Israeli Supermarkets Vie for Customers by Expanding Beyond Groceries

Israeli supermarkets are evolving beyond traditional grocery offerings, incorporating electronics, home goods, and even cars to attract consumers in a competitive market. This shift comes as consumers become more price-conscious, leading to increased price comparisons and a willingness to switch stores for better deals. While the overall market for daily necessities grew, this expansion is driven by price hikes and customer redistribution rather than increased purchasing volume.

"Rami Levy" and "Osher Ad" are emerging as key beneficiaries of this trend. "Rami Levy" saw sales increase by 6.4% in 2025, reaching 6.96 billion shekels, while maintaining competitive prices by slightly reducing its gross margin. The chain is also diversifying by selling BAIC cars through its stores. "Osher Ad," a major competitor, focuses on large stores, a wide selection, and bulk packaging to offer low prices, and has also entered the car market by selling Kia vehicles, which sold out rapidly.

Consumer perception often aligns with these chains' low-price strategies. A survey indicated "Rami Levy" as the cheapest for meat and poultry, and fruits and vegetables, with "Osher Ad" following closely. However, official price transparency data from Savy shows "Osher Ad" as slightly cheaper overall, with an average basket price of 12.15 shekels compared to "Rami Levy's" 12.43 shekels, highlighting their near-duopoly in the discount segment.

Conversely, "Shufersal," Israel's largest retail chain, is experiencing a decline. Its revenue dropped 7.5% in the second quarter of 2026, with same-store sales falling approximately 8.5%. The company attributes some of this to the timing of the Passover holiday but acknowledges a deeper issue of losing customer traffic. "Shufersal" is undergoing a major restructuring, including a new store format and increased direct imports, but faces the challenge of balancing price reductions with profitability.

Other chains like "Yohananof" and "Victory" are also adapting. "Yohananof" increased sales by 6.8% but saw its gross margin decrease due to wider discounts. "Victory's" revenue declined, but net profit rose due to a store sale; it is expanding its electronics and appliance offerings, recognizing the need for higher-margin products to offset low grocery margins.

The strategic move to sell non-grocery items, including cars, is driven by the low margins in the food sector. Retailers aim to leverage regular customer traffic to increase the average transaction value by offering higher-profit goods. This intense competition ultimately benefits consumers, who gain more choices and potentially lower prices, though careful comparison of entire shopping baskets is advised.