Supermarkets Suffer Sharp Drop in January Sales

Big retailers hit hardest in month that traditionally enjoys high turnover.

Shoppers started 2014 by abandoning the country’s large supermarket chains — Super-Sol. Mega and Co-Op Israel — figures from the market research company Nielsen obtained by TheMarker show.

Neisen reported a 3.7% drop in the number of items, or unit sales, sold by the three biggest food retails, compared with the same month last year, while their combined sales in shekel terms dropped 3.2%. The decline encompassed almost the entire food retailing industry, including the low-cost chains such as Rami Levi Shivuk Hashikma and Yeinot Bitan, although the low cost chains showed a smaller drop in sales of only about 1%.

The biggest drop in sales came in the beverages category, with a 8.4% drop in unit sales in January at the big chains. Some of that decline, however, was offset by higher prices, Neisen found.

January was also a tough month for food manufacturers and importers, not just the supermarkets, said a supermarket executive who asked not to be identified. After detecting the sharp drop in consumer spending, supermarket chains moved to allocate additional funds toward advertising and promotions, he said.

The figures are particularly disappointing for retailers because January - when chains traditionally hold beginning-of-the-year sales - is traditionally a strong sales month. The difference this year, said the executive, is that the come-ons failed to bring in shoppers.

“This year Super-Sol and Mega came out with sales identical to last year’s with individual specific products discounted to just 5 shekels ($1.44). Co-Op Shop offered a sale of buy two and get one free, but all of that was not enough to stop the damage to profits,” said a senior executive at one of the large supermarket chains.

Both the chains and suppliers said January was the worst month in a long time. “No one understands what happened - but it seems people prefer to spend their money outside the home in restaurants and coffee shops, and for the house they only buy what is necessary,” said another senior supermarket executive who also asked not to be named.

Suppliers echoed the sentiments — and also said they couldn’t find an explanation for the downturn. Super-Sol was hit the hardest, while Mega and the smaller low cost chains saw little change, said a major food company executive.

Super-Sol said there was no drop in sales in January: “According to the figures we have and those of Nielsen, there is no truth to what was said [in this report].”

A supermarket produce section.Credit: Eyal Toueg



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