Chastened Super-Sol, Mega Chains Promise to Cut Prices in Periphery

Mass boycott threat follows TheMarker's report that Super-Sol and Mega branches in peripheral towns charge significantly higher prices for numerous products, including staples, than do the same chains' stores in big cities.

Super-Sol and its rival, Mega, both pledged yesterday to slash prices at their supermarkets in southern Israel, after unions representing tens of thousands of workers threatened their members would boycott both chains.

The mass boycott threat followed TheMarker's report that Super-Sol and Mega branches in peripheral towns charge significantly higher prices for numerous products, including staples, than do the same chains' stores in big cities.

The price comparisons revealed that residents of outlying towns were paying as much as 30% more at their local Super-Sol Deal branches than residents of centrally located Ramat Gan, where people are better off. The reason seems to be that in the big cities, competition between supermarkets is fierce, while in the periphery, it's all but nonexistent.

At Mega, prices were found to be 10% to 15% more in outlying towns than in the cities.

Yesterday, Super-Sol CEO Richard Hunter met with Avner Ben-Senior, head of the forum of unions in Ramat Hovav, who has been spearheading the boycott campaign. On Monday, Ben-Senior sent Super-Sol and Mega a sharply-worded letter demanding that they lower prices in the periphery within 24 hours.

"Super-Sol claimed the price differences were due to local holiday sales," Ben-Senior said. "Hunter promised that starting tomorrow, he would make the products whose prices were checked by the media significantly cheaper. We also agreed that stores in Dimona, Sderot and Ofakim would be cheaper than regular Super-Sol Deals starting at the end of the holidays."

Super-Sol agreed to meet again with union representatives immediately after the Jewish holidays to decide how to make prices in the periphery equal to or less than those in the center.

Ben-Senior said he had not yet met with representatives of Mega, and therefore the boycott of that chain would continue.

But Mega announced yesterday that it, too, would bring its prices in the periphery into line with those in the center. It also promised to turn its Netivot store into a "flagship" for holiday sales.

The forum of Ramat Hovav unions represents about 20 factories and 4,000 workers. The movement also has the support of other major institutions in the south, including Soroka Medical Center and Ben-Gurion University of the Negev. Union representatives from Teva, Chemagis, Soroka and Israel Chemicals group company Bromide Compounds thus attended yesterday's meeting with Hunter.

The unions have been threatening to halt their holiday purchases of supermarket vouchers. Israel Chemicals alone buys more than NIS 2 million in vouchers for the holidays and more than NIS 7 million in vouchers a year, Ben-Senior said.

TheMarker's price comparisons found that Super-Sol Deal charged 30% more in Sderot than in Jerusalem, and 30% more in Nes Tziona and Dimona than in Ramat Gan. It also found that Mega Bool charged 10% to 15% more in Acre and Kiryat Gat than in the Haifa suburbs.

The survey found it wasn't geography that determined prices, but the number of competitors in a given location: The big chains were turning larger profits in places that had a limited number of supermarkets, like Nes Tziona, Dimona and Sderot.

"We were shocked by the price differences, and we're urging local residents not to buy from chains that price-gouge," said Dimona Mayor Meir Cohen. "If we're strong enough, they'll think twice. A difference of 1% to 2% is understandable, but not tens of percentage points. They're taking advantage of their status as the only players in these markets."

Products that should soon be getting cheaper include 1.5-liter bottles of Coca-Cola, which cost NIS 5.99 at Super-Sol Deal in Dimona and Sderot but NIS 3.99 in Ramat Gan, Elite Turkish coffee (NIS 8.99 versus NIS 5 ), and Maxima laundry detergent (NIS 27.99 versus NIS 14 ).

Super-Sol stated in response: "No company in Israel cares about the periphery more than Super-Sol, and its prices in the periphery are similar to those in the center of the country. There is no price discrimination. Several products were being offered at holiday sale prices in the center, and as a show of good faith, we've now expanded our local sales to include all branches of Super-Sol Deal."

Mega stated: "Mega offers and will continue to offer its customers in the south the cheapest food products. In addition, it will offer residents of the south its cheapest Mega Bool price list. Store managers in the south have been instructed to run additional local sales, as is done at all other branches."