Kika’s mistakes

If the customer is always right, those local shoppers who stayed away from Kika’s swanky emporium exercised their choice wisely.

Kika (photo credit: Yoni Reif)
(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.
Our 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 America).
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 if overcharged.
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 international chains.
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.
If any 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.