The board of directors of Shufersal (TASE: SAE), Israel’s largest retail chain, has approved a streamlining plan designed to save NIS 250 million. The company notified the Tel Aviv Stock Exchange this morning of the approval of extensive streamlining moves, as it faces imminent competition from France-based international supermarket chain Carrefour and other new international competitors about to enter the Israeli market.
Meanwhile, Carrefour’s partner Electra Consumer Products (TASE: ECP) has reported streamlining moves in its Yeinot Bitan retail chain subsidiary that will result in a provision of NIS 50-60 million in its quarterly financials. The plan includes downsizing of the workforce, the closure of five loss-making branches, renovation of other branches, and conversion of branches to the Carrefour format.
The worker layoffs in Shufersal’s plan will mainly be at its head office: over 10% of head office and business unit staff, more than 100 employees, will be dismissed. The saving is estimated at NIS 60 million. Cuts in operating costs are expected to save another NIS 90 million.
Fourteen Shufersal branches and eleven branches of the group’s pharmacy chain Be will be closed. In addition, as Shufersal’s automated dispatch centers become operational, the warehouses serving the company’s online operation will be closed. The company currently has 312 Shufersal branches and 91 Be branches.
Shufersal is offering voluntary retirement to staff employed under a collective agreement at its head office and business units. The company will also part from some head office employees on personal contracts, "in order to adapt the workforce to the needs and challenges of the changing reality in the retail market."
Last resort
"Parting from employees is hard, but it’s the last resort, after we have done everything we can to examine alternatives and minimize the extent of the layoffs, in full cooperation with Ariella Siso, head of the Shufersal workers’ committee," Shufersal CEO Ori Watermann said.
On the decision to shut eleven branches of the group’s pharmacy chain Be, Watermann said, "The branches to be closed are mainly former NewPharm branches in locations with low profit potential. In the coming year, we will open eleven new branches of the chain in new, strategic locations."
Shufersal chairperson Itzik Abercohen said, "Alongside the streamlining measures that are now getting underway, thorough, in-depth work is being done at the company on the advancement and development of its core businesses and its growth engines. Under the streamlining program, unprofitable branches will be closed, and in their stead 25 new branches will be opened in the coming years." Abercohen said that the company was avoiding layoffs of staff at the branches being closed, and that they would be transferred to nearby branches.
Published by Globes, Israel business news - en.globes.co.il - on November 2, 2022.
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