National supermarket chain Shufersal Ltd. (TASE:SAE) is expanding its campaign against independent supermarket chains through price wars. Yesterday, Shufersal launched a new price war in Migdal Ha'Emek in the Lower Galilee against independent super market chain Osher Ad, which has a store 500 meters from a Shufersal Deal store in the town.
Shufersal also launched a new price war in Bnei Brak, which has a high haredi (ultra-orthodox) population, inaugurating a new supermarket under the Yesh Hesed label. The price war in the city is against Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) and Osher Ad, which have strict kosher stores along the municipal border with Ramat Gan.
These measures are a continuation of Shufersal's bitter price war launched last week against Rami Levy in Modi'in, and Shufersal has no intention of stopping there. It has decided to launch similar price wars in Holon against independent chain Hazi Hinam, which is the dominant supermarket in the city, and in Bat Yam, against Super Dosh 2000 Ltd., the dominant supermarket there. The price cutting in the two cities is fairly modest so far, but prices could fall further when Hazi Hinam and Super Dosh respond.
"Shufersal will only profit from the price war in Modi'in. Our slogan is, 'The party is over'. We will no longer allow every player in the market to do as it pleases. We'll dominate and lead. We've expanded the policy in Modi'in to other places in the country, and when the campaign is over, the market will stabilize. We've decided to take care of customers and employees. The rules of the game have changed. We'll know how to respond to everyone, and we'll continue to lead the market for a long time to come," said Shufersal CEO Yitzchak Abercohen.
Yesterday, Shufersal cut prices for a wide range of products at its supermarket in Migdal Ha'Emek, selling them at a loss. The battle in Migdal Ha'Emek is part of the price war between Shufersal and Osher Ad's owners, who were once 50% owners in Shufersal label Alef, which operating in the haredi community. Shufersal bought out its partners in Alef for NSI 100 million and converted the supermarkets to the Yesh label. A year later, the former partners opened Osher Ad, which has eight supermarkets.
Shufersal launched the price war against Osher Ad several months ago in Beit Shemesh, and then expanded the war to Ashdod and Beersheva. Including in Migdal Ha'Emek, four of Osher Ad's eight supermarkets are in a price war against Shufersal, although prices in Beit Shemesh have somewhat stabilized.
The Osher Ad and Rami Levy supermarkets in Bnei Brak compete fiercely with each other, which in the past led to street fights between their employees that escalated to shots fired into the air. Shufersal intends to eat away at their market shares by operating inside Bnei Brak and through a bitter price war.
Published by Globes [online], Israel business news - www.globes-online.com - on October 24, 2012
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