A drop of about 17% in mall revenues

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Mall renters will prefer to forget about the current summer. After the months of closure in March and April, and against the backdrop of the closure of the skies and the cancellation of family vacations abroad, retailers hoped that the public would spend the money in July-August shopping in Israel. At work in July.

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According to Rees’ data, sales per square meter in the shopping centers in July 2020 were 8% lower than in July 2019. The largest decrease was in the regional malls (large malls that attract population from different cities), where sales decreased by 17% compared to last July.

Revenues are also expected to be low in August, and landlords have already begun notifying tenants of discounts. Calcalist has learned that at the Tel Aviv port, tenants will receive a 40% discount on their August rent. A letter sent to Tel Aviv Port tenants and received by Calcalist states that due to the continuation of the corona crisis and its consequences “the company decided that the collection of usage fees for August 2020 will be reduced by 40%” and the tenants were asked to transfer the redemptions of August 2019 and August 2020. “The said provisions shall apply, mutatis mutandis, also to the collection of the usage fee for the month of September.”

Rise in revenue at Power Centers Photo: Amit Shaal

The declining trend in redemptions in malls continues for several months, with the beneficiaries of the phenomenon being the power centers, which under the auspices of the Corona are experiencing an increase in the number of visitors, which translates into an increase in redemptions. In July, Power Centers recorded a 4% increase in sales per square meter compared to last July. This is not a trivial matter, since during the hot summer months, with an emphasis on the big holiday months, the Israeli public flees to air-conditioned malls that also offer free events for children. , Families visit the open air-conditioned non-air-conditioned shopping centers, due to the desire to be in an open and not closed place.

Trading in July shrank and was affected for a number of reasons: By the time eight projector Roni Gamzo, the government had created a sense of uncertainty. There were days when the closure was borderline and the public got a feeling from the government that in another moment they were entering another closure. This situation intensified the uncertainty and in those days the redemptions in some of the stores fell by 50%. The public was afraid to go out so as not to get infected and the fall in redemptions was immediate. Another reason that affected the redemptions in July is the “between the Egyptians” period. The year Tisha B’Av falls at the end of July and last year it falls in August. In all the last nine days of the inter-Egyptian period the religious public underperforms shopping and this has affected the redemptions in July. On the other hand, there was an increase in sales in the Arab sector in July due to the holiday of Eid al-Idha, which this year took place in July and last year the sales were attributed to August.

Economic Advisor Tamir Ben Shahar Economic Advisor Tamir Ben Shahar Photo: Erez Ben Shahar

Of the large mall groups, Azrieli Malls recorded the largest decline in July – about 17%. The Melisron Group recorded a decrease of 11% and sales in the Big Group increased by 1.5%. “We are on a ‘consumer diet’,” explains economic adviser Tamir Ben-Shahar. “The Israeli consumer is in the ‘year of survival’ and is expected to return to normal activity in 2021 at the earliest. The decrease in consumption in the last two months – after completing by consumers in May – was expected due to the fact that most “Living with parents, and in general shoppers prefer open centers and neighborhood centers. The shopping experience at the mall has disappeared in relation to the normal life before the corona.”

According to him, consumers also declare that they will buy less premium fashion products, entertainment and leisure and clothing and footwear, on which most of the mix in the mall is based, and will save money for more difficult days. “All this, even in a situation where the sky is closed, ie 10% of the purchasing power remains in the country and while the number of households in Israel continues to grow by 2% per year. This means that the decrease in consumption is much more significant than the data show.”

Revenues in July were also hurt by the government’s decision to close trading on weekends. This in itself also hit the malls that are currently operating partially on Saturday nights, but the main hit was at power centers that are open on Saturdays. Tenants who open stores on Saturday mornings feed about 40% of the store’s monthly turnover on Saturday, which is a turnover deducted from them in July, when Saturday trading was shut down. Last Saturday, some of the tenants opened the stores in violation of the guidelines, but large chains such as Castro, Golf and H&M preferred not to open the stores for fear of receiving fines. However, the trade centers reported that even if inspectors arrived, they did not issue fines last Saturday, after the farce of closing the trade, among other things, against the background of opposition from ultra-Orthodox Knesset members and not due to the morbidity situation. Redemptions, according to tenants, were 30% lower last Saturday compared to a regular Saturday.

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