Isranomics

Leading European supermarket chain Carrefour opens its stores in Israel. Will consumers enjoy lower prices?

by | May 8, 2023 | Economy | 0 comments

Electra Consumer Products (TASE: ECP), after a year of preparation, a well-orchestrated marketing campaign, and an investment of NIS 250 million, is opening fifty stores of the international retail chain Carrefour across Israel tomorrow.

Carrefour is a multinational retail and distribution corporation that operates 14,000 stores in 49 countries and generates annual sales of about €81 billion. Its main competition comes from Shufersal, Israel’s largest supermarket chain, as well as other major players in the Israeli market like Victory, Rami Levy, Osher Ed, and Yohannoff.

Carrefour’s entry into Israel has been facilitated by the Ministry of Economy, which launched a new procedure a month ago, allowing the entry of hundreds of products without inspections for international retail chains that are willing to open branches in Israel. The imported products will enter the market based on the importers’ obligations, and their supervision will be carried out after their entry in the stores. The venture is expected to help launch and establish Carrefour as well as increase competition in this area.

The main benefit of bringing Carrefour to Israel is that it could potentially lower consumer prices. Carrefour products have already entered Israel since the summer, including chocolate, cereal, olive oil, and beer, some of which are tens of percent cheaper than the competition. Uri Kilstein, the CEO of Carrefour in Israel, has promised a price revolution. However, Carrefour’s strength is in dry food products and non-food products, and it is clear that the prices will not be the same as the prices in France due to the costs associated with bringing them to Israel.

Electra Consumer Products plans to establish 80 to 100 branches by the end of the year, with each of them having more than a thousand Carrefour products in about 80 categories, including about 400 food and organic products and about 600 non-food products, including toiletries and cleaning products. The stores will operate in three different formats: Carrefour City (neighbourhood branches), Carrefour Market (medium-sized branches), and Carrefour Hyper (discount stores).

The branches were designed by Carrefour Global and established according to the chain’s concept. This is why 20 professionals have arrived in Israel in recent months to train the Israeli teams.

Having said that, Carrefour will need low prices, high-quality goods, and first-rate service in order to thrive in Israel. It will also have to adjust to Israel’s distinct cultural and regulatory climate. Competition is hindered, for instance, by regulatory barriers that increase product prices. Kilstein believes the government should take action to eliminate them in order to introduce genuine competition into the market.

In addition, Carrefour continues to take some marketing moves to win over Israeli consumers, such as the distribution of reusable bags at the doors of houses, a Facebook page that offered prize-bearing activities and offers for launch gifts. On the same day as the branch openings, an advertising campaign will also be launched on television and digital.

Carrefour will have to work hard to earn the trust and loyalty of Israeli customers in the face of stiff competition. Is it likely that Carrefour’s prices will remain the same six months after it opens? Will the Israeli consumer stick with the established names they know, or will they let the price decide? These are some of the questions that remain open.

Main photo: Reuters/Stephane Mahe

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