Renee Peres is
Professor of Marketing,
Deputy Dean of the School of Business Administration at the Hebrew University, and Head of the Marketing Specialization in the MBA program.
Investigates spontaneous outbursts in virtual and human systems.
Holds a master's degree in physics
Prof. Renana Peres, before we talk about the suspicion of price coordination, price competition in the markets, the Shufersal affair and the shopping month - it must be said that the fact that you came to be a researcher at a business school is not trivial. You came from a special family in Jerusalem.
"I was born in Jerusalem, in the Nahalat Zion neighborhood. Our family had many bards, cantors and rabbis - clerics and clergy. Women in the family also had roles - midwives, folk clinics and also bards. My great-grandmother was a very well-known figure in the neighborhood."
You're also a bard in a synagogue.
"Yes, as part of my non-research work. There are ancient piyyutim that no one has sung for at least 2,000 years, they have been forgotten, and I try to re-compose them and bring them back to life. These are very interesting piyyutim because they were written in Israel, in the fourth and fifth centuries, "An ancient poet from Eretz Israel. He wrote in modern, beautiful Hebrew. Very personal poetry."
With this diverse history, you have found yourself studying for two degrees in physics, and eventually teaching and researching business administration. Was it natural in the family?
"I do not think it was unusual, but also not very natural. My mother was the first generation to be educated in our family, after my grandfather, who was a shoemaker, insisted that she and her sister go to university. At the time it was a rather delusional thought. They thought my grandfather went crazy. "The way, I entered the paved road. Either way, in the extended family I was the first to complete a doctorate. Since then I have lived in multiple, diverse worlds, which also connect for me."
Where do music and poetry meet the director of business and physics?
"In general, people have always been curious to understand the world we live in, the wonder of creation, the universe. Scientists study creation, poets sing it, artists paint it and poets write about it. What they all have in common is that they are attempts to look at the bigger picture. "From basic phenomena, such as researching in-depth shopping at the supermarket, and is also attracted to birds that fly in the air. Even behind the simple things, there is a deep mechanism that is worth understanding."
"Everyone is exposed to consumer reactions."
Shufersal // Photo: Eyal Margolin - Ginny,
On the way to a "death spiral"?
Since you have already mentioned the issue of shopping at the supermarket, it seems that this is a good time to deal with it, after only this week the Competition Authority raided the offices of Shufersal and Strauss, and also investigated other chains on suspicion of price coordination, among others. This is not the only affair that has recently shaken Shufersal. Last week, News 12 published an investigation that revealed a secret website of the Shufersal chain that offers low prices to the ultra-Orthodox population. Are these light blows on the wing, or the beginning of the end?
As for the investigation, I understand that it is still in its infancy. In a market dominated by few manufacturers and few retail chains, it is important that every marketer be able to purchase products from all major manufacturers, to allow consumers variety. For those who coordinate price increases and harm competition - the well-being of consumers is harmed and the state authorities intervene.
"As for the second part of your question, it's not unreasonable for a marketing network to lose its customers and go down to the boards. Do you remember the Blue Square co-op? Where is it today? "Similar to the kind we saw and no repair will be made - the network could enter what we call a 'death spiral', a kind of slippery slope that leads to loss of profitability and collapse."
These provisions come precisely in the month of shopping. On the net, we are all probably familiar with situations where the price of a product varies for us throughout the day. How concerned should consumers be about these changes, and are they playing to their advantage?
"This is actually what economists call the 'exploitation of small inefficiencies.
' Efficiency causes a loss of money, which is bad for companies as well as consumers. But when there is technology - algorithms perform at any moment price forecast as a function of demand. It turns things into a kind of stock market, without you thinking you were going to the stock market. "And it makes the market more efficient, even for consumers - because the consumer does not pay the margin of confidence that the company would take at the expense of the consumer if the pricing was not dynamic."
So in the end technology works for the benefit of the consumer?
"Yes, because on average we pay less than we would pay in a situation where this technology did not exist. When all companies are hired, consumers are also hired. Of course, before booking a flight, or any other product, it is advisable to use a price comparison site."
But alongside the use of technology, Israel is still an expensive country relative to Europe, for example. This is of course relevant to the case of the suspicion of price coordination between the marketing chains. This week also saw a discussion in the Economics Committee on the cost of living, and many chains have already warned of rising prices.
"Abroad there are fewer barriers and more competition, and that's what sets the price. In Israel, the costs are higher and the competition is smaller. "
So in your eyes, the wave of price increases in the economy that everyone is warning about - is justified?
"Most of the increase is due to shipping prices. Transportation of raw materials, for example, leads to an increase of hundreds of percent due to corona-related phenomena. So prices go up and someone has to absorb them. The regulator, for its part, takes a market-opening solution."
"People do not stop compensating themselves."
Dizengoff Center // Photo: Yehoshua Yosef,
Shopping and binges
But in the meantime we are hearing about accumulating anger and frustration on the part of consumers. You are also investigating spontaneous outbursts in virtual and human systems. Do you recognize any accumulation of consumer anger, perhaps one reminiscent of consumer movements that characterized the days before the outbreak of the Great Protest in 2011?
"I do not recognize such a movement, mainly because people are buying more today than they ever bought. Try to buy a car in Israel. Not something mass, but a quality and prestigious car. You will wait half a year. "And it's annoying, and on the other hand the volume of shopping is delusional. People are taking their disposable income and investing it in consumption. And that is perhaps what worries governments and regulators very much."
It would have been better for people to take the money and save it.
"For example. Saving is a skill, a habit, and when practitioners do not save, they create long-term damage. But people have not stopped buying. The question often arises whether following the corona will return to simplicity, having seen that it is possible to live without shopping. I laughed when this issue came up, because as soon as the options opened up again - people just thought about how to compensate themselves: for all the trips abroad they avoided, for all the restaurants they had not sat in. Try to get a place at a restaurant in Tel Aviv, or anywhere else. "People are compensating themselves enormously for everything that was withheld from them during the Corona period."
Intense purchases can be an expression of anger, a kind of binge, a burst of unregulated passions. This is not necessarily a good sign.
"From a psychological point of view you are probably right, but the way I see it - I do not think people in Israel are angry. By all measures of happiness and satisfaction - the population of the Western world is reconciled. Maybe it is long-term concerned about climate and environment, "We did not go into significant economic crises following the corona. It's pretty amazing."
Car park in the port of Haifa // Photo: Herzli Shapira,
The parable of the English tomatoes
If we focus a little more on the matter of anger, a good reason to be angry is the same investigation published in "News 12" that revealed a secret website of the Shufersal chain that offers low prices to the ultra-Orthodox population. Were the price differences between that site and the general site of the network legitimate or some kind of consumer fraud?
"From an economists' point of view, every organization has the right to sell where it wants and for as much as it wants, and consumers have the right to choose. But I am not an economist. From the business manager's point of view, I believe in relationships, For a Shufersal customer, it is not a one-time purchase, but in fact constitutes its shopping flow from now until the cessation of consumption - this is what is called the value of a customer's life. This flow represents the customer's monetary value for Shufersal.
"The customer also brings reputation. And once the look is from a point of view of a relationship - the attitude of 'here I will sell for 10 shekels and here for 5 shekels'It's starting to get problematic. "
It is problematic because of secrecy, it is experienced as a betrayal in the eyes of customers.
"True. And that's the feeling. This is not a flight ticket, for example, where we know that the person sitting next to us did not pay the same amount as us, and this is almost always true. There are automated systems that review the computerized auction, where prices constantly change. Even when we bought the ticket A few minutes away - the price will be different, and that's fine, people are not angry about it
.
What we will also experience in a serious way is the reaction - stopping the activity on the site.
"It's like the traitor who was caught - and hiding. They could have leveraged the event and said the site was open to everyone, or alternatively they would campaign to make the products available to everyone. Some people care more about price and some less - but one thing people do not like: lying to them".
Long-term consequences.
Online Shopping // Photo: GettyImages,
And things hurt more when they conflict with the branding of the product.
"It's another layer. Cottage, for example, has built itself as a brand of a long-term relationship - 'the cheese with the house.' Rabbi.
"In the case of Shufersal, under the branding 'mine' - it is impossible to follow the personal, human line, 'mine', and then behave in the opposite way.
"All the flaws in relationships have happened here: creating expectations of a long-term contract, commitment, and finally - betrayal."
If you already mentioned "my" branding, people became associated with their writers during the Corona period.
"Think for about two years it was the almost only place you could go. The writers were at the forefront of this war, and functioned very nicely overall, after an initial period of confusion. Behaving dishonestly after everyone was tied to their writer - the betrayal is even more painful. I would like to catch someone. In the management of Shufersal and ask him 'What did you think of yourself?' "
What is being done now to repair the damage?
"What they do in a relationship - talk, explain, apologize and correct. In the writers' network in Sainsbury's in England, they wanted to create a situation where they serve diverse populations in the same branch with different levels of price sensitivity. They did it by branding - in the same branch they sold series of brands from the same branch. "A product, at different price levels. For example, eight different types of crushed tomatoes - from the simplest to the most luxurious - all on the same shelf."
This is a consumer situation that allows us a great variety, which brings us to buy more. In this context, of our shopping volumes, some of the forecasts for the month of shopping indicate that it is expected to be less profitable for manufacturers. Does that mean we bought less?
"Less profitable because they are likely to offer big discounts, along with a rise in their costs. Manufacturers' profit margins will be smaller, but that does not mean they will buy less. What worries me more are the long-term consequences of our shopping. Before every purchase consumers need to think about They do not pollute the sphere in which we live; and in the long run - if they do not violate the basic contract of the relationship between us and the planet we are sitting on.
"We have spoiled, but it is our duty to repair and not to spoil.
Just as they say 'drink responsibly' - so too should you buy responsibly, with a full understanding of the long-term consequences of things. "
For suggestions and comments: Ranp@israelhayom.co.il