(photo credit: Yoni Reif)
Employees of Kika’s Israeli branch in Netanya were locked out of their
multi-storied store’s posh premises Thursday without having been paid their
April wages. The Israeli franchise of the Austrian furniture and home
accessories chain closed down in the wake of massive financial losses. It froze
all credit lines, failed to reimburse suppliers and its employees fear they
won’t receive severance pay, or back wages.
This dismal picture is the
flip side of the shiny coin of foreign retail conglomerates flocking to launch
local outlets and to export to us enticing slices of overseas lifestyles.
Israelis avidly lap up the trend. Scenes of throngs of shoppers mobbing
just-opened branches of H&M or Forever 21 were no less than profoundly
embarrassing. Company executives abroad couldn’t believe their eyes.
isolation and insular existence have bred a seemingly insatiable hunger for any
tokens of the big wide world.
The impression imparted to merchandisers
abroad is that the Israeli consumer is a non-discerning, eager provincial, a
particularly easy target and one who’ll readily pay through the nose for
prestigious brands (by our standards, though not necessarily so in Europe or
The predictable upshot is that most foreign retailers
shamelessly charge higher prices here than for identical items in other
countries. It seems that many Israelis can’t resist the temptation to buy even
This made Israel look like an exceptionally lucrative
corner of the globalized marketplace – and all too frequently for all the
economically wrong reasons.
Then came Kika’s acute failure here. It
proved that Israelis shouldn’t under all circumstances be taken for granted and
presumed to be invariable dupes.
But the lesson wasn’t fully learned. As
Kika Israel teetered on the brink of bankruptcy, its director-general blamed
Israeli consumers for the debacle.
The root of the trouble, he opined, is
that “Israeli shoppers assumed they were coming to IKEA II. But when they saw
bed linen retailing for NIS 1,900, they recoiled and said, ‘Oh, how expensive.’
We tried to avoid comparisons to IKEA but the Israeli consumer had already
tagged us as a luxury store.”
There’s indeed no denying that average
Israeli shoppers were shocked by Kika’s prices. But is that their fault? Or does
the fault lie with entrepreneurs who opened up shop here on the premise that
anything can be hawked to non-discriminating natives, the expense
notwithstanding? Proper market research should have delineated the bounds of
even our oft imprudent and compulsive shopping habits.
The usual rule of
thumb in commerce is that the customer is always right. This seems natural
everywhere. Nowhere else would large international retail chains take the
liberties they allow themselves on our turf. Perhaps their effrontery
arises from our unique history of curious and parochial commercial practices.
After all, in Israel, more often than not, it used to be that the customer is
always wrong and forever a gullible mark.
That, though, has begun to
change, especially since last year’s “cottage cheese uprising.” New consumer
awareness is slowly but steadily changing the rules of the game. Consumer
activists, many among them alumni of last summer’s social action protests and
boycotts, have begun to turn their attention to the large and profitable
They compare prices here and elsewhere. According
to their calculations, even after allowances are made for customs duties and
transport costs, we still end up paying more than our counterparts in countries
where the public’s judgment and sense are apparently respected more. These
groups promise to focus on the foreign business transplants.
businessmen haven’t yet taken note of the winds of change, they should. They
should take a long hard look at Kika’s mistakes. These constitute the writing on
the wall for the lot of them.
The Israeli consumer had in this case
evinced new-found maturity. If the customer is always right, then those local
shoppers who stayed away from Kika’s swanky emporium exercised their choice
wisely. We hope it’s a sign of things to come.