• Of money

The supermarket was reborn online

In all the talk about price increases, it is almost forgotten that price is just one of the parameters in our shopping in the supermarket.

The blossoming of online sales channels is proof that considerations of time and convenience are just as important.

What will happen to the shopping experience in the online age and what are the price differences between the various shopping arenas?

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• supermarket

Dr. Hezi Gur Mizrahi

Thursday, November 25, 2021, 3:15 p.m.

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The average monthly household expenditure in Israel is about NIS 16,500 per family and includes all current expenses, from education expenses to the drinking bottle purchased in the explosion. According to some forecasts, we will spend NIS 5,000 more this year, due to price increases, purchase taxes and more.

Although according to the government some of its measures are supposed to bring down the cost of living, even if it does, in the end, it is estimated that on the way there each family will have to add 420 shekels a month to the household expense account. I personally believe the amount will be even higher.

An study of the Israeli consumer shows that he is excited about price increases and taxes, only when these directly affect his pocket. It is no coincidence that the cottage protest, more than ten years ago, swept the masses - while the huge purchase tax on disposable utensils was perceived mainly as a problem by the ultra-Orthodox public.

The truth is of course much more complex: once price increases are perceived as sectoral, it will pass in relative shekels, but will ultimately hurt everyone, through an increase in the price of products and services that are relevant to the general population.

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Comparison between our shopping basket in the big chains (Photo: Daniel Malakhovsky)

It's not just the money

In recent weeks we have been exposed to a storm around the retail food chains and suppliers in the local market, from the war in Shufersal that "dared" to sell at more favorable prices to the ultra-Orthodox public (through an online site that was free to all!) To suspicion of price coordination.

Everyone is complaining about price increases and the cost of living - and apparently this is the most important figure for our household economy.

Right?

So this is, not really: various considerations, convenience and even the shopping experience, are no less important - and often much more, than price considerations.

So yes, we are easily shocked whenever anyone dares to talk about price increases, but in practice we are willing to pay more for elements that complement the experience.

One such, which ostensibly stands in contrast to the concept of "shopping experience", but provides other functional benefits, is the largest shopping channel in the world and in Israel: online.

Comparing the shopping basket in the neighborhood supermarket (Photo: Daniel Malakhovsky)

We will not pretend to analyze the online phenomenon here in detail, but will content ourselves with specifying a number of points for thought, before moving on to the shopping cart we have assembled.

Online shopping was born out of telephone order centers, designed to provide a solution that is slightly more expensive, but incredibly convenient, for people whose intense lifestyle does not allow them to shop in the supermarket, or whose time is so precious that the time they devote to the task will cost them more than the online channel. To the messenger.

What was the domain of urban and advanced populations, with technological literacy and often also means, gradually seeped into additional strata of the population - and flew up thanks to the corona, which dramatically jumped the online channel.

Comparison of online shopping baskets (Photo: Daniel Malakhovsky)

All the writer on the show

What are the effects of these changes on the retail market? Hard to know. Will the supermarkets go the way the market went and be emptied of their original audience? See what happened to the market: Once everyone bought it, "market day" was a concept they knew in every home in Israel. Slowly, many moved to supermarkets, until today many of the markets in Israel have become a kind of fast food complex with a popular image or a place for "foodies", food and culinary lovers. The original audience has almost disappeared - and with it the favorable prices have disappeared.

If this is indeed what supermarkets also expect, it is a dramatic change: time congestion, traffic jams and the proliferation of digitization will push more and more consumers into the online ordering cycle and dependence on shipments, so much of the retail chain activity will move from discount branches to marlogs and shipping complexes.

Of course, at the same time, marketing will also change: today it is mostly aimed at increasing the volume of the shopping cart that the consumer collects in the aisles of the supermarket, when he is exposed to temptations he did not plan to buy, sees, tastes, is impressed and buys.

It's not that it's impossible to entice consumers online, especially with the help of coupons, but it's a completely different marketing technique - and retailers should give it some thought, for the future.

The weekly purchase online, just like the purchase at a large discount branch, will mainly provide a solution for products with a longer shelf life: detergents, care, preservatives and dry products.

The renewal of inventory in the refrigerator for example, mainly of dairy or fruit and vegetable products, with a relatively short lifespan, we will continue to purchase, or at least "complete" in the neighborhood grocery or supermarket, which is usually more expensive, but close.

(Photo: Daniel Malakhovsky)

And now for shopping:

This week we chose a shopping basket that contains a variety of common grocery products, without vegetables and fresh meats but presents the same brands and products in all the different chains, from basic products, culinary, sauces, preserves, frozen vegetables to detergents, paper products, drinks and snacks from leading brands.

Yes we peeked into several arenas: what happens in the big stores of the retail chains located in the suburbs how much we will pay for the basket and who will display the cheapest basket, how much we will pay for proximity to the same basket in the neighborhood stores also it is the same chain and of course We have the most affordable basket.

We found gaps of about 25% between the cheap basket and liqueur and the question is, what are we willing to do to save up to a quarter of household expenses on food and grooming products?

The survey is based on data reported by the networks to the Ministry of Economy and processed through the Pricez and CHP website as of 22/11/2021 Produced by the Institute for Retail Research.

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