Shufersal bows to boycott threat, Mega follows suit

Shufersal Ltd. will cut the prices of 30 basic goods by an average of 20 percent, after reaching a deal with the Tel Aviv Student Union.

By ILANIT HAYUT/GLOBES
August 31, 2011 23:38
2 minute read.
Supermarkets are great places to make mistakes

Supermarket_521. (photo credit: Illustrative:Reuters)

Shufersal Ltd. will cut the prices of 30 basic goods by an average of 20 percent, after reaching a deal with the Tel Aviv Student Union, in exchange for which the Student Union cancelled the boycott on the supermarket chain that was scheduled to begin on Thursday.

Shufersal president and CEO Effi Rosenhaus signed the agreement. The supermarket will lower prices for cottage cheese, eggs, hummus, sugar, and other items. The parties agreed that the list of goods will be published at the beginning of next week.

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Shufersal asked for time to implement the price cuts, and it will probably ask the suppliers of these products to absorb a large part, or even all, of the reductions.

“We do not want Shufersal to go bankrupt. This is a first step. I want to generate momentum,” Tel Aviv Student Union leader Ran Livne told “Globes.”

The students said that Shufersal promised to apply the price cuts at all its branches, including Shufersal Sheli and Shufersal Deal, irrespective of location or brand. The supermarket chain will also freeze all price hikes until January.

“This is the first major achievement of the current wave of consumer protests. This is the first step toward restoring sanity to Israel’s food market. We call on the Israeli public to join the million-person march on Saturday night, and to join the next consumer protest that we will announce on Sunday,” said Livne.

Alon Holdings Blue Square - Israel Ltd.’s Mega supermarket chain has chosen to mimic, and even surpass, its rival by announcing on Wednesday that it will cut the prices of 32 basic goods by 20%. Mega cut its prices for bread, dairy products, eggs, pasta, cornflakes and other cereals, children’s snacks, frozen foods, canned goods, baked goods, and cleaning products.

The supermarket chain rushed to make a similar move to prevent a boycott like the one that the student union threatened against Shufersal unless it agreed to the price reductions.

Mega said that the selection of products of which the prices are being cut is based on an analysis of products consumed by all Israeli families. Many of the products are brand products.

The company said that the basket of products will be a cheaper alternative, and that this is a new long-term pricing policy, not a temporary one-off deal.

Blue Square CEO Zeev Vurembrand said, “We are aware of the public’s need for permanently lower prices for food products, rather than specific solutions of sales campaigns and discounts. Only a strong private brand can create real competition and force food companies to lower prices.”

Blue Square’s share price rose 0.3% by mid-afternoon on the TASE today to NIS 24.02, after falling 2.9% in New York to $6.60, giving a market cap of $435 million.


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