Getting Schooled in Israeli School Supplies

When it comes to back-to-school supplies, Israel's economic downturn is barely visible in the large chain stores.

As August rolls around, Nurit, a mother of three children, sets out on another shopping spree for school supplies. She knows that even if she convinces her kids in advance that they don't need a brand name backpack or planner, it won't help. Social pressure and stores full of all the coveted brands dictate the choices.

"I don't really manage to withstand the girls' insistence on buying Hello Kitty items or my son’s demand that everything be embellished with the image of SpongeBob SquarePants," says Nurit. "These items cost tens of shekels more than the basic product. Even my 10-year-old daughter knows this, but she also knows enough to tell me there's no way she’ll go back to school if everyone but her has new, brand-name supplies."

Nurit says she expects schools to intervene. "Just like school uniforms were decreed a few years ago, to avoid unpleasant situations, that's how school supplies should be dealt with, too,” she says. “Parents should be instructed to buy basic products and standardize the backpack with the school or city logo."

Until that happens, her compromise is to buy name brand planners and notebooks only. "I insist on buying the other supplies cheaply," she says. "They work exactly like writing supplies that cost five times as much. The children know precisely what famous character they want on their backpacks, but they haven't any idea what the difference is between a pack of pencils costing NIS 13 and one costing NIS 4."

Nurit's dilemma is shared by many parents. Menashe Zilka, CEO of the Kravitz office supply chain, says that a survey of 250 parents of school-aged children revealed that the economic situation barely affects the purchase of fashionable brand names, primarily because they are a one-time, annual purchase, rather than a recurring monthly expense. "These are unplanned purchases, made without necessarily considering the price, and are mainly driven by the desire to keep up with trends," he explains.

No slowdown has been felt as far as back-to-school supplies are concerned, Zilka says. "The parents surveyed claimed they don't intend to scrimp on their basket of purchases this year and even intend to increase the allotted budget."

The back-to-school market is worth about NIS 450 million a year, roughly 30 percent of overall office supply sales, which are estimated at NIS 1.5 billion annually, according to Dun & Bradstreet. The main players are Kravitz and Office Depot, which together control 62% of the market.

Office Depot, which was sold to Avi Malka last year after running into difficulties, promises to provide consumers with lower prices by introducing new management techniques. Kravitz, for its part, is taking advantage of Office Depot's weakened state and confidently claims to be the country's leading office supply chain.

Independent office supply stores, found in nearly every city, offer a more personalized shopping experience. Ruthie, a mother of two, says she has bought supplies at her town's local store since she herself was a child and enjoys going back. "I also browse the other stores, but in the end I go back because they usually round down the bill for me – and for a large purchase I get a better discount," she says.

Toy store chains also give the two office supply chains a run for their money. The Kfar HaShashuim chain portrays itself as a major competitor and offers a fair selection of back-to-school supplies. Chains like Toys "R" Us, Idan 2000, Happening and The Red Pirate also fill their shelves with school supplies at this time of year.

Competition is assured in places where three or more stores are in close proximity. The large chains claim a competitive advantage, saying their prices are similar throughout the country, while toy chain outlets held under license and small stores vary their prices. But Haaretz was told by a store manager from one of the large chains that the moment it becomes clear that local competition has intensified, the store receives special permission to lower its prices. Office Depot went so far as to advertise this explicitly, by promising to provide the lowest price when presented with advertising or a bill proving the chain to be more expensive than a competitor for an identical item.

Prices up from last year

According to figures provided by Kravitz, the average expenditure on back-to-school supplies per elementary school child is NIS 250 to NIS 300, with expenditure of NIS 400 to NIS 550 for high school students.

Haaretz visited Rishon Letzion to determine which of the three main school supply chains offers the best bargains. Like last year, Kfar HaShashuim has the least expensive basket. The chain's stores are licensed out, so they don't offer identical prices, but the overall difference between the two branches we sampled was just NIS 8 on a basket averaging NIS 425 – only NIS 2 more than last year.

Kravitz has the highest prices this year, although the cost of the basket hasn't changed at NIS 490. Prices at Office Depot, last year's most expensive chain, dropped by 10%, coming in at NIS 37 less than at Kravitz.

Prices on brand name items, like notebooks and pencil cases, rose 7% to 17%, with the largest price gap between identical products at different stores reaching 25% for SpongeBob SquarePants and Angry Birds notebooks. A pack of five of these notebooks sells for NIS 14 at Kfar HaShashuim and Office Depot but NIS 17.50 at Kravitz.

The items with the most impact on the overall cost of the basket are actually basic products, with the largest gap registering at 550% on a pack of markers - NIS 2 for the cheapest set at Kfar HaShashuim against NIS 13 for the lowest-priced package at Kravitz. In most cases, the stores claim the price differences are due to the varying quality of the products but, since these are cheaper products rather than leading brand name items, this is precisely where the possibility of saving money comes into play.

The fact that prices weren't always clearly marked at any of the stores, despite being required by law, was particularly noticeable. We found many items whose prices were hard to ascertain at all the stores we visited.

Kravitz replied that the chain offers the largest and broadest selection of back-to-school products in three price categories: low, medium, and higher priced. "A market study by the company showed that in the three price categories, the products at Kravitz are the lowest and most attractive compared to products equivalent in level, quality and branding at other chains," Kravitz said.

Bloomberg