Are the supermarket price wars that have raged in Jerusalem over the past few years about to hit the kosher lemehadrin market?

In about two months, Rami Levy Shivuk Hashikma, the Jerusalem-based supermarket chain known for selling to the public at low prices, will open its first kosher lemehadrin supermarket in Givat Shaul. Aimed primarily at the haredi sector, the new store is expected to reignite stiff competition in the mehadrin market after a relative lull in recent years.

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The new store, to be located off Rehov Kanfei Nesharim on the former premises of the Mifromal factory, will join nine other Shivuk Hashikma stores in the Jerusalem area – five in the city proper (including a store opened in 2008 on Rehov Beit Hadfus in Givat Shaul) and the others in Modi’in, Mevaseret, Mishor Adumim and Betar Illit. The Betar Illit supermarket is the company’s first kosher lemehadrin store and will serve as a model for the new Givat Shaul mehadrin supermarket.

“I want to serve the large haredi population in Jerusalem,” says Shivuk Hashikma founder and CEO Rami Levy. “They also deserve the chance to buy at low prices.”

Asked why his other store in Givat Shaul cannot serve this population, Levy – who in addition to running Shivuk Hashikma is a Jerusalem city council member and coalition chairman – says, “The haredi sector has special needs. You can’t really have a store for haredi and secular customers together. They are two different markets in two different directions. You can’t put regular kosher products and mehadrin products on the same shelf and really be serving the haredi population. So we decided to go for two stores in Givat Shaul. We are also increasing the number of Hamutag [the Shivuk Hashikma house brand] products with mehadrin certification,” he says.

“I don’t see this new store creating a price war in the haredi market,” he continues. “I look at it more as creating competition. The haredi sector also deserves to have real price competition.”

Levy, who was born in a tin shack in Nahlaot, founded his company in 1976, naming it after himself and the street in the Mahaneh Yehuda shuk – Hashikma – where he started selling to consumers at wholesale prices. In 1992 he opened his first large discount supermarket in Jerusalem.

Today, the company has 17 retail supermarkets throughout Israel and plans to expand to 30 branches by the end of 2011. This expansion will include new stores in Gush Etzion and Atarot.

The Hebrew press reported that in 2009 Rami Levy Shivuk Hashikma reported revenues of NIS 1.35 billion, an increase of 42 percent compared to 2008. The company netted NIS 73.5 million in 2009, up 47% from the previous year. Levy attributes that gain to a 17% increase in sales in his stores and the opening of new branches in Nesher, Tiberias and Ramat Gan, as well as expansion of the Modi’in store.

The new Shivuk Hashikma mehadrin store will be facing some stiff competition in the area. Osher Ad, another mehadrin chain, opened its first Jerusalem store on Rehov Beit Hadfus in March. The giant store (6,000 square meters) has ample parking and is owned by the former Zol Po owners Margalit and Boim and operated by Merav-Mazon Col Ltd. The chain is pitching itself to the haredi market with the slogan “Lo trickim, lo shtickim (no tricks or gimmicks).” Like Shivuk Hashikma, the Osher Ad chain does not have sales but boasts low prices all year long.

In addition Shufersal, the nation’s oldest (founded in 1958) and largest supermarket chain (240 stores), has two of its seven Jerusalem Yesh (mehadrin) supermarkets in the same area – one on Rehov Najara in Givat Shaul and the other on Rehov Shaulson in Har Nof. The Shufersal chain also has a Shufersal Deal supermarket on Kanfei Nesharim. Shufersal declined to comment on how it views the entry of the new Shivuk Hashikma mehadrin store into the area.

And what do haredi consumers in the area think? Shoshana from Givat Shaul told In Jerusalem, “The main thing that interests me is that the prices are low.” Rahel, also from Givat Shaul, said she probably would take a look at the new Rami Levy store when it opens. “I shop in many stores. But there are already so many supermarkets here, I don’t think it will make a substantial difference in prices.”

Etti from Har Nof says, “I think many haredim will go there, and it will be good because you need places that serve different populations. It is easier when all the products are mehadrin. You don’t have to check the type of kashrut on each item you want to buy. And, of course, different people prefer one store to another, so variety is good. But personally, I would like to have had the Mifromal land be used for building housing. We really need housing in the neighborhood, not more shopping.”

In Jerusalem encountered Haya Bracha and Eliezer Zahavi from Givat Shaul as they were wheeling their toddler and groceries out of Osher Ad. “I don’t think prices will go down dramatically with the opening of another mehadrin supermarket,” says Eliezer. “Neither Rami Levy nor Osher Ad have sales. I think Osher Ad has more experience in the haredi market. So far, we are very happy with Osher Ad. We will definitely check out the new Rami Levy. But it all depends on prices. That is what determines where we shop. We go to the store that offers the lowest prices. We want a supermarket that has low prices all year long and not just this week or that.”
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