Shufersal's New Strategy Faces Challenge of Rebuilding Customer Trust
Translated & summarized from Maariv by baba
Shufersal, under new ownership, has improved profitability through internal efficiencies but faces declining same-store sales and a potential erosion of customer trust due to changes in loyalty programs. The company is also pushing its private label brands in a market accustomed to established names. Its future success hinges on shifting focus from cost-cutting to rebuilding customer relationships and demonstrating consistent value, a challenge mirrored by competitors like Carrefour.
The story in 6 lines · by baba
- Shufersal's new leadership has improved profitability but faces declining same-store sales and a need to rebuild customer trust.
- Changes to loyalty programs and partnerships may have alienated some long-term customers.
- The company is expanding its private label brands, aiming for them to rival established industrial products.
- Competitors like Rami Levy and Yohananoff are reporting sales growth while Shufersal's has declined.
- Shufersal's exit from the TA-35 index signals a market focus on future growth and profitability.
- Rebuilding consumer trust requires demonstrating consistent value beyond promotional offers.
Shufersal, a major Israeli retail group, is undergoing a significant transformation under the leadership of brothers Yossi and Shlomi Amir. While the company has successfully implemented organizational efficiencies, reduced costs, and improved profitability, its next challenge is to regain customer loyalty and increase sales. The company's exit from the TA-35 index highlights the market's focus on future growth and profitability, not just size.
The Amir brothers acquired control of Shufersal and quickly initiated a comprehensive overhaul. This included streamlining management, restructuring the organization, renegotiating supplier contracts, and strengthening operational discipline. Concurrently, Shufersal revamped its brand identity, upgraded stores, and expanded its private label offerings to gain more control over product variety, pricing, and profit margins. These efforts have led to improved profitability, with significant dividends distributed since their takeover.
However, the company has seen a 2.7% decline in same-store sales in the first half of 2026, contrasting with growth reported by competitors like Rami Levy and Yohananoff. While profitability can increase even with reduced sales through cost-cutting, a sustained decline raises concerns about Shufersal's ability to maintain customer traffic and its position in family shopping baskets.
Shufersal's strategy also involved changes to its loyalty programs and partnerships with external consumer clubs, such as ending its long-standing collaboration with Club Hachayal. While these moves aimed to boost profitability by reducing discounts, they may have eroded customer trust and perceived value, prompting some consumers to re-evaluate their shopping choices.
The company is also aggressively developing its private label brands, aiming for them to be seen as full alternatives to established industrial brands. Currently, private labels account for about 20.4% of sales. While this strategy is common internationally, the Israeli market's strong attachment to established brands presents a unique challenge, requiring more than just lower prices to encourage consumers to switch.
The article suggests that Shufersal's departure from the TA-35 index could serve as a wake-up call, prompting management to shift focus from internal cost savings to customer spending. The company possesses a strong retail infrastructure, market familiarity, and resources, but rebuilding consumer trust requires building relationships through consistent value, not just top-down directives. The success of Shufersal and competitors like Carrefour, under new leadership including CEO Inbal Harson, will depend on their ability to combine organizational strength with flexible marketing and a keen understanding of consumer needs.