Israel's appliances market has shrunk from NIS 6.5 billion (approx. U.S. $1.4 billion) in consumer prices in 2000 to NIS 3.5 billion in 2004 (approx. $765.8 million), according to Sakal chairman and CEO Solly Sakal. Sakal operates, among other chains, a chain of appliance stores and duty-free appliance stores at Ben Gurion International Airport. Sakal's appliance sales are estimated at NIS 500 million (approx. $109.4 million) a year.
Mr. Sakal said that the past 2 years were very hard for the appliances industry, especially for retailers. The reduction in purchase taxes was intended to boost imports and sales, but appliance sales nonetheless fell 25 percent in financial terms and 15 percent in quantitative terms, mainly due to the recession that lasted from late 2001 to late 2003.
"I thought the purchase tax should be cut gradually. It was very good for consumers, but terrible for market players. All retailers were hit hard and are losing money," Mr. Sakal said. "The market has become risky, and we, the chains, are afraid to sell. It's almost impossible to grant credit in the appliances industry. The industry is now very risky."
Purchases prices per unit have plummeted over the past 2 years. Television prices are down by an average of 35 percent, and DVD [player] prices by 70 percent.
Mr. Sakal said retail chains were having a harder time than small stores because the chains had to support stores and heavy administrative and headquarters costs. The chains have been closing an increasing number of branches.
"I claim that a fifth of the chains' stores have to be closed and commercial space reduced," Mr. Sakal said. "There's a surplus of commercial space disproportionate to the size of the market." (Globes [online])
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