New Market Research Report: Israel Retail Report Q1 2011

Jan. 17, 2011 - PRLog -- BMI's Q111 Israel Retail Report forecasts that the country's retail sales will grow from an expected ILS139.29bn (US$38.82bn) in 2011 to ILS166.95bn (US$46.53bn) by 2015. Key factors behind this growth are Israel's underlying economic growth, sophisticated consumption habits, its growing population and rising disposable incomes.

Israel's nominal GDP is predicted to be US$229.9bn in 2011. GDP growth is forecast to be 3.1% in 2011, slightly weaker than 2010's rate of 3.4%. Average annual GDP growth of 2.8% is predicted by BMI between 2011 and 2014. With the population increasing from an estimated 7.7mn in 2011 to 8.1mn over the forecast period, GDP per capita is predicted to rise to US$34,974 by 2014, an increase of 17.3%.

The Jewish tradition of offering gifts to relatives and friends at festivals during the year - Hanukkah in December, Passover in March/April and Rosh Hashanah (Jewish New Year) in September - generates healthy demand for products such as consumer electronics, fashion goods and accessories, jewellery and other quality goods. Also, with about 30% of the Israeli population under 14, the youth market presents great potential for toy and game retailers.

In 2005, 63.3% of the Israeli population was described by the UN as economically active, with 35.5% in the 20-44 age range important for retail sales. In 2010, an estimated 64.3% of the population was economically active, but the proportion of those in the 20-44 age band is estimated to have fallen slightly to 35.3%.

A very high level of urbanisation is also contributing to retail growth. In 2005, 91.7% of the population was classified by the UN as urban, and this is forecast to increase to 92.0% by 2015.

In terms of retail sub-sectors, Central Bureau of Statistics (CBS) data show that in 2006, 3.9% of the Israeli household budget was spent on furniture and household equipment. 3.4% went on clothing and footwear, 1.3% on cosmetics and 0.4% on jewellery and watches.

According to BMI data, the retail sub-sectors that are likely to show strong growth over the forecast period include consumer electronics, with sales predicted to rise by nearly 17%, from an expected US$2.95bn in 2011 to US$3.44bn by 2014. Spending on consumer electronics devices will be supported by the falling unemployment rate, which we expect to drop to 6.5% by the end of 2011. A growing population and rising computer and internet penetration will help drive growth, along with new technologies and feature-rich products such as smartphones, higher-capability netbooks and highdefinition (HD) TV sets.

The over-the-counter (OTC) pharmaceuticals sector is forecast to grow from a predicted US$0.42bn in 2011 to US$0.52bn by the end of the forecast period, a rise of nearly 25%. With car ownership levels at a low base, vehicle sales are forecast to rise by 43.2%, from an expected US$6.23bn in 2011 to US$8.93bn by 2014.

We estimate that overall food consumption in Israel in 2011 will account for 47.6% of total retail sales and be worth US$18.29bn. Food sales are forecast to reach US$21.54bn by 2014. Mass grocery retail (MGR) sector sales are forecast at US$4.35bn in 2011, representing 25.6% of the total food market. BMI expects its value to rise to US$5.14bn by 2015, when the sector will account for 25.8% of the food market. Exposure to modern retailing and its convenience has led to an interest in packaged and processed foods and increasingly sophisticated consumption habits in Israel.

Retail sales for our set of Middle East and Africa (MEA) countries in 2011 are predicted to amount to US$196.69bn, based on the varying national definitions. Total consumer spending for the region based on BMI's macroeconomic database is forecast at US$722.41bn. In 2011, BMI predicts that South Africa and Israel will together account for an estimated 56.8% of regional retail sales, and their combined share is expected to rise to 57.2% by 2014. For Israel, its estimated 2011 market share of 19.4% is expected to decline to 17.3% by 2014.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.