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Consumers tighten belts

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Sunday, July 8th, 2012

Supermarket sales in the three weeks after the Shavuot holiday were 0.9% less than in the corresponding weeks last year, reports Storenext. Dairy products sales were down 1.5%, beverages sales were down 1.4%, and personal care product sales were down 3.6%.

“The period after Shavuot was terrible. It was very hard. June began very badly,” a large supplier told “Globes” today.

A retailer told “Globes”, “June sales are very weak. May wasn’t great either, and already a downturn, but because of the holidays, they preferred to stick their heads in the sand, and not see it. We’re in a recession. There is a real slowdown in spending on basic goods, everything you need for daily life. In some sectors the decline is 15% compared with 2008. We’re seeing prices fall along with demand. People are buying less.”

Storenext, however, reports a 2.6% increase in sales of fast moving consumer goods (FMCG) in January-May 2012 over the corresponding months of 2011, to NIS 15.8 billion.

“June sales were very weak, bordering on catastrophic. It’s awful. Sales are down all across the market in the past two weeks. Sales are down despite falling prices. Sales of some products are down by more than 10% compared with last year,” a large food and non-food supplier told “Globes”.

Commenting on the Storenext data, he said, “The drop is huge at grocery stores and small supermarkets not covered by Storenext. Declines there are at least 10%.” He added that the neighborhood grocery stores sector continues to contract as supermarket chains open new stores.

“When Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) or Osher Ad open a new supermarket, they not only hurt Mega and Shufersal Ltd. (TASE:SAE), but all the retailers in the radius, including grocery stores and small supermarkets.”

A top retailer said that the drop in consumption may signal that the market has reached equilibrium. “Some people claim that a life of plenty is a life of waste, people buy too much, and that now there is a balance. The annual growth in the dairy market was unrealistic and has reverted to normal,” he said.

Published by Globes [online], Israel business news – www.globes-online.com – on June 27, 2012

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