Bottom Shekel / Will Levy's base sign on?
Rami Levy the man can fairly claim to have changed the face of Israel's retail industry - by triggering a price war.
The fact is that the two biggest retail chains, Supersol and Blue Square, constantly run ads shrieking that they're the cheapest (via their discount outlets Supersol Deal and Mega Bool ). Now he wants to have them running scared on the Internet as well.
This week, Levy announced at a conference put on by Ernst & Young that he plans to take his low-price revolution online. Possibly persuaded by the thought that the average Internet shopping basket is typically twice the size of a real purchase at an actual supermarket, he intends to launch a shopping site.
But Internet shopping is typically used by people of a higher socio-economic standing than Levy's core clientele. Internet shoppers aren't the type to haul themselves to one of his supermarkets to save a few shekels.
Can he win them over with the convenience of the Rami Levy shopping experience - from the comfort of their living room in Tel Aviv, Herzliya or Ra'anana?
Levy has been meeting with Internet experts, including the CEO of Google Israel, Meir Brand. He is seeking ways to transfer his gimmicks, such as the chicken for a shekel that set off a stampede and price war, to the virtual world.
He could well tap into a new cluster of customers by using home delivery, and possibly even trigger real competition in online retail. But he has a long way to go. Internet retail in food never took off. Supersol and Blue Square have offered online shopping for years, yet it contributes less than 1% of their sales.
People like to choose their tomatoes for themselves. They want to check each banana for black spots.
In Europe, where the industry is more advanced, Internet sales accounts for only about 3% of food transactions and many chains won't allow their online clients to buy chilled items.
U.S. Internet retail sales, not including restaurants and gas stations, were 4.1% of turnover.
Selling online is no walk in the park for the retailers. They need storage for the thousands of products, logistics, transportation, workers that collect the items, call the client if something is missing, deliver it and so on.
Rami Levy has managed to keep prices low at his eponymous supermarkets, even when expanding - he now has 17 branches. Can he supply low-cost service over the Internet? He'll have to decide for himself if the narrow margin is worth the logistical headache.
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