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Why should Smotrich's appeal to Costco worry us? - Walla! Of money


Barely 5 weeks have passed since Bezalel Smotrich entered the Finance Minister's office and he realized that the most he could do to lower the cost of living was to beg Costco

A huge queue near a Costco branch in Australia, with the imposition of the first Corona quarantine (Photo: Reuters)

A festive headline was published over the weekend in the Israel Hayom newspaper and heralded an impending upheaval in the food market and a rallying cry for the war on the cost of living: the Minister of Finance, Bezalel Smotrich, addressed a letter to the management of the giant American chain "Costco" and suggested it come to Israel.

It can be assumed that the fans of the brands who stood at the doors of Seven Eleven and went to the mall for a pair of Kanye West shoes, relished the news and perhaps even a memory of the shelves loaded with extremely cheap huge packages, from their last trip to the USA. On the

other hand, those who understand little about retail read the lines The goddess again and again and felt great embarrassment.

Finance Minister Bezalel Smotrich.

A letter that seems to have been written by a first-year business administration student and not by someone who is responsible for Israel's economy (Photo: Avi Rokah)

While Prime Minister Binyamin Netanyahu is talking and meeting with the world's top economists, in order to convince them that the legal reform, which his government intends to pass, is the best thing that can happen to democracy and the Israeli economy, the Minister of Finance is knocking on the doors of a large private retail chain and sending it an official and puzzling letter, as if it were In a first year student in business administration and not in the person who is responsible for the state coffers and Israel's economic image in the world.

"The Israeli government has set itself the goal of increasing Israeli competition in the Israeli food market," Smotrich wrote to CEO Craig Gelling. "It would be a great achievement if international players like your company enter.

We want to interest you in entering the Israeli market, we have an opportunity and common goals," and concluded that he would be happy to discuss the matter with the heads of the company during his next visit to the US.

Costco is the largest chain of wholesale stores in the USA, operating in a model where only club members can purchase products, for a payment of 60 - 120 dollars for an annual subscription, which allows it to maintain a low price level even in times of global price increases.

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Did the Minister of Finance conclude from this that he has no real chance of fighting the cost of living in Israel? (Photo: ShutterStock)

Smotrich has nothing to offer

On the face of it, it sounds like a great idea.

Why not bring here a chain that will hit the market with floor prices and make competitors pressure and lower prices?

Let's start with the fact that if Costco thought the Israeli market was attractive, it would have entered here a long time ago and not wait for the Minister of Finance to court it.

With all due respect to the local consumer's purchasing power and lust for brands, we are probably not the kind of guy who is worth going through the "Via Dolorosa" that greets every importer.

Besides, it is likely that in the first step, Cuzco would have been looking for a partner, a franchisee or at least a representative of the market faucets, not necessarily the Minister of Finance of the State of Israel, who is possible because his heart is in the right place, his intentions are good and his words are sweet, but he has nothing real to offer her.

I tried to figure out if Smotrich had promised Costco a generous grant, or an unusual chopper, something akin to a piece of jewelry that bestows a successful suitor.

In his environment, I was told that nothing was promised, and this request came to hear with a desire to hear what the network's needs are, and if there are ways to facilitate its entry into Israel.

This answer is no less puzzling than the letter.

Common sense says that first we need to do careful preparation work and make a significant change in the business environment, for example, easing the kosher process (not on the halachic level, but in the cumbersome mechanism surrounding it), financing the Hebrew stickers on the products, quick release of the short-lived produce at the ports, so that it will be worthwhile for the company to import fresh food here - and only then contact and invite the chain to Israel, and prove to it how worthwhile it is to enter our gates.

Want to understand what are the needs of a large chain that is trying to start operating in the Israeli market?

Jump down to Carrefour (photo: PR)

asked Carrefour

If the Minister of Finance wants to hear about the difficulties faced by foreign chains that want to enter Israel, he does not need to buy a plane ticket to America.

He is invited to tell his driver to start the car and drive to the headquarters of Electra Consumer Products, the Carrefour franchisee in Israel, or to exchange a word with Amit Zeev, the representative of the Dutch "Spar" chain. Good news from abroad to the people sitting in Zion - and on the way I eat bitters from every direction.

Above all, this letter may have a deeper and more worrisome meaning: it took the Minister of Finance a little over a month in office to despair of his ability to influence the food market from the inside and lower the cost of living, and with no choice he is turning outside to look for solutions that will take care of the marketing chains and food manufacturers.

Perhaps he understands what some of his colleagues in the government have not yet realized: in the State of Israel there is a big gap between ideas that look great in theory, and what can be implemented in practice.

  • Of money

  • opinions


  • Cost of living

  • Bezalel Smotrich

  • Carrefour

Source: walla

All business articles on 2023-02-06

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