Sales by three of Israel's biggest supermarket chains, Shufersal Ltd. (TASE:SAE), Mega, owned by Alon Holdings Blue Square - Israel Ltd. (NYSE: BSI; TASE: BSI), and Coop Israel Ltd. fell by 3.2% in January 2014, compared with January 2013, according to Nielsen data obtained by "Globes". If population growth is taken into account, the drop in sales by volume was 3.7%.
The figures are also bad compared with the drop in fast moving consumer goods (FMCG), which were down 1% in financial terms in January, compared with the corresponding month, and down 1.8% by volume. Sales of food and beverages were down by less than 1%, but sales of cleaning supplies and personal care goods rose by 1.9%.
The FMCG category excludes meat sold at deli counters, fruits and vegetables, and many non-food items. The drop might therefore have been greater.
Aggregate market sales fell to NIS 3.09 billion in January 2014 from NIS 3.12 billion in January 2013. Shufersal, Mega, and Coop Israel accounted for 40.5% of total sales.
The three national chains were hit in all segments. Food sales, which account for 76% of total sales, fell by 2.7%; sales of personal care products fell by 7.5%, and sales of beverages and cleaning supplies fell by 3.7%.
Shufersal undertook an aggressive sales campaign in January. According to Ifat Business Information Ltd., Shufersal nearly doubled its advertising expenses in January, compared with the corresponding month: to $6.8 million in price list prices, from $3.7 million. Although actual prices paid were about a third, the ratio still holds.
Mega's advertising expenditure was unchanged. Suppliers believe that the drop in its sales was greater than Shufersal's. Mega sold some of its discount stores in 2013, but suppliers say that January was weak at its Mega in the City format.
As for Shufersal, a top supplier told "Globes", "Shufersal is on the air all the time, with wild ads. It's feeling the pressure, but it should take care of itself. The method of taking money from suppliers is pathetic."
A source at Shufersal said that the jump in advertising was due to the launch of its "Yesh in the Neighborhood" format, a strategic decision to advertise the company's private label, and the launch of a new store at Shufersal Deal. "Everything came together at the end of the year and the start of the year. It is not related to anything. I cannot say that January was great, but I promise you that we're taking care of business," he said.
Published by Globes [online], Israel business news - www.globes-online.com - on February 6, 2014
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