No Passover Miracles for Israeli Supermarkets

Sales are falling, buffeting the two biggest companies in the sector: Super-Sol and Mega.

A shopper in Super-Sol takes her pick of chocolates.
Ofer Vaknin

Despite aggressive marketing campaigns, Israelis were not eager to spend money at supermarkets this Passover season. Food sales over the two weeks before the holiday dropped 1.7% compared to last Pesach, according to the Nielsen surveying firm, citing the companies' own data.

The numbers do not include Erev Pesach – the day the holiday begins – or the shopping day immediately before. The decrease in sales is even more significant given that Israel’s population has grown over the past year.

Sizable drops in sales were registered in the drinks category, where sales tumbled 5.7% versus the previous year, and in toiletries and homeware, which dropped 4.3% to 4.5%. Food sales inched down 0.2%.

Supermarkets offered more significant special offers than last year, but sales fell for the entire first quarter, pushing chains to market themselves as inexpensive. Not only lower prices contributed to the sagging business – people were simply buying fewer things.

The number of items purchased by consumers in the two weeks before Passover was 1% below last year’s figure. Shoppers bought 7% fewer drinks.

Drink sales have been declining for some time now; a series of factors are thought to be at play. Drinks are considered a luxury when consumers are looking for ways to cut costs, and more people are using home drink machines such as SodaStream’s products. Also, Israelis are choosing water for health reasons.

The country's two largest supermarket chains, Super-Sol and Mega, were the big losers in the supermarket wars. The two chains launched expensive advertising campaigns in an attempt to draw consumers to their discount stores.

But apparently the promises by Mega’s new series of stores, You, not to pull one over on consumers, as well as the declarations by Super-Sol that consumers’ money was worth more, failed to draw consumers away from the privately owned discount stores.

According to data from StoreNext, in the four weeks before Passover, sales at Super-Sol and Mega’s discount stores – including Super-Sol Deal, Super-Sol Deal Extra, Mega Bool and You – dropped 4.7% from a year earlier.

The privately owned discount stores, including Rami Levi, Victory and Osher Ad, saw sales increase 1.4% versus the previous year.

These figures are particularly striking given that the big chains have one major advantage over the private ones – many companies give employees store vouchers as Passover gifts, and these vouchers can be used only at the big chains.

“A few days before the holiday, when Super-Sol switched over to a sale of products for 5 shekels [$1.44] at Super-Sol Deal, down from 10 shekels, I knew they had a problem,” said a senior executive in the sector. “It’s true that part of the loss in sales at the big chains – and the growth in sales at the private chains – is because the private chains opened more branches. But you can’t ignore the fact that Super-Sol and Mega are facing a problem.”

Super-Sol and Mega declined to comment for this article.