Attention, Shoppers: IDF Soldiers Are Big Spenders

They may not look like attractive consumers, but conscripts buy NIS 2.2 billion a year of goods and services. Now, more big businesses are gunning for their wallets.

In many cases, they are just out of high school, earning between NIS 350 and NIS 700 a month. Most of these Israel Defense Forces draftees still live with their parents and many only leave their bases for civilian life every week or two, so they don't frequent shopping malls, at least not those soldiers in combat units.

So on the face of it, IDF conscripts doing their mandatory army service wouldn't appear to be a particularly promising target population for merchants, unless you happen to run a falafel stand at a central bus station. Dig deeper, however, and you will find clientele that has become increasingly attractive to business owners.

Last year, soldiers doing their mandatory service – which is generally three years for men and about two for women – spent NIS 2.2 billion according to Yoter, a non-profit customer club whose 165,000 members are almost all soldiers doing their mandatory service. It is affiliated with the Association for the Wellbeing of Israel's Soldiers – Ha'aguda Lema'an Hahayal.

In addition to an inoculation shot, newly enlisted soldiers get a package of products through the association filled with food and toiletries from commercial firms – NIS 15 million worth of products a year for 70,000 draftees. The companies apparently provide the merchandise to attract the soldiers as customers during their army service and for years beyond that after the soldiers return to civilian life.

"From the day the young people go to the induction center, their life changes," the director of the Yoter customer club, Asher Azulay, says. "Until then, they get up whenever they feel like it and buy what they want," he said, but with their induction into the army, they become entirely different people, subject to commanders' orders, a schedule and a set of responsibilities. "And they also get a bank account and a salary and their consumer habits also change."

On average, soldiers spend NIS 1,100 a month – double their salaries, says Azulay, whose Yoter club is the only consumer club actually affiliated with the defense establishment. Soldiers may not be exactly a captive audience, but before their enlistment, soldiers are required to open a bank account for automatic transfer of their salaries and all of the banks then issue the soldiers Yoter club credit cards that provide discounts and promotions at a range of business establishments.

Among active soldiers, 94% have the card and in nearly every case, it's the only credit card they have. "It's an attractive population, actually because they don't have a lot of money and they are therefore loyal to companies that give them discounts," says Azulay. "Unlike the wider population, soldiers doing their mandatory service devote all of their spending to their own needs rather than to children and other family members. It's an interim phase in life in which soldiers are drawing a salary but have no outside financial obligations, so most of their spending goes to their personal [consumption]. From the companies' standpoint, this is the age and stage at which consumer perceptions and loyalties are shaped."

Of the NIS 2.2 billion that soldiers shelled out last year, NIS 1.6 billion was paid by credit card and the rest in cash. The biggest segment – 15% of their credit card spending – was at restaurants and cafes. Another 14% was spent on clothing and shoes. Communications and media services represented 10% of their credit card outlays, along with another 10% on gasoline, 9% at supermarkets and 9% on entertainment, culture and leisure activities.

The balance of the credit card spending last year – NIS 530 million – went in about equal measure to tourist services and travel; a category consisting in part of payments to government authorities; and medical services, with smaller amounts in categories such as education, transportation and insurance.

Consumer spending by soldiers declined by 2% last year compared to the year before, Azulay said, notably in the leading categories including restaurants and clothing. "More and more over the years, we are also seeing soldiers leaving their parents and renting apartments, which also has an impact on spending on food [in supermarkets], which has also increased in recent years. At the same time, there is another trend in which soldiers help support their families, and that also affects their spending habits. We are also seeing [spending on] laser treatments and surgery. Spending on cellular telephone service has declined substantially since the reform in that sector."

Prior to the increased competition in the cellular telephone sector, many soldiers ran up huge bills. Azulay says his office is working with the three long-time cell firms to settle arrearages. "We have handled 1,200 soldiers whose cases had reached the stage of collection procedures. Soldiers come to us with debts of NIS 6,000 to NIS 7,000 and we've managed to wipe out hundreds of thousands of shekels in debt so far."

Yoter has also partnered with the consumer organization Public Trust (Emun Hatzibur) to provide legal counseling to soldiers experiencing other consumer problems, Azulay said.

The package of goodies the soldiers get on induction consists mostly of food items and toiletries, Azulay noted. "They're not samples but rather just like products off the store shelves," he said. "These are not contributions but rather sales promotions by various companies. For companies like Procter and Gamble, Strauss, Osem, Sano and others, it's important that soldiers use their products."

Among the businesses that have decided that soldiers' patronage was worth cultivating through Yoter's promotional program are the Steimatzky bookstore chain, Holmes Place fitness clubs, Mega Sport, Café Hillel, Fattal and Prima hotels, Israir airlines and Tel Aviv's Habima, Beit Lessin and Cameri theaters.

Career soldiers who have remained in the IDF after completing their mandatory military service have been a natural target audience for businesses, and a similar club, Hever, exists for them, but when it comes to draftees doing their compulsory military service, recruiting businesses has been a bit of a harder sell. Azulay says promotional efforts directed at draftees have not yet reached their potential. He recently met resistance, for example, from a gasoline company executive, but everything changed when Azulay mentioned that members of Yoter spend NIS 158 million a year at service stations.

"The major obstacle at the moment is the large retailers that have their own customer clubs," Azulay acknowledged, but he argued that retailers should recognize the increased patronage that conscripts could bring. And he added this: "Beyond that, there's the combination here of Zionism and business." 

Nir Keidar
Tomer Appelbaum