Rami Levi has decided to remove Procter & Gamble's Pampers diapers from his supermarket chain, Rami Levi Shivuk Hashikma.
"With the price Pampers demanded, I would have to have sold their diapers for over NIS 45 [a package] or even more than NIS 50. Huggies at least has sales sometimes, like now for NIS 39.50 for preferred customers; but Procter & Gamble wanted to be tough and not do sales. So thank you very much, but no thanks," said Levi yesterday.
Levi qualified he was continuing to sell the rest of P&G's products in his stores.
Levi expects Procter & Gamble to give in ultimately: "They've been off the shelves for over a week, and it doesn't really bother the customers. One customer came and asked what happened, and then went to buy Huggies at a cheaper price. I believe that in the end they will lower prices," said Levi.
Pampers made up 30% of the chain's diaper sales, he said. Huggies, made by Hogla-Kimberly, is the leading brand with a 45% share. A number of smaller brands make up the rest of diaper sales.
Diapers are a big loss leader for supermarkets (products that are sold, even at a loss, in order to bring in customers ). Levi said he sometimes loses money on his diaper sales, and usually barely makes a profit, "but why should I sell at a high price," he asked.
Pharmacy chain Superpharm reported last year it lost NIS 50 million on diapers and baby food, compared to a NIS 30 million loss in 2010.
Pampers is not the only product Levi pulled from his shelves when he couldn't offer customers an attractive price: "All last week I didn't sell sweet potatoes, since they were horribly expensive. That is how companies will learn: If there is no demand, then they will lower prices," said Levi.
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