Israelis Don’t Like High Prices - but They Don’t Like Discount Supermarkets Either

Residents seek to block the opening of low-cost supermarkets in their neighborhoods. Is it the traffic they don’t like or the down-market image?

Daniel Bar-On

Since the 2011 social justice protests, Israelis have made clear they don’t like high prices. But now it seems they don’t like low prices either, at least when the low prices are offered by stories right in their own backyard.

Residents of two affluent neighborhoods – one in the coastal town of Netanya and the other in Nes Tziona south of Tel Aviv – are campaigning to block the opening of discount supermarkets in their areas. It’s not just that they’re worried about traffic and parking problems, residents say they don’t want the down-market image the supermarkets suffer.

In Netanya, residents of the Agamim neighborhood have launched a Facebook campaign to stop Echad from opening in the local shopping center next month. The newly launched chain features no-name brands and a very limited selection of products at very low prices

A similar campaign in Nes Tziona’s Argaman neighborhood is also underway to block the discounter Yochananof, which bills itself as “the supermarket for everyone.” In a petition, 500 neighbors of the supermarket say it will “damage the quality of life of neighborhood residents and will constitute a severe noise and traffic nuisance.”

“It’s not that we don’t want people coming from other neighborhoods or from other social classes. But we’re talking about a small and intimate neighborhood with one lane of traffic going in each direction on most streets,” said Etai Noy, 30, a resident of Agamim for the last year.

“The suddenly two weeks ago we heard they’re going to open a supermarket here. The shopping center has just 150-200 parking places and a supermarket will bring 1,000 cars.”

The clash between low-cost and high-toned comes as the rapid growth of discount food retailers has left little room for them to expand in their traditional locales in industrial zones at the edges of cities. Starting about five years ago, the bargain supermarkets began setting up shop in city centers and shopping malls, and now the trend is accelerating.

Mall developers once looked to Supersol and Mega, the two big full-price retailers, as anchor stores for their malls. But the two big chains are contracting, so developers are ready to lease to the likes of Rami Levy and Victory.

In fact, Victory has opened a store in Tel Aviv’s upscale Ramat Aviv quarter, Rami Levy is looking for locations and Lahav Warehouse is expanding to neighborhood sites.

“Discount supermarkets, in contrast to My Supersol or Mega in the City, will draw customers from outside the neighborhood, which will increase traffic, create crowding and big trucks that deliver merchandise every day and unload it,” said Tamir Ben-Shahar of the retail consulting firm Czamanski & Ben Shahar.

Discount stores at the lower end of the market can also lower the image of the mall and the surrounding neighborhood, he added.

But Gil Unger, CEO and partner is the 5-shekel-a-cup café chain Cofix, feels otherwise. He is planning to launch in May a supermarket chain featuring the same 5-shekel prices in neighborhoods and downtowns.

“Well-off people want to buy cheaply. When I was CEO of Mega, the residents of Ramat Efal, which is very affluent, came to demonstrations demanding that Mega in the City sell at the same prices as Hetzi Hinam,” he said, referring to another cut-price supermarket chain. “We were forced to surrender and cut prices because they boycotted us.”

At 250 square meters only, Unger’s Super Cofix stores will at least be small, a quarter of the size of the planned Echad store in Netanya. He implies that behind the protests is a kind of snobbery.

“My Supersol stores cover 600 and 1,000 square meters, but neighborhood residents accept them happily, even if they want them to sell at discount prices,” he said. “Maybe at the beginning people will come to see something new and it’ll be a mess, but very quickly things will return to normal.”