Shufersal Quietly Expands Private Brands Offering Significant Savings Amid Israeli Market Challenges

Shufersal, Israel's largest supermarket chain, is quietly developing a broad private brand strategy inspired by European models like Aldi and Lidl, aiming to reduce dependence on suppliers and offer consumers cheaper alternatives. While private brands account for over a third of grocery sales in Europe, in Israel they represent only about 6.9% of the total market, though some chains like Rami Levy and Yohannoff report private brand sales exceeding 20% of their revenues. Shufersal's approach differs by creating multiple distinct private brands, such as "Interia" for pasta and "Beit Yehuda" for canned goods, rather than a single private label, and is expanding distribution beyond its stores through a wholesale cash-and-carry format for small businesses.

Price comparisons conducted by the Retail Research Institute on 59 Shufersal private brand products versus leading national brands found an average price gap of 56.7%, with over half the products costing at least 50% less. However, some private brand items were more expensive, including vegetarian schnitzel and hummus salad. The study highlights that while savings are often significant, they vary by product and category. Consumer loyalty to familiar brands remains strong in Israel, partly due to taste preferences and the prevalence of promotions that narrow price differences.

Other retailers like Carrefour Israel emphasize branding their private labels under the retailer's name to build trust, while Shufersal's multiple-brand strategy aims to replicate European success where consumers trust the retailer's brand quality. Challenges in Israel include a smaller market size, supplier concentration, and less consumer awareness about private brand origins and quality. The article concludes that the key question for Israeli consumers should shift from whether private brands are cheaper to whether they offer better value, reflecting a cultural and market gap compared to Europe.