Lessons for fashion from Israel's reopening - Vogue Business

It’s two weeks since the Israeli government permitted fashion retailers to reopen on the back of a world-leading rapid vaccination programme. The early business indicators since then are being studied intently worldwide.

The news is mixed. Retailers and malls in Israel have reported a rise in sales following the reopening on 21 February, but the number of people out shopping remains way below pre-pandemic levels. A return to normality could be some way off, despite the success of one of the world’s fastest vaccination campaigns.

Over half of the country’s residents have now received at least one shot of the vaccine. Cases of serious illness and death are declining fast. However, the number of cases remains stubbornly high, not least because of a lack of adherence to social distancing rules, particularly among some ultra-orthodox Jews.

The sluggish return to retail normality suggests that retailers worldwide may need to be patient as shoppers make a cautious return to old habits. “If the retailers in Europe are waiting for a big boom on the day that you say you can go shopping, I think it takes a little longer,” says Noam Pincu, analyst at Israeli investment firm Psagot.

Luxury boutiques in Tel Aviv note that customers have focused on high-ticket items like bags and jewellery, rewarding themselves after eight weeks of lockdown. Browsing is kept to a minimum, says Shira Dolinger, owner and founder of luxury boutique Verner, based in the Ramat Ali mall in the north of the city. “They know what they're coming for, and they are not afraid of investing in pieces.” Dolinger adds there has been no sign of recovery yet in party dresses and evening wear, the category that performed worst for Verner during 2020 when social events were minimal.

Google mobility data suggests that the recovery in retail and recreation traffic (which does not separate visits to restaurants, cafés and cultural venues from stores and malls) is comparable to the end of the last lockdown in November. Foot traffic in these categories has remained below pre-pandemic levels, down 30 per cent in Tel Aviv on 21 February, and still considerably down on last summer when Covid-19 cases were low by international standards.

Sales figures hold out some promise. Raz Domb, equity analyst at Leader Capital Markets, says retail sales were up by around 10 per cent on 2019 levels in the first few days after lockdown eased, adding that this was higher than anticipated.

Alon Piltz, owner of the Dizengoff Center mall in Tel Aviv, agrees sales were good, albeit not quite as strong as they were pre-lockdown in December. He attributes this to higher pent-up demand after last autumn’s lockdown. There is some optimism that figures will improve following the reopening of restaurants and cafés in Israel on Sunday. Piltz says the reopening will help drive more foot traffic into shopping malls as city-centre visits become a more rounded experience.

Speaking to Vogue Business last week, however, he criticised the government for its slowness in clarifying the loosening of lockdown on Sunday. Restaurants, bars and cafés in Israel are now open for dine-in services to diners who can produce a green pass, indicating proof of vaccination or recovery from Covid. Clarification of the measures came only as late as Saturday, with the delay criticised by industry bodies. Restaurant bookings still skewed towards outdoor dining ahead of the reopening, reports suggested. Analysts similarly predict that open-air malls, including the luxury Alrov Mamilla Avenue in Jerusalem, are likely to prove more popular with shoppers at first than fully enclosed ones.

As the government balances reopening society with attempting to control case rates, city centres and shopping malls are full of reminders that Covid is still a problem for shoppers. Masks remain mandatory whether a person has been vaccinated or not. The science remains unclear as to the extent to which vaccinated people can transmit Covid even if they are protected themselves. The discovery of the New York and South African variants in Israel has also caused concern.

Luxury stores tend to have fewer customers inside at any one time than mainstream retailers. But Dolinger explains there are regular checks to ensure that stores are not exceeding government restrictions on numbers. “It's not a normal situation, and you keep getting reminded,” she says.

Since reopening, retailers and malls in Israel have reported a rise in sales.

Enigma Boutique, a store located in Kikar Hamedina, Tel Aviv’s main luxury shopping district, has been working with clients through social media channels like WhatsApp during lockdown. The expectation is that some clients will continue to prefer this way of working for some time to come.

While consumers may be cautious about picking up their old shopping habits, the desire to return to normal life is abundantly clear among Israel’s young. The government imposed a nighttime curfew during Purim, a Jewish holiday in late February typically marked by costumes and festivities. This did not stop many illegal gatherings during the day, with police working especially hard to disperse partying young people in the Jaffa district of Tel Aviv. Over the past year, some retailers have also shown their impatience with the government, with a handful of malls and shopping venues opening illegally during periods of lockdown.

The next few months could be upbeat. If the vaccination campaign continues to build momentum, summer has the potential to be a strong period for high-end retailers analysts predict. Unlike in Europe, the Israeli luxury sector is largely driven by locals rather than tourists, says Anna Klaiman, senior retail specialist at real estate services firm Cushman & Wakefield Inter Israel. Options for travel to Europe may remain limited, encouraging locals to spend even more at home for the foreseeable future.

The sector’s next big litmus test is coming in just a few weeks as Israel celebrates the important festival of Passover, usually a time of inflated retail spending across most categories. In a best-case scenario, Israeli cities will be buzzing again by then as workers return to offices, people pick up dining in restaurants, and shopping for fashion becomes once again one of the pleasures of daily life.

But no one is taking anything for granted. Sceptics highlight a plateauing case rate and the challenge of rolling back restrictions while keeping the virus in check. Patience remains the watchword. As analyst Noam Pincu puts it: “If you want to exactly evaluate how the shopping centres and retailers are doing, it’s not something you can check in 10 days.”

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