Super Pharm's sales are rising, despite a bitter price war launched last year by Israel's large supermarket chains, which decided on a business strategy of assaulting the non-food sector, dominated by Super Pharm.
Super Pharm had NIS 2.31 billion in sales in 2004. It opened seven new stores last year, for a total of 112, and expanded its commercial space by 7%. Monthly sales were $1,140 per sq.m. of commercial space.
Super Pharm is also rapidly expanding into new overseas markets. It is opening stores in Poland; the eighth store will open in Krakow this month, and the ninth in Warsaw in April. Super Pharm will have 14 stores across Poland by year end, with $22 million in turnover. It is also negotiating to buy drugstores in China, and will probably begin operating by mid-year
Although the opening of stores in Israel has led to cannibalization in Super Pharm, same store sales rose by 3%, thanks to its high level of service, after investing in personnel. Super Pharm has the highest number of employees per sq.m. of any retail chain in Israel: 4,500 employees for 45,000 sq.m. of commercial space, or one employee per 10 sq.m.
Real growth at Super Pharm's same and new stores was 7.9%. In order to increase sales and market share, the chain reduced its profit margins in 2004. The gross profit margin in cosmetics departments fell by 0.8%, in infants departments by 0.7%, and in diapers by 0.5%.
One of the more interesting achievements was the increase in sales of Super Pharm's private brand, Life. Life sales grew by 17% in 2004, reaching 11% of sales in relevant departments. Life sales amount to 15% of over-the-counter drug sales. 12 new Life products were launched last year, to 1,600 products in 40 categories.
Life's market share in financial terms amounted to 40% of notions, 21% of over-the-counter drugs, 14% in paper products, 11% of infant products, 11% of vitamins and nutritional supplements, and 6.5% of toiletries.
Published by Globes [online], Israel business news - www.globes.co.il - on March 1, 2005