A customer at a branch of Super-Sol in Tel Aviv.
A customer at a branch of Super-Sol in Tel Aviv. Photo by Ofer Vaknin
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Public anger may have targeted the big supermarket chains during last summer's cost-of-living protests, but apparently it's the mini-markets that are paying the price for the new consumer awareness that the protests brought about.

Sales at private mini-markets and corner stores were 7.3% lower in the first quarter of 2012 than they were a year earlier, during the first quarter of 2011, according to Nielsen data. They totaled NIS 1.5 billion, down from NIS 1.7 billion. Mini-market sales also decreased 3.3% between 2010 and 2011.

The company tracks sales at the big supermarket chains, the private chains, mini-markets and corner stores, which make up 97% of the bar-coded market. This does not include outdoor markets, the Arab sector and some small stores.

Now, mini-markets and corner stores hold 15.9% of the market, compared to 17.6% in 2011 and 18.3% in 2010.

The big winners from the social-justice protests have been the private discount chains, which have been making inroads into cities and driving up competition. Meanwhile, the smaller stores are unable to compete as consumers show new price awareness.

"Prices at mini-markets and corner stores are still higher than at the big chains because they have lower turnover and have to work on higher profit margins. They also receive less preferable terms from suppliers," said a senior executive at one of the big chains.

In order to compete against the big players, the mini-markets need to unite to arrange better terms and offer their own private labels, said Tamir Ben Shahar of the Czamanski Ben Shahar consulting firm. Otherwise, they'll be able to survive only in places where they don't face direct competition from bigger players.

Eli Stavi, head of the grocers' association, said that in some places, mini-markets were buying their stock from discount stores such as Rami Levi or Osher Ad in order to get by.

"This is a side effect of the increasing competition between Super-Sol, Rami Levi, Osher Ad and the other private chains," he said. "The more these chains cut their operating profit, the more it hurts small businesses. For instance, since Rami Levi entered Ashdod and Osher Ad and Super-Sol Deal responded, prices have been down an average of 20% in that city."

The mini-markets still reign supreme in some small towns and kibbutzim, where residents have no other options. There, prices are almost twice what they are in other places, he said.

Meanwhile, private chains including Rami Levi, Kimat Hinam, Hetzi Hinam and Victory saw their market share jump over the past year. Their sales were up 9.1% last quarter compared to the first quarter of 2011, to NIS 3.4 billion. Sales increased by a more moderate 3.2% between 2010 and 2011.

These stores make up 34.4% of the market, up from 32.4% a year ago.

Super-Sol and Mega accounted for 49.8% of the market last quarter, down from 50% in the first quarter of 2011. Their sales totaled NIS 4.9 billion in the first quarter of the year, up from NIS 4.8 billion.

Meanwhile, the big grocery store chains reported that this Passover was a weak one, partially because the holiday began on a Friday night. Therefore, customers didn't buy much more than they would have for a regular Friday night meal, and they certainly didn't need to plan both a seder and a Friday night meal. Mega reported that while the store was seeing new customers, the average purchase was smaller than it was last year. This may be partially due to the weak economy, said a store source, who reported average purchases were down 5%.

But that may partially be because consumers were seeking cheaper alternatives.

Rani Zim, one of the owners of discount chain Kimat Hinam, reported that same-store sales were up 5% while chain-wide sales were up 20%. Sales of the store's private brand were up 8%, he noted.

The picture at Rami Levi's eponymous discount chain was much better. The chain's sales were up 33%, and same-store sales were up 12%, said Levi. The average customer bought more items - 31.6, up from 29.5 last year - but paid an average of 3.4% less for each item, he said.