviour of older consumers affecting department stores

Traditionally, the group primarily attracted to shopping at department stores consisted of middle-aged and older consumers, typically those aged 40 years old and older. Often with higher disposable incomes, these consumers were often willing to pay more for quality, and they had less of a need to experience innovative retail.

COMPETITIVE LANDSCAPE

Hamashbir 365 Holdings continues its dominance in 2019

As it did during the review period, Hamashbir 365 Holdings continues to dominate the department stores channel in 2019 with a massive—and continually growing—value share. The well-established New Hamashbir Lazarchan brand has been operating in the department stores channel for many years, and its strength has been based on its portfolio of high-quality products, particularly underwear, nightwear and fragrances.

Players continue to reduce once expansive sales areas in 2019

Traditionally, the selling spaces of department stores have been well-known for their expansive size. However, in response to declining sales and changing consumer shopping habits, players in the channel have sought to significantly reduce the size of their sales areas during the review period and that reduction effort continues in 2019.

E-commerce continues to pose a competitive threat to department stores

E-commerce has experienced very strong growth in recent years, appealing to consumers with its low prices, convenient delivery services and wide range of products, amongst other attributes. But the growing popularity of e-commerce has had a particularly significant impact on the performance of department stores, as the quality of products offered online is typically comparable to that of products offered in department stores, but e-commerce sites usually offer the products at lower prices.

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