In the last couple of postings I have mentioned (the Arab) Educational Bookshop and (the Jewish) Ludwig Mayer Bookshop. I've been writing only about shops selling English language books, and covering the few independents in the City. Most people though will come across one of the three chains, Steimatzky, Tzomet or Tamir, with modest English language sections. Steimatzky feels like a WH Smith, with an interesting exchange rate. At Ben Gurion airport I bought the second volume of the Stieg Larsson series, in the US Vintage edition, not realising it was all over the UK already. The US price was $7.99, and at Steimatzky it was the equivalent of £10. Tzomet - correct me if I am wrong - was set up by Israeli publishers concerned about the previous stranglehold Steimatzky held. This sustains in importing with Tamir buying all their English language books from Steimatzky.
Meanwhile, one further indie worth mentioning is the excellent bookshop (also with a high conversion rate) at the American Colony Hotel in East Jerusalem. The Colony is the starting point for all journalists and politicians preferring to stay on the Arab side of the divide, and it is a very luxurious hotel with high quality fiction, poetry and biography from the US, UK and the Middle East and a pretty comprehensive selection of books on the Israeli/Palestinian conflict. It packs a huge amount of books into a very small space and is open long hours, and open to non-hotel residents.