Supermarket shopping - Ilan Asayag - August 2011
Shoppers at a supermarket. The increase in the consumer price index for April was the lowest in over a decade. Photo by Ilan Asayag
Text size

Food purchases at supermarket chains dropped 6.6% in July compared to that month in 2010, the Central Bureau of Statistics reported.

This is the sharpest drop in food purchases seen in the past few years.

These figures take seasonal changes into account; without these adjustments, the decrease was 5.5%.

Consumers were apparently influenced by the social protests, and possibly also by slowing global markets, said industry members. Chain stores' sales decreased 1.9% in total for that month, after adjusting for seasonal changes. These include clothing chains, shoe stores, appliance stores, housewares and others. The CBS collects this data from chain stores every month, and it provides an indicator of private consumption.

"The entire market declined. Part of it is due to the protests, as well as what's happening in world markets, and we're certainly feeling a big slowdown in consumption. As much as it sounds illogical, people are buying less and eating less. When the atmosphere is happy people buy food for enjoyment, and when it's not, they buy food for sustenance," a senior executive at one of the supermarket chains told TheMarker.

A big supplier said, "The market isn't moving, and you can definitely sense a drop in sales. People have less money, and the protest isn't boosting people's drive to buy. Given what's going on in the south right now, we're likely to see the trend continue and even worsen."

Retail consulting company StoreNext found that consumers changed their consumption habits in the wake of the protest. The company's research covered food, drinks, toiletries and housewares, and compared figures from July - when the protest was gaining strength - to those from January through June.

In July, consumers bought more basic products, and fewer premium products.

Consumption of premium products increased only 2.8% for July compared to July 2010. Between January and June, purchases of premium products increased 6.3% compared to that period in 2010.

The company also found that consumers were abandoning their neighborhood stores for discount stores. This trend has been going on for some time, but it intensified in July.

StoreNext also found that dairy consumption as a whole decreased in July. NIS 641 million in dairy products were sold that month, compared to NIS 635 in July 2010 - an increase of less than 1%. Adjusting for the price increases of May and June, which averaged 4%, it turns out that consumption actually decreased 3%. The report also found that 3% fewer containers of cottage cheese - the product that sparked all the protests - were sold in July compared to July 2010. Total revenues from cottage cheese were down 18.5%, due to the sales offered in response to the protest.