Carrefour May Exit Israel's 'Basket of Israel' Project, Costing Millions

Carrefour Israel is reportedly nearing a decision to end its participation in the "Basket of Israel" consumer initiative, a government-backed program aimed at lowering food prices. The move, expected within weeks, could see the supermarket chain forfeit a NIS 25 million (approximately $6.8 million) advertising campaign funded by the Ministry of Economy. Carrefour would also cease offering deep discounts on 100 selected products.

The potential withdrawal comes after five months of the program, which was intended to combat the rising cost of living. The initiative, a flagship project for Economy Minister Nir Barkat, was allocated NIS 50 million in taxpayer funds. However, the program faced criticism for its limited scope, with only Carrefour participating and the "basket" featuring items like snacks and beers rather than essential goods. Reports suggest that instead of boosting overall sales, the aggressive discounts in participating stores may have negatively impacted Carrefour's general sales and gross profit.

Carrefour's same-store sales reportedly dropped by 7.6% in the second quarter, a steeper decline compared to competitors like Rami Levy and Yohananof, which saw around 2% decreases. This financial underperformance is seen as a primary driver for the potential exit.

If Carrefour leaves the "Basket of Israel," consumers could face a "shelf shock" as prices for the 100 discounted items return to normal, potentially leading to significant price increases. This could also result in a loss of customers to larger competitors like Shufersal.

Carrefour stated that it is "completing its reviews and will soon make a decision." The company recently appointed Moshe Debi and Debi Communications to manage its public relations, a move seen as the new CEO Inbal Harson's first strategic initiative to reposition the brand.