Blue Square fumbles on new strategy
Back in September, one could have believed that the seeds of the revolution had begun to sprout, and that Blue Square had begun to gain market share, albeit slowly. But October data from Nielson, which tracks bar-coded grocery sales, indicates that even these tentative signs have evaporated into thin air.
Four months ago, the Blue Square supermarket chain promised a major paradigm shift in Israel's retail sector that would change our shopping habits.
It invested NIS 25 million with the goal of making out-of-town travel to reach heavy discount chains a thing of the past, replaced by Mega in the City neighborhood outlets offering prices just 5 to 6 percent higher than those of the discount chains, which are accessible only by gas-guzzling private vehicles.
Back in September, one could have believed that the seeds of the revolution had begun to sprout, and that Blue Square had begun to gain market share, albeit slowly. But October data from Nielson, which tracks bar-coded grocery sales, indicates that even these tentative signs have evaporated into thin air. Blue Square lost 1 percent of the market, and now commands only 23.3 percent of supermarkets' cash sales. That is down from 24.3 in September and an annual average of 25 percent in 2006. The Supersol group, on the other hand, maintained stability with a market segment of 37.7 percent, compared to 37.6 percent in September and an average market segment of 37.6 percent in 2006.
Smaller, privately-owned chains captured 21.1 percent of the market, up 0.9 percentage points over September. But the privately owned "mini-markets" are paying the price of both tougher competition in city centers and the cost of their quick proliferation in downtown areas: They lost 0.4 percent of the market, falling to 9.6 percent from 10 percent in September and an average of 9.9 percent in 2006.
Blue Square, having chosen to change its strategy specifically in urban centers, in the Super-Center outlets that had been the company's main growth engine, was unable to halt the decline of its other subsidiary chain, Mega. According to the data, Mega's loss of 0.7 percent of the market was the biggest contributor to Blue Square's decline, and Mega-in-the-City lost 0.3 percent as well.
In the Supersol group, gains by the Supersol Deal heavy discount chain were canceled out by a weakening of Supersol Big. Supersol Deal's market segment rose to 14 percent (up 0.8 percentage points), but Supersol Big dropped 0.7 percentage points, to 6.9 percent.
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