Supermarkets Suffer as Consumers Change Habits

Social unrest raises consumer awareness.

The wave of protests sweeping the country is also affecting the supermarket chains, as consumer consciousness grows: Stores have reported declining sales figures over the past few months, and shoppers appear to be changing their consumption habits.

Particularly notable is the fall-off in demand for formerly leading brands.

protest, food cost, cost of living
Daniel Bar-On

"Our July sales were 2% lower than we'd predicted before the protests began, and I've heard other chains say that their figures are down 4-5%," said Yossi Shalev, head of sales and marketing at the Tiv Ta'am chain.

Most of the decline was in leading brands, Shalev said. "Because the large corporations are the ones in the firing line, people are buying less of the big companies' flagship products. People are buying the same things they bought in the past, but they're buying less. The companies could say it's due to the season, sales and other factors, but I think it's related to the protest."

A senior executive at another chain reported that sales were down 5%, commenting: "It's been a particularly weak month without a question."

So-called premium supermarkets and supermarket outlets within cities - known for being expensive - are feeling the effect in particular, as consumers shift even more to discount stores.

"July was catastrophic," said one senior supermarket executive. "Turnover was less than it was last year even though prices were higher. The stores' sales figures should have increased, but sales in fact have not increased, and this means that overall consumption is down. People have become more sensitive; they're examining prices and products and not rushing to take their money out their pockets."

Rami Levi, who owns the Rami Levi Shivuk Hashikma discount supermarket chain, reported that his sales had actually increased.

"We've seen a rise in sales as people shift to discount stores," Levi said. "You can see at the stores that people are looking more at prices, seeing if there's a cheaper product and trying it."

The supermarkets are reporting not only slower sales figures, but also changing consumption habits. All this has made the past month a tough one for the retail sector.

"July wasn't good, and it looks like we're going to continue having a tough time," said one senior executive who works at a non-food commodities company. "Sales are down only a few percent, but it's too early to tell if this is going to become a trend."

The impact has been felt in particular with regard to items at the center of the protests, such as dairy products and baby food, with one supermarket executive noting that dairy sales had fallen 10% in the last month.

"The price of cottage cheese is less than NIS 6 per cup, so people buy it, but they're buying less of other, more expensive white cheeses," he said. "They're also buying less packaged yellow cheese, and I hear them complaining that yellow cheese is more expensive than meat.

"In general, people are choosing products on sale over products being sold for full price," he said, adding: "One customer asked the manager which products were under government price control, and that's all she bought. That's the first time something like this has happened."

The change was affecting people from all social classes, said another executive, who noted that middle-class customers were also hesitating before making a purchase. "You could say that the public is behaving as if it's been brainwashed. People say, 'Why should I buy two loaves of bread?' And they buy just one," he said.

Consumers are angry, say executives, and the general atmosphere is not one that encourages consumption.

"Their eyes were opened. They stand next to the shelves and ask why products are cheaper abroad than they are in Israel. Once, they had no idea about these kind of things. Now they're asking why the white cheeses are expensive, why the puddings are more expensive here than abroad, and they're even threatening to go to the media," said one executive.