Food Shopping at Neighborhood Stores: It'll Cost You

A survey by TheMarker and the Pricesal website found that you will pay as much as 41% more to fill your shopping cart at a neighborhood store.

In fact, you will pay as as much as 41% more for a typical basket of items, a survey by TheMarker found.

You don't have time to get into the car and travel all the way to one of the big supermarkets, so you pick up the items you need at the neighborhood grocery. You know it will cost you, but the time you save is worth it. Right?

Think again. A survey by TheMarker and the Pricesal website found that you will pay as much as 41% more to fill your shopping cart at a neighborhood store.

The survey covered 26 products in various kinds of stores, all of them in Ramat Gan: the Super-Sol Deal discount chain in the Ayalon Mall; the discounter Rami Levy; Super-Sol's higher-priced neighborhood outlet in Merom Naveh, My Super-Sol (Super-Sol Sheli ); and the AM:PM convenience store on Haroeh Street.

According to the survey, the difference in price between the two Super-Sol stores was 18%. The gap widened to 26% between My Super-Sol and the local Rami Levy, and to 41% between the Rami Levy and AM:PM.

The two Super-Sols are both branches of Israel's largest food retailer, but if you purchase the 26 surveyed products at My Super-Sol you will pay NIS 464, while at Super-Sol Deal you'll pay just NIS 393. For some products, the difference works out to tens of percent, and in a few cases My Super-Sol's price is twice as much.

A kilogram of cucumbers or tomatoes, for example, cost NIS 2.99 at Super-Sol Deal, while at My Super-Sol it cost NIS 5.99. A kilogram of watermelon at Super-Sol Deal was NIS 1.99, versus NIS 3.49 at My Super-Sol. For chicken schnitzel, a kilo cost NIS 29.90 at My Super-Sol, compared with NIS 19.90 at Super-Sol Deal.

The same shopping cart ran a more modest NIS 366 at the local Rami Levy. The price for a kilo of watermelon was a stunning 3.5 times more at My Super-Sol than at Rami Levy, where it sold for just 99 agorot. The difference in price for a 400-gram package of Osem soup nuts was a whopping 47% - NIS 8.99 at Rami Levy versus NIS 13.49 at My Super-Sol.

Baby products also showed huge price differentials. Matera at Rami Levy was 40% less than at My Super-Sol - NIS 44.90 versus NIS 62.99. Huggies Diapers had a narrower 15% price difference - NIS 46.90 at Rami Levy, compared with NIS 54.32 at My Super-Sol.

At AM:PM, the bill for the same basket of products reached NIS 518 - NIS 152 more than at Rami Levy. A kilo of tomatoes at AM:PM cost more than 2.5 times more than at Rami Levy - NIS 7.90 versus NIS 2.99. Frozen chicken schnitzel was NIS 44.99 at AM:PM, compared with NIS 19.89 for the fresh kind at Rami Levy - a difference of 126%.

Osem Ptitim (400 grams ) cost NIS 7.99 at AM:PM, 45% more than at Rami Levy, where it cost NIS 5.49. The price of powdered chicken soup from Osem was NIS 16.79 at Rami Levi, and 78% more - NIS 29.99 - at AM:PM. For Osem soup nuts, there was a 66% gap - NIS 8.99 versus NIS 14.99. For Huggies diapers, the difference was 44% - NIS 44.90 versus NIS 64.90.

Even among higher-priced neighborhood stores, AM:PM was the more expensive alternative. Shopping for the equivalent 26 products at My Super-Sol worked out to 11% less than at AM:PM, a difference of NIS 54.

"Neighborhood stores have higher costs - higher rent, municipal tax and they pay higher salaries. At AM:PM, for example, they work nights and weekends," explained one former executive at a food retailer, who spoke on condition of anonymity. But even he says the higher prices are entirely justified by the higher costs. "A reasonable differential between Super-Sol Deal and My Super-Sol would be about 10%, and between My Super-Sol and Rami Levy it would be 15%. The gap between Rami Levy and AM:PM is too much and there is no way it should reach 30%," he said.

A shopping mall manager, who also asked not to be identified, agreed: "Based on rental costs, which is what I am familiar with, the difference in price between My Super-Sol and Rami Levy should be 10% to 15%. Eighteen percent is too much. The gap between AM:PM and Rami Levy doesn't need to be more than 25%."

Another food retail executive said that even if rental costs for the neighborhood stores amounted to three times what big supermarkets pay as a percentage of their turnover, prices should be no more than 10% higher.

In many towns - among them, Yeruham, Mitzpeh Ramon and Shlomi - there are no discounters and residents pay the highest prices. Data provided by the consulting firm Chimansky-Ben Shahar found that Yeruham, Mitzpeh Ramon, Shlomi and Pardesiya only had branches of My Super-Sol in town. Kfar Yona and Even Yehuda have Mega in the City branches, but no discount versions of the same chain.

In Yeruham, the average household spends NIS 1,880 a month on groceries, according to the Central Bureau of Statistics. A savings of 20% on that bill would amount to NIS 376, or NIS 4,512 a year. The average monthly salary in Yeruham is NIS 6,085.

In response to the survey, Super-Sol said: "The comparisons have no basis. ... Neighborhood stores answer the need for availability, proximity to the customers and services, while discount formatter stores answer other consumer needs."

AM:PM responded similarly, adding that the prices covered in the survey failed to take into account sales and other offers.