Carrefour is Open for Business: is it Really Cheaper than Other Chains?

Navit Zomer, Meir Turgeman | 09/05/2023 |14:30

The opening shot of the battles between Israeli retail chains and new player Carrefour has sounded, with the opening of 50 branches by the French chain this morning (Tuesday), which led to customers flocking to the stores. However, while at this stage Carrefour’s private label is cheaper the Shufersal’s, Rami Levi has compared their products to his own private label and claimed in a conversation with ynet: “Carrefour will not be cheaper than us. In some brands I’m already 10% cheaper than them. Rami Levi’s overall shopping basket will remain the cheapest in Israel.”

Some of the suppliers with which Carrefour’s private label is competing have already announced sales: Wissotzky are offering a second package for 50% off. We now estimate that the other chains, headed by Shufersal which has the biggest private-label market share, will react in upcoming days and align themselves with the trend. Meanwhile, Shufersal has started its Shavu’ot holiday sale.

The opening of Carrefour Ashdod, with the shadow of Operation Shield and Arrow hanging over the city(photo: Meir Turgeman)

The estimate is that Carrefour’s entry is expected to affect a change in the market at least in its first months of activity, during which it will probably offer low prices even in non-private-label products. For example, tomatoes at ILS 3.9 per kilogram, cucumbers at ILS 2.9 per kilogram, strawberries pack at ILS 9.9 per kilogram, etc. However, we should note that prices at Carrefour’s big Hyper branch are cheaper by about 10% than prices in other branches that operate under the City (neighborhood stores) and Market (medium-sized stores) formats.

This morning’s launch ceremony in Ra’anana was attended by the top officials of Carrefour International, headed by CEO Alexandre Bompard, along with Minister of Economy Nir Barkat, owners of Carrefour franchisee Electra – the Salkind brothers, Electra Consumer Products CEO Zvika Schwimmer, and Carrefour Israel CEO Uri Kilstein.

The new branch in the Ra’anana industrial zone, which used to be a Yeinot Bitan branch, is one of three Hyper branches operated by the chain, and it was launched simultaneously as 49 other branches, most of which are in the City format.

The opening of Carrefour Ashdod, with the shadow of Operation Shield and Arrow hanging over the city(photo: Meir Turgeman)

(photo: Meir Turgeman)

During the branch launch, Kilstein announced that “this is an earthquake in the Israeli food market”, but at this stage it seems the chain will only increase competition, and will not revolutionize the market. In fact, as long as the chain does not display the full variety of Carrefour products that are expected to be imported to Israel, the presence of the French chain’s food products is limited in relation to the regular variety displayed at the Ra’anana Hyper branch, which sprawls over 3,000 sqm.

For example, the chain displays a Carrefour flag next to its private-label products, and we have seen long aisles with only one or two flags, as well as aisles with no flags at all.

Carrefour claims that it currently offers 430 private-label food product, but in some cases these are different packages of the same category. Carrefour’s cleaning products are much more dominant, with a much bigger variety than food products, a special display right at the store entrance, and attractive prices, although these are almost identical to Rami Levi’s private label.

(photo: Meir Turgeman)

Even though ILS 250 million were invested in renovating the branches, the Ra’anana branch is modern yet boasts a simple design. Those expecting Parisian chic will probably be disappointed. Even in the basked-goods display, almost all products are Pillsbury products, with the usual selection of Roghallach, Bourekas, etc.

In comparison, the City branches, which are only several hundred square meters in size, have a more designed feel and a fancier shopping experience at this stage. For consumers, the chain’s advantage is the discounted launch prices that are currently offered. We can only hope that this is not only a lure, and that the same price level will persist even in a few months’ time, despite continued inflation and interest increases.

According to a client who came to the new Ashdod branch: “For French people like me, this is a big celebration, because the atmosphere is indeed French.” Another client added: “We are very happy. I am French and I know these products from France. I hope it will be the same as it is there, and that it will bring a lot of work and life to the neighborhood.”