Israeli Retailers Seek New Revenue Streams Amidst Falling Sales

In 2026, Israeli consumers began to significantly reduce their spending on groceries due to a surge in prices over the preceding three years. While essential food purchases cannot be entirely eliminated, shoppers are opting for less and smarter buying. Following years of consistent growth, grocery sales in the second quarter of 2026 declined by 3.6%, a figure that represents a broader drop in consumption when adjusted for population growth.

Shufersal experienced the most significant impact, with sales at its identical stores falling by 8.5% during the quarter. This downturn has prompted food retailers to explore innovative solutions. One immediate strategy has been increased sales to Gaza, following an Israeli commitment to provide ongoing food supplies as part of a ceasefire agreement. Retailers and suppliers like Victory, Carrefour, and Half Free, along with food suppliers such as Neto, Willi Food, and Diplomat, have received licenses to supply goods to the Gaza Strip. While exact figures are undisclosed, Victory reported sales of NIS 100 million to Gaza in a single month during the first quarter.

A more long-term approach involves diversifying product offerings beyond traditional groceries. The private chain Osher Ad has led this trend, selling a wide array of items including cars, New Balance shoes, and even apartments. Osher Ad, with its 24 branches, operates without an online presence or customer loyalty program, focusing on competitive pricing and a willingness to sell any product, such as parallel-imported Ninja appliances, if the price is right.

Other major retailers are following suit. Victory and Rami Levy have expanded their electronics selections to include iPhones, while Rami Levy and Super-Pharm have begun selling cars in their stores. It remains to be seen how effective these strategies will be in reversing the sales slump, with results expected to be reflected in the upcoming financial reports.