The Ministry of Economy and Industry published a report on Sunday by the Small and Medium Business Agency with worrying conclusions for businesses with difficulties stemming from competition. These hardships are commonplace for shop owners, who have been facing both the massive growth of chain stores and declining prices.
The idea of small business cooperation, in any sector, will reap benefits as long as it delivers on its basic premise of offering owners improved purchasing power. For the 5,000 shops and convenience storesin Israel, the recent report provides their owners with many reasons to unite.
The protest movement in the summer of 2011 had a number of consequences for Israeli consumers by raising awareness of the high prices paid for food products and other goods and by opening the door (relatively) to products from small manufacturers and businesses.
But a surprising trend erupted in the supermarket sector, at the same time as the heavy-discount stores expanded and the strip malls flexed their muscle, the neighborhood shops made a comeback in city centers and smaller towns even after their passing had been publicly mourned.
More and more of the mini-marts have sprung up, and the ties between the shopper and small shop continue to bond.
And it isn’t only emotional: consumer experts recommend shopping at convenience stores, even from a savings perspective. While the prices may be higher due to the rent expenses and the diminutive purchasing power with their suppliers people account for the relative prices and only buy what they need.
The shop owners were informed last November of a new initiative supported by the Ministry of Economy and Industry, which intended to help build an association of independent shops and mini-marts. But the initiative has yet to be launched.
The initiative, which hoped to offer shop owners attractive prices for food and pharmacy products, is backed by Makolot Forum Chairman Eli Stavi. While it has yet to begin its operations, it took its first steps this week by registering on the list of associations fully owned by their members.
“To jumpstart the process, we asked to form an association,” explained Stavi, who waved off the objections against a move which received a million shekel grant from the Ministry of Economy and Industry. The objections were raised after Rami Levy, Stavi’s former employer, was tied to the initiative. The idea was to have Rami Levy provide the stores with products at competitive prices.
“The reputation of the initiative was damaged for no good reason,” said Stavi. Under the association, the business owners would receive the services free of charge. “The plan is currently funded by the Ministry of Economy and Industry; as long as we do not need funding, we will not solicit a thing from the retailers.”
For his part, Levy noted that he would help the initiative. “For a shop owner to join the association, he must benefit. No one will join without cause even if it’s free.”
Levy emphasized he would not be the only chain to provide discounted items “according to the recommendation of the Ministry of Economy and Industry from eight years ago, when Stavi asked to launch the project.”
The idea of improving the purchasing power of independent stores also inspired another initiative six months ago, FREE-MARKET, which provides a partial solution that does not include refrigerated items, fruits, or vegetables. So far, some 1,000 shops and mini-marts from central Israel and the Shfela have joined the project, which offers a commercial and logistical platform for the purchase of food products from various suppliers without the need for a middleman.
The prices and sales are set by the supplier, while FREE-MARKET takes its cut from the suppliers.
“Our aim is not only to improve the terms for purchasing goods but to also supply a solution for distribution to the point of sale, which is usually located in small streets in central cities or in the periphery,” said FREE-MARKET CEO Haim Blashkovsky. “We are currently running into problems in the supply chain, between the supplier and the business owner. For a few dozen units of product, many suppliers simply won’t go to a shop on a small street in Bat Yam because it’s not cost-effective. But from the point of view of the shop, the business finds itself short on inventory and unable to meet their customers’ needs.
“Our system promises delivery anywhere in Israel within 48 hours, with full transparency which shows real time inventory and supplier prices and promotions.” Orders are handled through a specialized app developed with Partner and Isracard. The products are supplied by FREE-MARKET using its trucks from a logistics center in the Sharon. But their offering is not a comprehensive solution.
FREE-MARKET currently works in conjunction with a variety of suppliers, including Sugat, Hanamal, Schestowitz, Vita Pri Ha’Galil, Henkel, Kvuzat Yavne Food Products, Maya, and Ta’am Vareach Spices. However, several of the largest suppliers are missing from the list, like Coca Cola, Tnuva, Strauss, and Osem.
Not only for minimarts
But these are not the only initiatives trying to unite private businesses Toptica has been gathering independent eyewear stores to compete with the large chains. At its launch, Toptica rushed out of the gates with a campaign questioning the professionalism of optometrists at the larger chains compared to the personal attention of a small store.
Published by Globes [online], Israel business news - www.globes-online.com - on January 29, 2016
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