Survey: Consumers in the Sticks Are Paying Through the Nose

Super-Sol shoppers in Sderot pay 30% more than Jerusalemites.

Consumers outside the center of the country are paying the price for the lack of competition, a survey by TheMarker shows. Prices in Super-Sol Deal stores in Sderot are 30% higher than the same prices in Jerusalem, the survey found, with a lack of competing stores and subsequent price wars as the likeliest culprit.

Super-Sol Deal is the discount brand of Super-Sol, the country's largest supermarket chain. TheMarker's survey examined over 50 products including food, drinks, household products and body care items at the Super-Sol Deal store in Sderot in the northern Negev and the Super-Sol Deal store on Hauman Street in Jerusalem's Talpiot industrial area, which is home to several other supermarket chains.

A sample shopping basket of 36 items cost NIS 769.12 in Sderot and only NIS 550.16 in Jerusalem. The price differences stood out across the board for all categories.

For example, Kanor's 400 gram chicken soup mix was only NIS 12.80 in Jerusalem, but NIS 20.99 in Sderot. Elite's 100 gram Turkish coffee sells for NIS 4.90 in Jerusalem and NIS 8.99 in Sderot. The prices for a liter and half of Coca Cola are NIS 4.25 and NIS 5.99 respectively.

There is no real justification for such large price gaps, data from the Czamanski Ben Shahar economic consulting firm shows. The monthly rent in the Sderot industrial area is NIS 25-30 per square meter on average, compared to NIS 75-100 in Jerusalem.

It seems the real reason for the huge price differences is the much greater competition in Jerusalem. There are 59 supermarket branches in Jerusalem, but only three in Sderot - one of Super-Sol Deal, one Mega Bool and one of Victory.

The figures are even more disturbing when income levels are taken into account. The average wage for a salaried worker in Sderot in 2008 was NIS 5,261 per month, compared to NIS 5,930 in Jerusalem - a 13% difference.

The periphery is poorer, has limited choice and residents pay more for basic consumer goods, said consultant Tamir Ben Shahar.

"The reason is that the chains set their prices today on a regional and local basis and not necessarily on a national level, and on the basis of a daily price comparison against the competition conducted by store and regional managers," he said.

There seems to be little difference in prices between the three stores in Sderot, and they compete between themselves at higher prices than in other locations where there is greater competition, he said.

Sderot residents are not the only ones paying higher prices for the lack of competition where they live. For over a month the residents of Meitar, north of Be'er Sheva, have been waging a battle against Super-Sol, which runs a Super-Sol Sheli branch in the community and is the only supermarket there. Super-Sol Sheli is the chain's format for a store in urban neighborhoods, and is the chain's most expensive model.

"When we started shopping in the branch of Mahsanei Hashuk, a ten minute drive from Meitar, we were shocked to see how much higher the prices were in our community," said Hedva Shaked, the Meitar resident who is leading the fight against Super-Sol. She opened a Facebook page and organized local residents to stand outside the store and call on their neighbors to boycott the store, which Shaked said has led to a drop in sales. In response, Super-Sol announced price cuts on 1,000 products in Meitar.

Only one product cheaper in Sderot

Other examples of the price differences include baby products: A package of 52 Huggies organic cotton diapers cost NIS 54 in Sderot and NIS 40 in Jerusalem. Both Similac and Materna infant formula had similar price gaps, tens of percent higher in Sderot. Dove liquid body soap was NIS 13.68 in Jerusalem and NIS 21.99 in Sderot.

Palmolive dish washing detergent cost NIS 9.40 in Jerusalem and NIS 12.99 in Sderot; while Sano Maxima laundry detergent was NIS 14.90 in Jerusalem and NIS 17.99 in Sderot.

One product with a huge price difference was a 750-milliliter bottle of Carmel's Selected Cabernet Merlot, which was only NIS 15 in Jerusalem and NIS 35.29 in Sderot.

Two products were the same price in both cities, Telma cornflakes and 778 blueberry jam. One product was actually cheaper in Sderot, but only slightly: Osem's twisted pasta was NIS 3.99 in Sderot and NIS 4.17 in Jerusalem.

Super-Sol said over 90% of the products in its Sderot branch, representing some 20,000 goods, were the same price as those its Jerusalem store. "That is the way it was in the past and that is how it will be in the future, and we have proven it to TheMarker," a store spokesperson said. "Super-Sol is doing everything it can so that in every city our shopping basket is the cheapest."

The company said there were hundreds of products that were cheaper in Sderot than in Jerusalem on the day the survey was conducted.