Why are Israel’s veteran clothing chains going bankrupt? Opposition chairman MK Yitzchak Herzog (Zionist Camp) wants to find out, and he wants the Knesset Finance Committee, headed by MK Rabbi Moshe Gafni, to lead the investigation. “It’s no secret that in the past five years clothing sales have plummeted,” Herzog said in a letter to MK Rabbi Gafni. “Just last December, sales were down 18 percent off a year earlier.”
The request for a discussion on the matter by the Committee comes on the background of an announcement last week by the Honigman clothing chain – one of Israel’s largest – that it had entered receivership, as it was unable to pay a NIS 234 million debt that it has. Two other chains have declared bankruptcy in recent months, as well. But even chains – and shopping malls – that are still solvent are worried; over the weekend, some of the top officials in the retail clothing industry, as well as owners of malls, met to discuss the loss of sales that all of them have been experiencing.
Those losses come, not surprisingly, from the increased purchasing of clothing from on-line merchants, Herzog said in his letter. “International clothing sales sites like Amazon and Asos are expanding rapidly around the world, and they are having a dramatic effect on Israeli consumer habits, which are changing before our eyes.” High rents, taxes, and other fees – that online merchants do not have to pay – are making it difficult for local chains to survive, Herzog said.
Currently, Israelis who buy less than $75 in goods from online sites are exempt from paying any taxes. Zionist Camp MKs have discussed lowering that figure, in order to make on-line shopping less attractive, but MKs in the coalition have argued for a much higher exemption, as high as $1000.