Carrefour Exits "Basket of Israel" Program Amid Profit Concerns

The "Basket of Israel" initiative, a joint venture between the Economy Ministry and the Carrefour supermarket chain, will conclude on October 14th after an initial six-month period, with no immediate plans for extension. Economy Minister Nir Barkat decided not to exercise the option for a second operational phase, deferring the decision on the program's future to the next government. This move follows reports in August that Electra Consumer Products, the controlling entity of Carrefour in Israel, was considering discontinuing the program due to its economic toll on the chain.

While Carrefour acknowledged the initiative brought new customers, it also negatively impacted revenues and profitability. The Economy Ministry, however, presented the decision differently, stating that after discussions with Carrefour's management, Barkat opted not to commit to further expenses and an extended operational period during a government transition. The ministry plans to provide the collected data from the pilot program to the incoming government for evaluation.

The ministry reported that the state invested approximately NIS 25 million in the accompanying campaign, while direct public savings from purchasing basket items at Carrefour are estimated at NIS 40 million. Additional indirect savings of tens of millions of shekels are claimed due to price reductions at competing chains. The ministry asserts that prices for comparable "baskets" at leading chains dropped by 8.4% during the pilot, compared to a 3% decrease in overall consumer goods, with Carrefour's basket being, on average, 32.5% cheaper.

However, these figures contrast with earlier reports from June, which indicated that Carrefour's competitors were slow to lower prices for basket items, and some categories even saw sales declines. The ministry has yet to release its full report detailing sales data, household participation, cumulative savings, price developments, and the total cost of the initiative. Carrefour will end its commitment to the pilot's fixed prices on October 14th but is launching its own independent promotion program, "Carrefour Special Deal," across all its stores and online, offering varied discounts without the fixed price commitment of the government initiative.