Carrefour Ends Israel's 'State Basket' Initiative Amid Profit Concerns

Carrefour Israel will not continue with the "State Basket" initiative, a program launched six months ago by the Ministry of Economy to combat the rising cost of living by offering a basket of discounted products. The decision comes as Carrefour undergoes significant internal changes, including a CEO transition, and faces profitability challenges due to the program's operational costs. The retailer is forfeiting approximately 25 million shekels allocated for advertising the initiative.

The "State Basket" was initially conceived as "The Basket of the State" by Economy Minister Nir Barkat. A tender was issued, but only Carrefour submitted a bid, raising questions about competition from the outset. The program aimed to provide consumers with affordable goods, but the discounted prices negatively impacted Carrefour's profit margins and required substantial investment in operations and marketing.

Carrefour's decision to discontinue the program means the subsidized prices will not be extended beyond the current period. This development occurs during a period of leadership changes within Carrefour, with Inbal Harson replacing Michael Lovshitz as CEO, while Lovshitz moves to a co-chairman role at Electra Consumer Products. These shifts are part of broader group strategies, including preparations for Carrefour's IPO.

The Ministry of Economy now faces the decision of whether to relaunch the initiative in a different format, revise tender conditions to attract more retailers, or let the program, which aimed to increase competition in food pricing, conclude after only one round. Carrefour was the sole participant in the program's initial phase.