Rite Aid Family Backing New Chain of Pharmacies in Israel

As yet unnamed chain will offer downsized versions of products in city-center stores at a top price of NIS 10.

Nir Kafri

Super-Pharm, the Israeli cosmetic and toiletries retail giant, is due to get competition from an upstart selling smaller versions of products at a maximum price of 10 shekels ($2.57).

The chain, which has yet to be named (one candidate is “Mini-Pharm”), is being financially backed by the Grass family, which founded and owned the Rite Aid chain in pharmacies until they agreed to sell it to Walgreens this year for $17.2 billion. Adam Friedler, a 29-year-old accountant, will be heading the venture.

The new chain will be locating its stores in city centers, the first in central Tel Aviv opening in August. They will be open seven days a week, 24 hours a day, with each store having on average 120 square meters of floor space, a quarter the size of a typical Super-Pharm branch, and carrying only about 1,000 products.

Friedler declined to comment, but the new chain is aimed at younger shoppers without children, young families and people making spur-of-moment purchases. The chain has already closed deals with major suppliers, which have already adjusted their packaging for the Cofix model of 5-shekel products. For example, a package of Hugla Kimberly disposable diapers will contain only five diapers.

Some categories will contain top brands, but in others – for instance shampoo – the new chain will offer only less-known names. Unlike Super-Pharm, it will not offer prescription medicines.

The new chain comes at a time of upheaval for Israeli retailers as shoppers become more price conscious and online purchasing is taking market shares from bricks-and-mortar stores. Cofix has spearheaded the revolution, first with cafes with a menu of 5-shekel food and drinks, and more recently with a one-price chain of groceries.

Meanwhile, COS, the high-end arm of Swedish clothes retailer H&M, will open its first store in Israel next spring at Tel Aviv’s Gindi TLV Fashion Mall. H&M arrived in Israel in March 2010 and already has 18 huge stores here, but COS is not expected to open as many outlets.

H&M launched COS, short for Collection of Style, less than a decade ago. COS is less trendy and more expensive, with higher-quality fabrics and careful tailoring, if minimalist.

It counts 174 stores in 31 countries, compared with more than 4,000 in 61 countries for H&M. Israel will be the fifth Middle Eastern country to open a COS store after Bahrain, Kuwait, Turkey and the United Arab Emirates.