Grocery Bankruptcies Jumping as Crisis Unnerves Consumers

As consumer confidence quakes, bankruptcies in the retail sector have been soaring.

Food retail stores throughout Israel are starting to feel the bite of the economic crisis. As consumer confidence quakes, bankruptcies in the retail sector have been soaring.

In the last three months, the incidence of food specialists closing down has jumped 30%, according to a survey that TheMarker commissioned from BdiCoface.

"The crisis is filtering through to all sectors and is showing up in numerous economic parameters," said Tehila Yanai, the co-CEO of BdiCoface. "Because of the drop in average income, the job losses and the wage cuts, the slowdown had to be expected to hit the food-and-beverages sector."

Most people are already consuming less than before and are thinking more before purchases, she added: "Of course the businesses first to be hurt and then close are the small ones, the ones without wiggle room."

BdiCoface found that in September-November, 4.3% of Israel's food retail shops closed, compared with 3.3% in the preceding three months.

The hardest-hit area during the last three months is Tel Aviv and central Israel in general. There the collapse of food stores accelerated 66% in September-November compared with the preceding three months.

Haifa and the western Galilee were not spared the effects of the global economic storm; there the pace increased 55%, BdiCoface found.

In the Jerusalem area the increase was 50%.

Moving away from the big cities to the northern coastal area and the coastal plain, to the south and Negev area - the situation improved markedly.

In fact, the pace of food retail collapses was completely unchanged in the northern coastal and Sharon regions during the last three months. In the south and Negev, there was an increase - by 17%, which is bad, but not as bad as the acceleration of business collapses in central Israel.

BdiCoface also found that the index tracking the average business risk in the food-and-beverage marketing and wholesale sector had increased 1.4% in September to November, compared with the previous three months. The index tracking risk rose to 6.62 from 6.53, BdiCoface said, because more retailers were defaulting on debts to suppliers.

The payment ethic in the retail-chain, grocery and delicatessen sector has been suffering. That is, payments are coming in later. Retailers complain of the credit crunch and falling revenues. The result can be cash-flow problems, which the retailer may pass on to the supplier.

Meanwhile, arch-rival retail chains Super-Sol and Blue Square both rolled out campaigns and are fighting each other hard.

Somehow, when offering their discount products, the two managed to pick the same products, just at different prices.

Super-Sol was first, offering 20 products on sale until January 12 at Super-Sol Deal and Super-Sol Sheli. Immediately after that Blue Square advertised 10 products, of which nine were the same ones Super-Sol was offering.

Blue Square, however, was offering five for just NIS 1.99 per item (if you buy more than NIS 100 worth of products), and five others for NIS 3.99 per unit (if you buy more than NIS 200 worth of products). For NIS 1.99 you could get 100 Wissotsky teabags, a can of Elite Shokolit cocoa powder or a 500-gram container of Shahar chocolate spread, if you met the conditions.

The products that Blue Square was selling for NIS 3.99 included Javel bleach, which cost NIS 12.99 at Super-Sol, and Osem ketchup, costing NIS 8.99 at the rival chain. Or you could get four cans of Williger tuna fish for NIS 3.99, compared with NIS 15.99 at Super-Sol, if you met the conditions.