Cofix Breaks Its Own Rule, Starts Selling Stuff for More Than 5 Shekels

Israeli shoppers are slaves to the brands they love and won’t buy cheapo alternatives, chain admits.

A Super Cofix branch in Tel Aviv.
Ofer Vaknin

The Cofix “fixed-price” chain of kiosks and stores is moving beyond its own model of selling everything, but everything, from croissants to cups of coffee to beanie hats, for five shekels a pop. The company based its brand on the five-shekel price, yet has begun a pilot plan to sell some items for 10, 20 and 25 shekels at two of its shops in Tel Aviv (on Ben Yehuda and Allenby streets).

If the pilot takes off, Cofix intends to expand the broader offering to all its outlets.

Products sold for more than the trademark five shekels include olive oil (25), 32 rolls of Molett toilet paper (25), Unilever “Kariot” breakfast cereal (25), Segal red wine (20), three-liter bottles of laundry gel (20), Unilever Delipecan breakfast cereal (20), Osem-brand “Vitaminchik” juice concentrate (10) and reduced-size boxes of Telma cornflakes (10).

Cofix launched its grocery stores, as opposed to its kiosks, in June 2015. With the launch of the groceries, founder Avi Katz vowed that they too would sell products for 5 shekels, which the chain could do thanks to suppliers who agreed to give it preferential terms of trade. In some cases, suppliers agreed to make reduced-size packages especially for Cofix, so they could sell for the hallmark 5-shekel price, Katz explained; he added that when necessary, the company would import items so it could maintain its low prices.

Today Cofix has 26 groceries around the country, on top of its kiosks, and reality has proven that suppliers are not really prepared to make smaller packages for its convenience; and many shoppers are not prepared to forgo their favorite brands in favor of unknown cheap ones.

Suppliers balk

It’s no great trick to stay captive to the concept they had stated, and collapse, says Hagit Katz-Shinover, daughter of Avi Katz and commercial manager of the outfit.

“Unfortunately we couldn’t manage to bring the entire range of items we had thought to the chain. We knew when we launched the concept that suppliers would be hard to persuade, but I admit it was harder than expected,” she says.

The upshot was that shoppers couldn’t get the whole range of household products they wanted at the Cofix stores, and many didn’t take to the unknown imports; hence the tweak to their model.

No, they aren’t changing model, Katz-Shinover insists: They’re adapting it to consumer needs. Even if the pilot succeeds, 90% of Cofix products will still be selling for 5 shekels, she states. But people needed a wider range, so they have to supplement their shopping elsewhere.

Cofix is starting the new policy with products that Israeli consumers aren’t prepared to replace with unknown brands – for instance, their attempts to import breakfast cereals that could sell cheaply were a flop, Katz-Shinover says. Why? Because Israeli shoppers are addicted to their brands, and Cofix tried but failed to get them to change their habits, or educate them to consume more wisely – that addiction to brands winds up jacking up prices in general, she argues.

However, since the case is what the case is, and Israelis want their brands, Cofix gave up on efforts to teach them better, and rather than doom itself to bankruptcy, adhered to its principle of making shoppers happy. Hence the costlier items that Israelis won’t do without.

Meanwhile, the chain isn’t hungry, going by its publicly-disclosed figures. It listed for trading on the Tel Aviv Stock Exchange in 2015, but slumped from its initial surge to fluctuate – quite sharply – around a lower level. The company started trading on Wednesday morning at a market cap of 160 million shekels; in its heyday, it had been about triple that.