Text size

The Blue Square grocery chain's management headed by Gil Unger dropped a bombshell on the food market in mid-August when they launched Mega in the City (Ba'Ir)), and cut its prices in city centers by 10 percent. The new price gap of only 5 percent between Blue Square outlets in the city and the discount chains located far from metropolitan centers should have minimized the advantages of getting into a car and driving - and substantially increased the chain's market segment.

At least that was the theory.

But according to the Nielsen rating, which follows bar-coded sales (groceries with automated cash registers), it is still too early to determine whether the Blue Square's move- which included a broad televised advertising campaign - has contributed much to its market segment, TheMarker learned. The Blue Square's customer base has strengthened, increasing from 22.9 percent of the market in July to 23.8 percent in August, but it still remains a smaller segment than that commanded in August 2006, when the chain held sway over 25.2 percent of the market.

The strengthening of the Blue Square's position can be attributed to changes the chain made in mid month, but the explanation may lie elsewhere. Superpharm gained substantially on the Blue Square in July, and the Blue Square's market segment approached June levels, as did Superpharm.

The issue relates back to Superpharm's annual Life-Style day held in July, when the chain's 'Life-Style' club members enjoyed special discounts and benefits. Traditionally, Superpharm has enjoyed shopping bonanza's on Life-Style day that can reach 15 percent of its monthly sales. The success of the campaign held in July apparently hurt Blue Square harder because of it's relatively large offering of non-edibles compared to Supersol.

The August Nielsen report shows that the grocery chain sector may be seething, but the effects of the move on Blue Square remain unclear. Supersol maintains control over 37.4 percent of the market; the private chains that have gained in strength since early 2007 maintain about 20.6 percent of the market; and privately owned 'minimarkets' have a hold over 10 percent of the market.