International chains, led by H&M and Zara, are facing falling sales in Israel. H&M, the Swedish multinational clothing retailer, has suffered a dip in sales of between seven to ten per cent so far this year. Sales declines have been so steep that they have caused overall turnover at shopping malls around the country to fall 1.3 per cent since the start of the year, even as the population has grown about two per cent.

The US apparel chain Forever 21, which targets younger shoppers, was a huge success when it entered the Israeli market five years ago, but it will now be closing several mall shops over the next several months, leaving it with just four in Israel.

Even Zara, the international chain most popular with Israeli shoppers, has seen a sales slowdown. The reason international chains are hit is that the Open Skies aviation agreement that went into force four years ago which has led to cheaper airfares and more routes between Israel and Europe. When Israelis travel abroad, they go into the malls and discover that prices are lower. In the first seven months of this year, the number of overseas trips by Israelis climbed 12 per cent from compared to the same time in 2016.