Survey checked and found: This is the marketing network where the cost of living was not felt

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What’s happening in the last quarter of the year in the food retail market? After the issue of the cost of living rose to our joy and won headlines, and even the Competition Authority investigation, which at least so far has yielded nothing. While the authority investigates, the tax reform was launched on disposable utensils, the price of which jumped by 200%. Prices for soft drinks have risen in shekels per liter, prices have risen by about 30%, prices for chicken and fresh meat have risen by close to 25% this year, and fruit prices have reached unprecedented highs.

On the other hand, at the same time, quite a few retail chains turned their non-raising of prices into their advertising tone, with announcements – precisely against the background of the media discourse on rising prices – showing that this was not the case.

Despite all the consumer threats about protests over the cost of living, it seems that most of us prefer to curl up in a blanket in front of the screens and wait for someone else to do the work for us. Fact: The news from around the world shows that the rise in transportation prices is halted, that most of the raw materials have also stopped rising in price and that the expectation is that from February onwards the world markets will stabilize. To all this must be added the fall in the value of most currencies in the world against the shekel, which slightly offset the other price increases, and here, despite all this, we have not heard that any manufacturer, importer or other factor has backed down from its announcement of price increases to retailers.

One of the major problems with price increases on the part of suppliers is the snowball effect. Once a manufacturer, importer or retailer sees that their counterparts are raising prices without being harmed, he decides to update his prices upwards as well. Our consumer memory is quite short, so yes – a week or two angry at a particular manufacturer or importer, refraining from buying at the expensive and up-to-date price, and forgetting about it.

It should be understood that price increases have great significance for the giant companies. Showing a 5% increase in company turnover is not an easy and sometimes impossible task without developing into new areas, whereas here, through one email, the concept of a dramatic improvement in the profit line. |

Comparison of product basket in November 18-21 (Photo: None)

Have the major suppliers shyed away from media and retailer muscle exposures?

The price hikes have been put on retailers ’tables, and despite all the checks, they seem to be getting underway. Snow – which is the leading and dominant company in the fields of cleaning products, laundry, home care, body and cosmetics, occupies a market share of 3.30% of the total market in Israel and reaches every home – has raised prices relatively sharply.

Hogla Kimberly, which has a market share of 2.70%, took a similar action, followed by Stowitz, with a 2.00% share (of the total barcoded market), which raised prices, although not as initially attributed to it. And if the biggest can, the little ones will be in a hurry to emulate. We will all feel the results – maybe not immediately, maybe not in the first weekly purchase, but slowly the percentages will accumulate and become shekels – until at the end of 2022 we will feel the blow in the pocket of all of us in the form of excess expenses of thousands of shekels per family in Israel.

Will an increase in prices cause us to abandon the store or split a purchase?

Let’s talk for a moment about our shopping method: in an average weekly purchase, the amount of items in the cart exceeds 50 items. The traditional consumer prepares a shopping list, which usually includes only the products he already knows by heart and remembers, and everyone else joins the shopping tour itself. Moreover, when we discover a bargain price per kilo of tomato or chicken breast, we tend not to be alert to the price of the product standing next to it, which may have already risen in price. In other words: at the end of the process we may buy a chicken at a discounted price, but for the geranium to sit we will pay full price, and next to the discounted tomato we will pay a surprising price for the persimmon. We may sometimes give up on one item or another that seems noticeably expensive to us, but most of us will not leave the cart in the middle of the process because it is “expensive for us” and will go looking for discounts at a competing chain supermarket.

Part of our shopping experience is in exposure to promotions, which the Israeli customer is particularly excited about. The desire to “knock the system” is dominant in our consumption patterns, and so, if a product unit costs us ten shekels, and there is a sale of three units for 24 shekels (a considerable reduction of 20%), we do not ask ourselves if we really need the large quantity . Will we really use it or maybe throw some of it away?

Comparing the basket of fresh products in November 2018 against 2021 (Photo: None)Comparing the basket of fresh products in November 2018 against 2021 (Photo: None)

How much does the market roll and who are the main influences on our household expenses?

The food retail market in Israel generates about NIS 75 billion a year, and unfortunately, shows a significant concentration: Of all the various suppliers and manufacturers in Israel, 19 suppliers and manufacturers are almost 64% of all market activity, and if we look at how it affects us, it seems exactly as it sounds: Nearly two-thirds of the contents of our shopping cart come from less than 20 suppliers.

Note that this figure does not include fruits, vegetables and fresh chicken. If we add them to the list as well, we will find that those 19 suppliers control close to 85% of our shopping cart. Or if you will: All smaller manufacturers together are responsible for no more than 15% of the basket. So we went out to check out who are the 19 key players influencing our pocket.

What happened to our shopping cart this month

According to Sterncast data, the trend in November 2021 is for a decrease in activity in the retail marketing chains by 3% compared to November 2020, while the consumer price index rose by 0.9%. The categories that have lost market share are of course the disposable tools that have lost from 53.5% in quantity, but their price to the consumer has jumped drastically, and thus the financial damage stands at only 10.7%. The data in the children’s confectionery segment, fresh dough products, jams and jams showed seasonal growth explained during the Hanukkah holiday, which is also responsible for the decline in ready-made cakes, cookies, fillings and baking spreads.
This week we examined two important shopping baskets: one basket of fresh produce – poultry, vegetables and fruits, and in the other basket pantry products, frozen and dairy, with the most influential and common items in our shopping basket.

Leading suppliers' market shares (Photo: None)Leading suppliers’ market shares (Photo: None)

According to data from surveys we conducted in collaboration with the Pricez website for price comparisons, it was found that the basket has risen by close to 11% in the last four years. Compared to the average basket prices in November 2020, increases of 1.5% – 5% were found in the various chains.

The basket in the Rami Levy chain did not become more expensive, and remained as it was last year. The one who surprised the Shufersal-Dil chain in particular, where a decrease of close to 15% in the basket price was found compared to November last year (!). However, the cheapest shopping basket still belongs to the Rami Levy chain. We found the most expensive basket in the Freshmarket chain, which is 11.5% more expensive than Rami Levy’s cheap basket.

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The author is the CEO of the Institute for Retail Research

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