2023-12-20 12:17:00
Melisron, a major real estate group in Israel, has made the decision to close its online trade activity focused on the worlds of tourism, leisure, and products. This decision comes after the company invested approximately NIS 100 million in the purchase and development of a digital arm, with the aim of digitizing the malls. However, it seems that the venture failed to gain traction, especially after Azrieli Group launched a digital mall, which further heightened the competitive landscape.
According to reports, Melisron also mimicked Azrieli Group’s investment in the website, spending over NIS 300 million. However, the company has now come to the realization that the concept of a digital mall may not be suitable for Israel, and that “GROO” (the online trade activity) has no right to exist.
As a result, Melisron has announced the closure of the GROO activity in January 2024. The decision is attributed to the lack of economic viability and changes in the business and consumer environment, particularly in the fields of tourism and leisure.
In an effort to mitigate the impact of the closure, Melisron has assured that not all employees will be fired, and some of the development workers will be integrated into the company. This includes the CEO of Grouper, with plans to leverage the technology developed and develop additional digital applications and tools in the future.
The closure of GROO comes amidst a sharp decrease in the activity of fashion stores in the wake of the ongoing war. It appears that online shopping, which was expected to flourish, has faced challenges in the small Israeli market. Consumers are reportedly looking for products online, comparing prices with physical stores, and opting to purchase from cheaper sources online.
A senior official in the capital market commented on the situation, stating that Melisron’s business model was problematic. They noted that Azrieli’s vision was to provide a platform for the stores in the mall, but Melisron operated in a competitive rather than cooperative manner. The official also highlighted that importing retail goods is not the expertise of real estate groups, and the collapse of the business model was inevitable.
The closure of GROO and the challenges faced by online retail in Israel have raised questions about the viability of digital malls in the country. It seems that the traditional giants of the Israeli mall industry, specializing in real estate, have struggled to adapt to the online retail landscape and have faced internal and merchant dissatisfaction as a result.
As Melisron prepares to close its online trade activity, it remains to be seen how the company and the larger Israeli retail industry will pivot to address the shifting consumer behavior and digital market dynamics.
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