How the Israeli mall became a one-stop shop for vets, MDs, gyms – and peace of mind
As commercial centers continue to be built throughout the country, they’re turning into de facto town squares during a challenging national time
Since Dizengoff Center, Israel’s inaugural mall, was built in Tel Aviv in 1983, the country’s take on retail centers has exploded into a kind of lifestyle hug, taking on different shapes and sizes across the country.
Today, the Israeli shopping center has it all: fashion brands, veterinary clinics, indoor shuks, blood drives, afterschool dance classes and fully stocked grocery stores.
While malls abroad are still largely focused on fashion, during tough times such as the coronavirus outbreak or the immediate aftermath of the murderous Hamas October 7 attacks on southern Israel, malls responded to the fewer customers, changing rents and rising commercial vacancies by expanding offerings.
“A lot of empty spaces with low rent brought new businesses into the malls. What was happening was that malls became more like service providers in a way, to bring in traffic,” said Oren Paran, managing director of the Retail Innovation Club. “You have kupat holim [HMOS], and you have the dentist and the hairdresser. People are coming more weekly and bi-weekly. This makes more small businesses come into the malls.”
The diversity in storefronts inside an Israeli mall is what has kept them booming during extremely dark times.
“It is not only for shopping but also for social gatherings, for family, to escape the war,” said Ofir Oren, cluster manager of Azrieli Group’s Tel Aviv properties.
While sales and traffic have since recovered, the Azrieli Group offered support for all businesses in the days and months immediately following the October 7 infiltration of southern Israel in which Hamas killed 1,200 and abducted 251 hostages to the Gaza Strip.
Efforts included rent reductions in October and November, spaces in its malls made available for displaced businesses, and temporary schools in Azrieli-owned buildings for in-need families.
Meanwhile, in the United States, “the mall is dead” is a common phrase uttered by customers and retailers alike. The origin of the modern mall is currently home to around 1,150 centers, according to a May study from Capital One. That number is projected to diminish to as few as 150 malls by 2032. Malls in the US are twice as likely to be vacant when compared to the average retail space, a trend largely blamed on the shift towards e-commerce.
However, reports of the mall’s death may be greatly exaggerated: Retail experts and research show the rise of e-commerce to be grossly overstated, with some indications that shoppers are actually returning to physical stores. In a study released Wednesday from Ryder System, 61 percent of consumers said they prefer in-store shopping for the experience of trying on products, comparing items and beyond, up 21% from last year’s study.
New ‘unique lifestyle complexes’ on the way
Despite a year of war and uncertainty, the Israeli mall continues to boom and new mega centers are actively popping up and experiencing high traffic thanks to the more holistic approach.
BIG Fashion Glilot, is set to finish construction in November. At 30,000 square meters of commerce and the largest BIG center in Israel, the new space has been labeled as a “unique lifestyle complex” with “an international-level shopping and entertainment experience.”
BIG is one of the leading mall developers in the country, founded in 1994 to develop “American-style open-air shopping centers in Israel.” Yet BIG has taken the American mall and done it better.
“It’s really a lifestyle. Every store has its own unique facade. The environment is like you’re going inside a street with lots of vegetation and balconies and water elements,” BIG Shopping Centers chief of staff Etay Elder said of the company’s open-air centers, focusing on how crucial fresh air and sunshine are to the success of Israeli centers.
Despite massive dips in revenue and performance around October 7, several mall developers have shown impressive growth over the past year. In its second-quarter results, the Azrieli Group reported sales were up NIS 46 million from a year ago, though revenue and net income was lower. The Melsiron company, which owns and manages malls across Israel, is up 16% over the last year.
Why is it that the malls continue to thrive?
“Israelis love to shop,” said the Retail Innovation Club’s Paran.
And with fewer Israelis flying abroad due to challenging skies, canceled flights and uncertainty, that love of shopping can only be sated locally.
“Israelis are not going abroad so a lot of money is staying inside the country,” said Azrieli Group’s Oren, who also stressed that malls operate as a safe space for customers during an anxious time.
“The economy is very, very strong. Even now with a war going on, the economy is strong,” said Oren.
