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Even the cheap one is getting expensive: what happened to the prices of the private label? - Walla! Of money

2022-08-09T11:03:05.004Z

From a test we conducted with the help of the "Retail Research Institute" it becomes clear that it is precisely the private brands, which generate large profits for chains, that have become more expensive during the last six months



consumption

Even the cheap one is getting expensive: what happened to the prices of the private label?

In recent weeks, the retail chains have waged a battle against several large importers demanding that they prevent price increases, but from an inspection we conducted with the help of the "Retail Research Institute" it becomes clear that the private brands, which generate large profits for the chains, have become more expensive over the past six months

Liat Ron

09/08/2022

Tuesday, August 9, 2022, 1:36 p.m. Updated: 1:53 p.m.

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The chains are fighting the big importers, but at the same time raising the prices of the private brands (Photo: ShutterStock, Doron Sheiner)

The private brands are consumers' refuge from the high cost of living.

The private label, produced especially for the marketing chains by manufacturers, bears the chain's name and generates large profits for it.

Therefore, it should be significantly cheaper than its corresponding branded product, and of a quality that does not fall short of it.



Since the pasta protest broke out, and even more so after the tuna protest, the marketing chains - or at least that's what they want us to think - stand as a wall in front of the importers and producers and prevent them from raising prices, along the way they obviously improve their image in front of their consumers.



But from an examination we conducted it becomes clear that precisely in such a period, when sales of the relatively cheap private label should increase, the marketing chains take advantage of the opportunity and quietly increase the price of the private label - because if it is possible, then why not?

Rami Levy's private label cheeses.

The basket remains the cheapest, but the private brand has become more expensive (Photo: Public Relations)

How much did private label prices go up?

The "Retail Research Institute"

tested two retail chains, one of the leading in Israel: Shufersal and Rami Levy, their private label prices over the course of six months: between January 2022 and July 2022.



The test was conducted in their urban stores - Rami Levy in the neighborhood and Shufersal Shelly, in the discount store - Rami Levy Sycamore Marketing and Shufersal Deal, and in online sales - "Shufersal Online" and "Rami Levy Online", based on average consumer prices including promotions and benefits.



About a week ago, there were publications in the media according to which Schufersal, which stood up to a diplomat firmly, raised the prices of its private label under the radar - while allegedly fighting the consumer war.



But the survey by the "Retail Research Institute" shows that it is the "Rami Levy Marketing Sycamore" chain, which regularly wins the cheapest basket surveys, that sharply raised the prices of its private label, while Shoppersal settled for a relatively moderate price increase.



The private brand became more expensive in relation to its price in January at a rate of 1.21%, while the private brand of Rami Levy's discount chain

"Rami Levy Sycamore Marketing"

saw a sharp increase of no less than 7.62%.



In

Shufersal Shelly

, Shufersal's urban chain, the price of the private brand increased by 1.10%, while in its urban counterpart,

Rami Levy in the neighborhood

, the private brand increased by 4.95%.



And what is happening online?

Here the price increase is even sharper.

The price of the private label went up by 1.54% on "Shuppersale Online" and on the "Rami Levy Online" platform, the price jumped by 8.03%.

So, despite the large price gap in the average consumption basket between the Shufersell and Rami Levy chains in all its configurations, when Levi's shopping basket is significantly lower than Shufersell's, the price of the private label rose sharply in his chains.

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The light rail works near the Shufersel Sheli branch on Ben Yehuda Street in Tel Aviv. A slight price increase of about 1.10 in all private brand prices of the urban chain (Photo: Reuven Castro)

Why do you earn more on the private label?

Here are some of the stars of the current price increase: Malvah of the private brand "Rami Levy", rose by 87.6% between January and July, to a price of NIS 11.27.

Fruit granola became more expensive by 55.86%: from NIS 6.67 to a price of NIS 10.40.

The price of "Rami Levy" brand Jerusalem hummus, weighing 400 grams, increased by 48.29%, from NIS 6 to NIS 10.40 and the price of "Rami Levy" bath lotion increased by 60.77% from January, from NIS 4.91 to 7.89 shekels.



According to estimates, Rami Levy's private label has a share of more than 20% of all sales of Rami Levy's Sycamore marketing chain, being substantial mainly in the canning, cooking and baking categories - and holds a share of about 17%.



Shufersal benefits from the power of the private label that it markets in the food branches and the BE pharmacy chain - and its private label is responsible for more than 26% of the chain's sales, with the ambition being to reach a share of 30% of the turnover in the coming years.



The choice of the large chains in Israel to raise the prices of the private label precisely at the same time as the consumer protest against the large importing companies is a little puzzling, mainly because the private label generates bigger profits for the chains than other products on the shelf (that is, there is something to cut, or in the context of the increase in the prices of raw materials - there is somewhere to absorb), since there are no intermediaries on the way and the advertising and branding expenses are minimal.



At that time they could have been content with earning less, or - what they didn't do - and it's a shame: take advantage of the momentum and sell much more of their brand and cheaply.

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Tags

  • Shufersal

  • Rami Levi

  • Cost of living

  • importers

  • private brand

Source: walla

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