In recent times, the food market has not been out of the headlines, placing burning issues at the forefront.
Thus, for example, the focus is on the cost of living and the struggles between the chains and the suppliers against the backdrop of the suppliers' request to raise prices;
And this in addition to the expected change in the market, against the background of the entry of the international brand "Carrefour" which will arrive in Israel by the Beitan Wines group, which also includes Mega, and will gradually replace the group's branches.
Against the background of the price increases in the food industry and the soon expected changes, we asked the senior executives of the largest food chains in Israel who is to blame for the high cost of living, do they also have a part in the high prices we pay for food, what are the chances that Carrefour will indeed revolutionize the market, and also - do they think that in the near future they will not There will be cashiers and cashiers in the branches.
As mentioned, against the background of the delicate relations between the suppliers and the chains, there are quite a few chains that blame the suppliers for the cost of living;
On the other hand - there are elements that also accuse the chains of "celebration", which in the end amounts to a hole in the consumers' pockets.
"Teeth exposed in the trade department".
Stop Market branch,
So how do the chains deal with the cost of living in Israel?
According to Nir Matusowitz, Deputy General Manager and Vice President of Trade and Marketing at Shufersal, the largest chain in Israel, "In the face of the high cost of living, we are strengthening our private brand, whose products are cheaper than the category, and of course it is a product that has been tested for quality. In over 90% of the cases The private brand is cheaper. It is possible that at one point this or that brand will have a sale. In the vast majority, certainly in the price list, it is substantially cheaper and it is a high quality brand.
"We deepened the quality department and added standards to it, this year we will add a lot more innovation alongside the smart carts and the independent checkouts, and we will enter new categories. At Shufersal Online we have good prices and lots of promotions. This is about making Shufersal deal prices more accessible and high availability throughout the country.
As for the benefits, Matusowitz says: "In our new customer club, we offer coin accumulation. The mere accumulation of super coins gives a value that is not reflected in basket comparisons, since our club members convert it into money. These are huge sums that we invest in this. Our club members, who are Over 80% of shoppers in the Shufersal network can redeem the coins at Shufersal and at 150 different points and chains, as well as using the Golden Note and Paybox. That is, the consumer bought and accumulated coins and can convert them into money inside Shufersal and outside of Shufersal. In addition, we offer coupons in the club that are personalized for people , according to what they like to buy."
Who will lower the taxes?
Rami Levy says his network helps fight the cost of living.
According to him, "If my chain didn't exist, the cost of living would be much higher. You can see that we sell the cheapest in Israel. This makes it possible to buy even for those consumers who find it difficult. We do all this without compromising quality and service. In addition, when you enter the branch, you see that the consumer has Power in the hands. It has a wide variety and he doesn't have to buy at any price. There are various promotions, and if the consumer makes a smart purchase, he can save tens of percent."
If you are coming towards the consumer, who is responsible for the cost of living?
"Our country is the problem that caused the cost of living, and our country is responsible, net, for the cost of living. It is a centralized, monopolistic and powerful country. Citizens do not have many options. As soon as the property tax, electricity and fuel prices are raised, the citizens must pay. When the state collects duties and taxes, they must pay them, and when the state produces unnecessary regulation, one must follow its own path. When the state collects over 100% taxes on new vehicles - one must pay, the excise tax on fuel must be paid.
"In addition, the state sells land that increases the price of the apartment. It plays a double game - on the one hand, it says it wants to lower the prices, and on the other hand, it sells at the highest price. It sells the land at exorbitant prices, and on the other hand, it says that the prices have gone up.
"If they wanted to address the cost of living, they should have lowered taxes, tariffs and regulation. In the end, the state should collect taxes, but it should do so from growth and not on products that do not have crops in the country, in order to protect the farmer. The one who protects the farmer is the consumer. If people have money, they will buy more and the state won't have to collect taxes on things it doesn't need to collect such as fish, olive oil, honey and yellow cheese. On the one hand, they claim that the prices are expensive, but they charge tariffs. In addition, let them reduce regulation."
Fruits and vegetables at loss prices
In the Yohannoff network, the price increases are opposed by the suppliers.
According to the Deputy Director General Elad Harazi, "If we refer to the matter of the suppliers and the price increases, it is understandable that the suppliers send papers and want to raise prices.
We oppose it.
We are in negotiations with them all the time, so as not to raise prices.
On the other hand, we offer advantages over the shelf.
We speed up private label solutions that give decent value for money.
Ultimately, the ball is in the consumer's hands.
He chooses whether to pick up an expensive or cheap brand from the shelf.
Once he makes the right choice, he can influence supplier requirements.
In our private label we are already working on food products.
We already have microwave popcorn, olive oil and basmati rice.
We are working on dozens more items in the field of chocolate, spreads, mashes, waffles and sweets."
"Benefits on the Shelf".
Yohannoff branch,
Chai Mashiach, the marketing director of the Stopmarket chain, says that "Beyond baring our teeth in the trade department, there is not too much to do, except to demand the best purchase prices we can get, in order to pass them on to the consumer. The issue of the cost of living is a global problem. There is Significant increases in the prices of the products that are imported via sea and air shipping, and this of course raises the prices for the consumer.
"We talk a lot about the prices of fruits and vegetables. Even before the corona virus, we offered fixed days as market days for fruits and vegetables, which we sell at loss prices. This is a huge variety in the department. Despite the price increases, we decided to continue with the fruit and vegetable market, while we try to give special offers on the fruits and vegetables that are consumed Regularly. Throughout the year we sell a tomato on our market days for NIS 3, even if at that time a tomato is sold for NIS 16. The same goes for cucumbers and many other things."
Regarding parallel imports, an official in the industry says that "one must understand that the level of availability of parallel imports is low and not continuous, and therefore cannot be relied upon. Working with parallel imports results in a shortage of products on the shelves, which creates consumer dissatisfaction. You cannot rely on it For a long time, because there will be no goods on the shelves. If for two weeks I do not have a popular brand, the loss in sales will be greater than the savings.
"In addition, the state can be much more involved in terms of the cost of living and an influential factor in that the basket of products will be cheaper. The state has tax surpluses. The state took almost 2 billion shekels from consumers' pockets in the last year from collecting taxes on sugary drinks and disposable dishes. It is expected that the state Return part of this money to consumers by subsidizing basic products such as eggs, milk, bread and other products."
"Press the suppliers".
Tiv Taam branch, photo: Yossi Zeliger
Yossi Shalio, the VP of trade and marketing of "Tiv Taam", says regarding the cost of living: "We are considering entering the world of parallel imports of brands in both the food and non-food sectors.
We are already in the import world and are now trying to find solutions to the price increases.
"We deal with the cost of living through the pressure we exert on the suppliers to prevent price increases. We examine every request very carefully, and in most cases we do not respond to it, as of now, until after the holidays.
"Generally, to lower prices in the market, you need to make a differential VAT on food, lower tariffs, give more tariffs and reduce regulation significantly.
A significant part is derived from the price of energy (fuel, taxes - 15) is under the control of the government. The public also needs to change its habits a little and go less to brands and go to substitutes that are no less good in quality."
"The price is high? Don't buy"
But while the food chains defend themselves and accuse the state of being responsible for the cost of living, their reports actually show handsome profits and the distribution of dividends.
So where is the responsibility of the networks themselves?
According to Nir Matusevitz from Persal, "We have a responsibility and we exercised our full responsibility towards Diplomat. We prevented them from raising prices. When a supplier like Diplomat does not supply me with products, it hurts my customers - and my customers are the most important."
Matusowitz refers to the struggle that recently emerged between Shufersal and Diplomat, against the background of the latter's demand to raise the prices of its products, a struggle that drew calls for a boycott from parties such as the Histadrut chairman and on the part of Shufersal and other chains, who announced that they would not approve the price increases during this period.
After these calls, Diplomat partially folded and decided to postpone the price increases after the holidays.
According to Matusowitz, "It is absolutely clear that Diplomat has room to absorb, as we absorbed against the small producers and helped them. We have no interest in raising prices, because then they will buy less from us. We are not the cheapest chain but the best and the best. We are spread throughout the State of Israel. However , we are not ready to be the most expensive. As soon as Diplomat raises prices, it hurts our customers who can buy less."
Your profits are high, maybe too high?
"We are a public company and you can see our profits. We earn very reasonably, and by the way - very low compared to the industry in the world. You can compare with Walmart, for example, and see that we do not earn more, but even less. There is no excess profit for retailers."
But you have the private label which can be cheap compared to the different categories, but like all food in Israel it is not cheap. But beyond that, you also raised the prices of the private label.
"We also have import and transportation costs. We are an island country and these are heavy costs. In Israel we also pay VAT on food, and abroad there is a differential VAT.
The reasons for the high cost of living in Israel are also true for the private label here.
I can't buy abroad at a very low price like a branch in Germany and the Netherlands buys.
"We absorb a lot of the costs in the private label, and this at a time when abroad there are crazy costs of transportation, as mentioned, and raw materials.
For the private brand suppliers, we raised the purchase price, absorbed the decrease in profit and did not raise the selling price, or raised it only slightly.
These are small and medium-sized Israeli suppliers that were on the verge of collapse.
We have been working with them for many years and we are not looking at the short term.
These are small and medium-sized importers who were in distress.
It is impossible to leave a family in Be'er Sheva or the Golan Heights with a collapsing business.
If we did that there would be no one to produce for us.
And I remind you that we don't give up on the big ones, and Diplomat is proof of that."
Strengthening the private brand.
Shufersal branch,
Also Elad Harazi
Unsurprisingly, he does not believe that the networks have any contribution to the cost of living.
According to him, "In the end, there are market forces. If the market increases, I cannot continue to absorb or be in a situation where I do not make a profit. Where we are able, we do not increase. We did not increase the prices of the private brand. But if it becomes more expensive to supply the brand abroad And the inputs went up, in the end the price will go up.
At the same time, we provide solutions like cheap brands and private label."
As someone who represents the small chains, Chai Moshiach actually thinks that the chains have a responsibility.
The "Stop Market" chain has 10 branches, with the chain going to open the 11th branch in Kneam.
According to Mashiach, "The chains and the consumer have the same responsibility for the cost of living. The responsibility belongs to everyone - the suppliers, the chains and also the consumer. The consumer has to choose what he buys and how he buys. When there are products at a high price, he won't buy them.
"The chains, for their part, should fight and not allow small or large price increases. If you ask me, the big chains are the main player in the question of whether or not prices will rise."
Your network is small, open around the clock, including on Saturdays. How much does it affect prices?
"My trading conditions are less good, and on Shabbat the salaries are double. I can price, so to speak, however I want, but then customers will not come. Our pricing is not high. It is impossible in our market to be disconnected. There is competition in the market, one eats the other and that is completely fine" .
What awaits us after the holidays?
Yossi Shalio: "I don't know how to say. It depends, for example, on whether the currency will continue to weaken or if the prices of goods will continue to fall. There are companies that have difficulty with them because the price of the raw material they rely on has increased, and there are stubborn negotiations. Therefore, there may be situations where some of the company's products will not be on the shelves in full, because of the disputes between the suppliers and retailers."
"People don't want to work"
Another point that is relevant to the cost of living is the productivity of the worker.
According to Rami Levy, "The state should invest capital to improve the productivity of the employee through training and awareness of this issue. This is one of the important things in order to fight the cost of living. For example, if in the vegetable department I have a budget of NIS 100,000 and they were working according to normal productivity, then I would Bring seven employees instead of ten, and I would divide the 100,000 by seven and not by ten. Once productivity is better, operating costs in the industry will decrease and prices can be lowered. The gross profit is determined by operating costs. If they were to decrease, prices would automatically decrease."
What about technology? She can also help.
"When cash registers without cashiers are introduced into the chain, it is not because of a desire to save the cost of cashiers. I would prefer a cash register with cashiers, even if it would cost me more - because the service is better. The problem is that there is a shortage of workers."
Matusowitz: "We have Shopik, a smart cart with a smart technological system that identifies the products, without queuing at checkouts. This is of course for the benefit of customers, shortens queues and is very innovative. We will expand to 10 branches by the end of the year. In addition, we have over 1,400 checkouts Independence that eases the situation."
Harazi: "Our two main challenges are the lack of manpower and the cost of living. We have difficulty finding workers and cashiers, and are forced to provide technological solutions. Today we have an almost full deployment of independent cash registers in the branches. People do not want to work. The younger generation is not interested, and probably the older generation The work has become difficult. Today our ratio between employees and independent cash registers is 50-50. The future is without cashiers and cashiers. Working hands will be hard to come by. In terms of smart carts - they are already deployed in 10 branches, and I believe that in the coming weeks we will complete all the branches. It solves the manpower problem and gives the customer an experience."
At Stopmarket they say that the technological changes have not yet penetrated the branches.
"With us, this is a sensitive point," says Chai Mashiach, "we don't yet have independent cash registers because they aren't really independent either. The day we have a cart, it will be with us. In light of the technological solutions that exist today, I think the customer works harder. So we have cashiers who give Better service. For us, it's less about a financial matter, but about maintaining the customer's comfort."
"Competition is welcome, don't worry"
Alongside the technological changes and the treatment of the cost of living, the chains are beginning to prepare for the arrival of the retail giant "Carrefour", which is expected to arrive in Israel and also affect the cost of living.
We asked senior food retailers to what extent Carrefour is expected to change the rules of the game and lower prices in the industry, and how they are preparing for the new chain.
According to Matusowitz, "Competition is a welcome thing, and makes us excellent. We are not worried. They will come and prove it to them."
"Can Carrefour lower the cost of living?" Rami Levy resents, "This is another headline. On the one hand, the state brags that it is bringing Carrefour. On the other hand, the one who brings Carrefour is the same failed chain that lays off workers and sells the most expensive in the country. So what is the state doing Are you proud? The Prime Minister and the Minister of Economy are proud of Karpura and claim that it will create competition? That they will take care of duties and taxes, that they will lower the VAT on basic products and that they will take care of the real thing."
Chai Moshiach: "I don't see how to change the sign of Beitan wines in Karpur, something will be done to lower the prices, but I wish it would happen."
Yossi Shelio of Tiv Taam added that "there is more hidden than visible regarding Carrefour. The regulatory process is long, exhausting and expensive. Will they open 150 branches in three years? I think it will be slower. In addition, fresh products have no added value. They do not bring products Fresh and chilled from abroad.
In the context of the price - most of the price is derived from regulation, raw materials, tariffs and other costs that depend on ingredients that do not always depend on the supplier and the product."
Another source in the industry claims that "they have no chance of creating revolutions here. The media that says that following the arrival of Carrefour the chains will shake - probably does not understand the industry. The habits of the Israeli consumer are stable and constant. All the chains have Elite, Milka and Taman, for example. So Carrefour will have chocolate from Poland Will everyone come to buy it? Time will tell. It's a process of years. So I don't think there will be a revolution, unless they have a contingency plan, and do something completely different here."
"Olive oil for NIS 11.5"
A senior official from Carrefour Israel said: "We are in the middle of the Carrefour Israel construction project. By the end of the year, we will open about 25 stores nationwide designed by Carrefour, according to the chain's international standards. In the initial phase, the stores will not be opened under the brand name, since we are in the process of Import of hundreds of products, mainly in the food and pharma sector. This is a huge project, and we will start seeing the products on the shelves in the coming weeks and months. We will convert our brand to the Carrefour brand as soon as there are enough Carrefour products on the shelves.
"The revolution we will bring to Israel will be expressed in prices, quality and service. Carrefour's purchasing power is five times that of the entire Israeli food market. This can already be seen in our winning - the only chain among the secular food chains - in the tender for olive oil. The Ministry of Economy chose us because our offer was the lowest We will soon, before the holidays, sell Carrefour brand olive oil at a price of NIS 11.5 per bottle. As for online, we have purchased 51% of Quick, and it will be responsible for the online world."
Regarding the price increases in the market, the source says that "according to the latest reports, the issued food chains and retailers suffered a decrease in gross and operating profit of 2.5%-2%, and the meaning is that the food market suffered an order of magnitude of half of the price increases.
It is very difficult for suppliers to raise prices today, they run into a wall in every request to raise prices."
As for the competitors' claims, the source says: "We understand the pressure in the market, and the market also understands that there is going to be a big change here."
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