The question "What matters more – price or the shopping experience?" continues to generate interest among both researchers and business owners. At first glance, one might assume that the lowest prices will attract the majority of consumers and dominate the market.
However, the reality is more complex. Research and findings from the field suggest that Israeli consumers do not make decisions in a one-dimensional way. The choice of where to shop is influenced by a wide range of factors – both rational and emotional – that shape their preferences.
The Retail Research Institute conducted a comprehensive study on consumer behavior at the leading retail chains in Israel. The study included in-depth surveys and personal interviews with shoppers, aimed at uncovering the key parameters that drive consumers in selecting their preferred retail network.
Some of the questions examined included whether price is the main factor in decision-making and whether service, variety, convenience, or the shopping experience are equally important factors. The research findings show that the choice of where to shop is not solely based on price, but rather on a combination of additional considerations – indicating a more complex decision-making process in selecting the consumer's preferred network.
According to data from the Retail Research Institute, Carrefour is the fastest-growing chain in Israel, followed by Yochananof and Osher Ad. In the online shopping domain, Wolt Market is showing significant growth. The chain relies on dedicated sales centers and integrated services from various retail networks, competing with formats like Yango and the online platforms of the leading retail chains.
In a study conducted among 572 consumers aged 18 and above, the leading factors influencing consumers in choosing their favorite supermarkets were evaluated. The study was based on observations, interviews, phone surveys, and online questionnaires, combining both qualitative and quantitative methods.
The findings indicate that Shufersal continues to lead as the strongest and most beloved brand among consumers in Israel. Loyalty to Shufersal stems from a combination of size, extensive national coverage, a broad product range, and a shopping experience tailored to all consumers.
To Unite or Split?
Numerous studies confirm the importance of price as a central factor in consumer purchasing decisions, but it is not the only parameter influencing where consumers choose to shop. Alongside price, other factors shape the consumer's decision and sometimes even outweigh it, such as product quality, proximity to the store, ease of access, customer service, cleanliness, as well as product variety and availability.
The data from the Retail Research Institute highlights interesting trends, clarifying why it is difficult for the public to directly influence the cost of living. First, most households make their purchases at more than one chain, often due to factors such as promotions, availability, and convenience. Second, consumers tend to separate their main shopping – where they purchase most of their goods – from secondary purchases, which are made as needed.
This behavior raises an interesting question: Is distributing purchases between multiple chains a wise economic strategy, or does it result in additional expenses? At first glance, there are two main advantages: Taking advantage of unique promotions and low prices at each chain and meeting changing needs, such as higher-quality products or geographic proximity.
However, there are also disadvantages, such as resource wastage (time, fuel). Additionally, this can lead to many unplanned purchases, as each supermarket visit represents a potential for spending money not originally planned. Finally, when consumers split their shopping between chains, it makes it harder for them to fully benefit from the unique discounts or loyalty programs of the main chain.
While splitting shopping between networks allows consumers to take advantage of the specific benefits of each, it also exposes the complexity of managing a family budget. Loyalty to brands for main shopping emphasizes the importance of the overall shopping experience, showing that market competition is not solely based on price but also on product quality and the services offered.
Size Does Matter
The food retail market in Israel is characterized by concentration, with large chains dominating the majority of the market. Despite some dynamics in terms of acquisitions and mergers, new players find it difficult to penetrate the market. Small private stores are shrinking, and in their place, branded urban formats tailored to consumer needs are emerging.
Among the major players are Shufersal (leading with more than 30% of the market share and close to 400 branches, with its advantage being wide national coverage and a tailored shopping experience); Rami Levy (about 13% market share, focused on competitive prices and leading in the battle against the cost of living); Osher Ad (holding about 9%, primarily targeting families with a broad product range and a shopping experience focused on competitive prices); and Hazi Hinam (primarily targeting the central region, with about 5% of market share and seven branches selling large packages). Carrefour (a new player with almost 8% market share, bringing innovation and freshness through international brands and renovated stores); Yochananof (7%, focusing on large stores and main shopping); and Victory (6% market share, offering discounts) are also prominent.
Israeli consumers tend to prefer large, branded chains over small private stores, due to trust in the brand, convenience, and the broad range of products they offer. Innovations brought by chains like Carrefour and the shift to urban formats indicate a change in consumer culture, focusing on shopping solutions suited to a dynamic lifestyle.
In this sense, there is no doubt that Carrefour’s entry into the Israeli market has changed the rules of the game. Carrefour brings unique brands, extensive knowledge, and a strong business infrastructure that challenge local networks, attracting the attention of Israeli consumers seeking innovation and different shopping experiences.
Cultural and technological changes are reshaping the retail market. The big question is whether the competition will lead to lower prices and improved customer experiences, or whether the high level of market concentration will continue, leaving consumers with limited options.