An investigation by "Globes" has found that Gillette products cost at least twice as much in Israel than at pharmacy chains in other countries. "Globes" compared prices for Gillette products at Super Pharm Ltd. in Israel with Walgreens in the US, and Boots in the UK, and found that Israelis paid much more.
Gillette Power Bead deodorant costs NIS 37.40 at Super Pharm, 150% more than the $4 (NIS 15) at Walgreens. Gillette Splash after shave costs NIS 80 at Super Pharm, double the £6.75 (NIS 39) at Boots.
"Globes" readers who spend considerable time abroad already know that it pays to stock up on toiletries when travelling overseas. People who do not make frequent trips have another option: breaking the psychological barrier of shopping online.
In the past few years, there has been a huge change in how Israelis buy goods, and online stores offer lower prices right to consumers' doorstep. The social protest of the summer of 2011 raised consumer awareness about prices they were paying for goods - not just cottage cheese, but also toothpaste and razors. Consumers were no longer satisfied complaining en route to the checkout counter, they actively began to seek alternatives.
One alternative is online shopping - not just for mobile gadgets and children's clothes, but for consumer goods. eBay Israel business activity manager Elad Goldenberg has seen strong growth in purchases of men's toiletries and body care products. "Price differentials are big and Israeli men know this. Purchases in the men's toiletries category have risen over 50% compared with last year, and purchases in the shaving peripherals category have risen by 30%."
A top retailer, who prefers to stay anonymous, says that prices in the Israeli market are markedly higher than in other markets. "Procter & Gamble have us in a trap," he says. "Retailers' profit margins on the company's products are very low, and the company is the main beneficiary of the high prices it charges the Israeli consumer, and it reaps the rewards. No retail chain can remove it from its shelves, with its leading brands in every category. Procter & Gamble has established itself in Israel and dominates categories, with brands such as Gillette and Alldays, so it therefore takes the liberty of charging higher prices compared with countries where there is stronger competition or where it is still fighting for market share.
"Procter & Gamble's people are outstanding marketers. They know how to develop products and brands, create consumer demand, and then raise prices. For less successful products, the company knows how to lower prices, such as Oral B toothpaste. Failed products simply disappear from the shelves, such as Lenor fabric softener and Herbal Senses.
"It is the consumer who has to take action. For every Procter & Gamble product, there is a cheaper alternative that is just as good. When demand falls, maybe the company will realize that it cannot continue to gouge the Israeli consumer."
Another retailer told "Globes", "Everywhere in the world, Procter & Gamble launches products at very low prices, and when they win market share, they become the most expensive products."
Consumers may now be realizing this. Gillette's market share in Israel has fallen to 78% from 95% seven years ago.
Going online
An 8-pack of ProGlide razor blades offers an example of online shopping for Gillette products. This product costs NIS 180 at Super Pharm - 160% more than the NIS 70, including shipping and handling, it costs on AliExpress, and 75% than the NIS 109 it costs on eBay. An 8-pack of Gillette Mach 3 Turbo razor blades costs NIS 110 at Super Pharm - 145% more than the NIS 45 it costs on AliExpress. A ProGlide Fusion razor blade costs NIS 72 at Super Pharm compared with $10 (NIS 36) on Amazon.com, which ships orders above $35 for free.
It is possible to get even lower prices on Amazon: at registration, a customer receives a $3 coupon for $30 products, repeat buyers of a product receive a 5% discount, and buyers of five or more products a month receive a 15% discount. In this way, a group of buyers can obtain very low prices.
Procter & Gamble's (NYSE: PG) online store PG eStore offers cheaper prices for the company's products than in Israel. The site only delivers to the home in the US, but in some cases prices for Gillette products are half what Super Pharm charges.
Online shopping is easy, and the obstacles are disappearing. Reduced customs for consumers, which came into effect in January 2012, are a contributing factor to the growing use of e-commerce, as is the increasing number of sites which allow payment via PayPal, which does not require disclosing credit card details for every transaction. Finally, there is customer's experience: order, receive, satisfaction, and repeat order.
Procter & Gamble said in response, "In Israel, the Gillette brand offers a wide portfolio of products in all categories, enabling consumers to benefit from basic through state-of-the-art products, across a range of offers at any given time. The prices mentioned in the article do not reflect the average price in Israel, and they certainly do not represent prices in sales by retail chains.
"It is important to note that retail chains in Israel set consumer prices. The comparison between online retail prices and brick-and-mortar stores is fundamentally flawed, and the differences in prices between Israel and the US are sweeping (home, cars, clothing etc.) and are partly due to tax differentials."
Below are responses to specific claims raised:
"Globes" claim: ProGlide Fusion shaving gel costs NIS 30 at Super Pharm and NIS 17 at foreign sites
Procter & Gamble: "Most shaving gel sales in Israel are in the Series line, which can usually be purchased on sale for NIS 14.99, or even for NIS 12.99 at Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) in October."
Claim: An 8-pack of Mach 3 razor blades costs NIS 110 at Super Pharm and NIS 45 online at AliExpress.
"Manual Mach 3 razor blades (the most common Mach 3 razor blade sold in Israel) equal the average shelf price at online chains in France (Carrefour), the US (WalMart), and the UK (Tesco), according to a survey conducted in October."
Claim: The ProGlide Fusion razor blade costs NIS 71 in Israel, compared with NIS 36 at Amazon.com
"During October, at all large retail chains in Israel, the price of a razor blade was NIS 40."
Claim: An 8-pack of ProGlide razor blades costs NIS 185 in Israel, compared with NIS 92 on eBay and NIS 70 on AliExpress.
"For one week each month, it is possible to find an 8-pack of ProGlide Fusion razor blades for NIS 100 at Super Pharm, Shufersal Ltd. (TASE:SAE), Alon Holdings Blue Square - Israel Ltd. (NYSE: BSI; TASE: BSI) (Mega)."
Super Pharm said in response, "The chain scrupulously offers consumers discounts and prices that are lower than Procter & Gamble's recommended consumer price, and it is constantly developing competing products under the Life brand, which are cheaper. A year ago, we launched M5, the Life system razor, which competes against the Gillette Fusion, and which has achieved a 43% market share in the manual razor category, and 10% share in the razor blade packs category. On sale, the M5 costs only NIS 19.99, and its regular price is NIS 39.99."
Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2013
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