Connect With Authors
*Your message will be sent straight to the team/individual responsible for the article.
Menu
Boosted by the easing of most COVID-19 restrictions and vaccination efforts, Israel shows a significant rise in private consumption in 2022. Despite this positive outlook, various global factors including rising commodity prices and supply chain disruptions resulting from the Ukraine conflict will impact consumer spending. In addition, monetary tightening measures by the Bank of Israel may curb credit availability and demand, affecting retail sales.
Retail in Israel is expected to benefit from the government’s focus on reducing the cost of living. Reforms aimed at reducing costs for kosher certification for businesses and promoting competition in the economy will help support consumption growth. The Israeli government has also taken steps to liberalize markets, reduce import tariffs on certain goods, and provide tax credits for working families to aid retail sales. However, the current coalition weaknesses and uncertainty surrounding government stability may delay the implementation of these policies. In the long term, normalizing trade ties with Arab states, such as the UAE, Bahrain, Sudan, and Morocco, is expected to enhance Israel’s significance as a technology exporter in the region and boost retail sales. However, the impact of inflationary pressures caused by global headwinds will be a challenge for the retail sector.
Despite that, Israel still show strong sign of recovery and growth going forward. With local players such as Shufersal, the largest retailer in Israel, and the likes of Victory Supermarket, Rami Levy Chain Stores and Tiv Ta’am dominating the market. Israel is the world’s largest market for kosher food, which is produced in accordance with Jewish dietary laws, and this is reflected in the country’s retail sector, where nearly all major supermarket chains offer only kosher meat, accounting for roughly 95% of all meat consumed in Israel.
International players such as IKEA, Inditex, Apple, and Nike are also quite relevant in the market with their own distribution channels (Physical retail stores and Online).
When it comes to the e-commerce sector, interestingly, it has been lagging behind global average for quite a long time. In 2022, data from Edge by Ascential suggest a penetration rate at around 1.9%, far from many of its OECD peers which is at around 8-15%. However, this figure also shows how much potential is in the online sector.
In Israel, the most commonly purchased items were apparel, followed by electronics and toys, with most of the shopping done on international websites. However, the pandemic has led to a rise in online sales of groceries and other essential items. To keep up with the trend, local retailers such as Shufersal, Rami Levy and Super-Pharm, the country’s largest drug and cosmetic chain, are increasing their presence in online sales channels. This requires investment in logistics infrastructure, with Shufersal recently partnering with Via Transportation, an Israeli transit-technology firm. Israel Post has allocated an annual budget of NIS100m (US$30m) to improve its e-commerce and supply-chain operations in anticipation of growing demand. Several logistics companies, such as ecargo and Bringg, are working to meet the increasing demand for these services.
Amazon, the US e-commerce giant, has developed a direct online presence in Israel. After years of preparation, the company’s dedicated Hebrew-language website went live in November 2019 and offers a platform for Israeli retailers to reach the local market. Amazon does not plan to operate its own logistics centre in Israel and has partnered with the state- owned Israel Postal Service to oversee deliveries.
In late 2020, Amazon and Next from the UK, among other online marketplaces, resumed cross-border e-commerce deliveries to Israel, albeit with heavy delivery fees. In an effort to compete more effectively with other players, including AliExpress, Amazon lowered its minimum threshold for free cross-border deliveries to $49 from $65. Additionally, as part of the normalization of trade ties with the UAE, a deal was signed with the Dubai Airport Free Zone Authority, enabling Israeli companies to access Dubai’s e-commerce infrastructure and set up business within the free zone to reach Middle Eastern markets.
In Italy, There are about 42.5% of people use credit cards, and 84.6% of people use debit cards. While there are 54.9% of people purchase on the internet, there is only 22.2% of people with online banking accounts.
For E-Commerce Customers in IsraelWhat are the major driving factors to purchasing online?
There is 4.17 million consumer goods e-commerce users in Israel, and they spend total of around 6.69 billion USD dollars in 2021. That makes a per capita spending on consumer goods e-commerce of around 1605 USD. Also, in those e-commerce users, about 39% of them purchase through their mobile phone.
Our consumer research practice tracks what customers spend and how they make decisions across major economies in the world.
