What Drives Secular Israe...

One-third of shoppers in ultra-Orthodox supermarkets are secular – and not by chance

We met Eldan Ezer, a nursing student and father of five from Ramat Gan, as he loaded groceries onto his moped outside the Yesh Hesed ultra-Orthodox supermarket in the city of Bnei Brak. Ezer is not Haredi. He shops there, he explained, because of the proximity to his home and the cheap prices it offers, as compared with other chains.

Ezer is not alone: According to sources in the retail industry, one-third of the shoppers in Haredi supermarkets do not belong to that population. When we conducted our recent survey of stores targeting a Haredi clientele, the vast majority of people we encountered were Haredim; at smaller-scale outlets and corner stores, we were often the only secular shoppers. However, at some of the Osher Ad supermarket branches we visited in the Bnei Brak-Ramat Gan area, and also in Tel Aviv, the combination of customers was more varied, with secular shoppers sometimes outnumbering their religious counterparts.

It’s easy to understand this: After all, shopping in Bnei Brak can be quite cost-effective for a small secular family, especially if you don’t mind trying unfamiliar brands and/or buying in bulk.

For example, a 500-gram package of “Yesh” brand ptitim (short-cut pasta) costs 2.90 shekels (about 90 cents), compared to 6.40 shekels for the same product, made by Osem, and 4.90 shekels for a package at Shufersal or Rami Levy branches belonging to those chains’ house brands; a package of Yesh shell pasta is 2.90 shekels for 500 grams, as opposed to 3.90 for the same product, made by Taaman, at Osher Ad supermarkets, and 5.70 shekels for the identical sort of pasta, made by Osem, at Yesh Hesed, and 4.90 shekels at Osher Ad – the same as at Shufersal.

For an unbranded or generic 50-gram bag of potato chips, you will pay 1.90 shekels at Haredi stores. If you insist on the popular Tapuchips variety, you will pay 4 shekels for a 50-gram bag or 20 shekels for an 8-bag package at Osher Ad or Shufersal. A 50-gram bag of the snack will cost you 3.50 shekels at Rami Levy, while at the Haredi chain Bar Kol Tov, a 5-bag pack goes for 15 shekels. Outside on the street, in a small corner store, the price was 10 shekels for three bags.

Secular folks who go to Bnei Brak to shop will find the experience challenging. The streets are narrow, some filled with big piles of litter. Driving is tricky due to the combination of masses of pedestrians, heavy traffic and the need to find an ever-elusive parking place in Israel’s most densely populated city; that nerve-racking search reminds one of what happens in busy downtown Tel Aviv.

A visit to one of the grocery stores may be somewhat unnerving for people used to other standards. Some of the stores we visited had poor maintenance and sanitary conditions, with shelves in disarray. In addition, many of the products and brands were unfamiliar to the secular eye.

At the larger Haredi supermarket chains, however, the consumer experience improves: The cleanliness and organization are usually satisfactory, and if you become a “club member” at Yesh Hesed, you can do self-service checkout with barcode scanners. The scanner option replaces the app that can be used at other supermarkets, but it’s not accessible to many Haredim who use so-called kosher phones.

‘Smart and focused’

“The Haredi consumer is smart and focused, for the most part they know what they want and compare prices more closely than general consumers,” says Dudi Dror, CEO of Askaria, a consulting and research company specializing in the ultra-Orthodox sector. “On the other hand, price isn’t everything: Haredim appreciate quality and pay for it, and when it comes to dealing with certain issues like kashrut, the price is less important and even secondary.”

One knowledgable figure in the retail industry reckons that prices at Haredi chains are 15 percent to 22 percent lower than at secular ones. “Haredim buy in volumes the secular public is unfamiliar with,” the source says. “The bulk packaging is designed especially for the Haredi chains, and of course the larger the volume, the cheaper it is for the consumer. In addition, Haredi chains pay their suppliers for particularly large amounts of goods, so that they can pay lower rates for them and thus afford to keep prices low for the consumer.”

Another factor that keeps prices down, he adds, is the fact that the expenses at those chains are 5 percent to 10 percent lower than at secular supermarkets: “This is due to a number of reasons. First there’s the employment model: The chains mainly employ Haredi workers, and their paycheck is quite different from [their counterparts’] in the secular sector. Many of these people work only part-time and their income supplement comes in the form of welfare payments, not to mention the situations involving illegal cash payments to workers who are registered yeshiva students.

“Secondly, these supermarket chains donate significant sums to the various ultra-Orthodox sects, and as a result kashrut certification is cheaper because they strike a deal: A chain that donates money to a yeshiva and supplies goods for events held there will receive discounted certification rates and also benefit from consumer loyalty from the community. Municipal tax rates are significantly lower for branches of Haredi stores in Haredi locales. So, for example, if a secular and a Haredi chain both operate a store in the same town, the Haredi business will pay lower taxes because Haredi entrepreneurs will have connections at City Hall.”

Moreover, adds the same source, “the Haredi sector is less influenced by branding, and cares mainly about kashrut. This means that the same product may be sold under a different name, in packages of different sizes and at lower prices when compared to its secular counterpart. It isn’t a question of lower quality – the quality is fine. We’re talking about an identical product, just with a different name. If secular Tel Avivians shops at such places, they will encounter unfamiliar packaging and brands, so they may not touch the products. They haven’t been exposed to them, and even though they may be of excellent quality, they won’t buy them, because people are addicted to brands. The secular consumer wants Osem or Barilla – but if you put those products in a Haredi store, the Haredi clientele won’t buy them. Pasta is a basic foodstuff, so they won’t spend a lot on it.”

All of these factors, the source stresses, make it possible for Haredi supermarkets to operate at profit margins similar to those at secular ones: “A secular supermarket operates at a 17 percent to 27 percent profit margin, the Haredi ones at a slightly lower one, 15 percent, but because they sell by bulk, have unfamiliar brands and lower costs, the net profit is very similar to that of the secular chains.

‘These supermarket chains donate to rabbinical courts, and kashrut certification is cheaper because they strike a deal,’ says the source. ‘A chain that donates to a yeshiva and supplies goods for its events receives discounted certification rates and benefits from consumer loyalty.’

“In addition, particularly since the outbreak of the pandemic, the chains have been offering a communal shopping option: Instead of shopping individually, a few local families will organize and order groceries collectively; the store prepares pallets of bulk goods and delivers them. It is cost-efficient for such branches to deliver goods to a public park, for pick-up. We don’t have this option in secular stores because some government inspector will likely get involved and issue a fine. No one says a word to the Haredim though – now that is purchasing power.”

Eitan Yochananof, CEO of Yochananof & Sons Supermarkets, agrees that the biggest difference between the two sectors when it comes to grocery shopping is the apparent Haredi indifference to brand names, which allows retailers to offer a wider range of products.

“It just goes to show that if the consumer knows how to play the game, they can influence the branding,” he says. “Secular people buy brands because they want to show that they have ‘taste’ or because they simply have enough money to do it. In the Haredi sector, there are people who can afford to buy known brands, but the majority cannot.”

The reason secular chains like Yochananof don’t stock the sort of unfamiliar brands popular in Haredi stores, the CEO continues, is simply because virtually no one buys them: “A retailer won’t waste shelf space on an unknown brand. You won’t see me stock products that my customer base doesn’t purchase. We have actually tried to offer some different brands to provide variety and competition, but no one bought them.”

Yochananof is convinced that consumers have a significant impact on price rises: “The suppliers have an advantage over us, because consumers help them out. The supplier advertises on television, we try to stock competing products to moderate the situation and to try to make a higher profit, but the suppliers have the feeling that their market share is backed by the consumers, so we cannot compete. Prices will drop only once consumers understand they can affect things. The consumer needs to realize that we are on the same side – but how can you foster competition if the consumer only purchases brands they are familiar with?”

Soft drinks skyrocketing

Even though prices are generally lower in Haredi locales than in secular areas, the price hikes on basic goods and the taxes that were recently levied on disposable dishes and on sweetened beverages – the latter took effect in January – have hit the Haredi public hard. Indeed, even a month or so ago the hot topic on the street in Bnei Brak, as elsewhere, was not the coronavirus, but the cost of living, which is only getting higher.

Indeed, the Haredi community, heavy consumers of these taxed items, is feeling the sting. If secular Israelis are finding it hard to make ends meet, this religious community is struggling to afford proper observance of the Sabbath, which constitutes the most significant weekly expense for such families. Shabbat is the time when they host relatives and friends, cook large meals, and often pamper their kids with soft drinks, sweet treats and salty snacks not usually eaten during the week.

“It feels like everything is more expensive,” says Leah, a mother of 13 and grandmother of three from Bnei Brak, who made aliyah from Switzerland 25 years ago. “It is much harder to get by these days. My weekly shopping trip used to cost around 400 shekels, now it is 600 to 700 shekels. Feeding all the kids and their spouses on Shabbat has become a big expense.”

Leah does most her shopping at a local grocery store, which is “crowded and unpleasant,” she says, but cheaper than other places. She only goes to the larger chains in Bnei Brak when things are on special. “It is more costly here than in Switzerland. It is expensive there as well, but you earn accordingly. If salmon used to cost 30 to 40 shekels per kilo, now it is around 60 shekels. But we won’t give up on the salmon for Shabbat dinner, so I started comparing prices and looking for the cheapest option. I found a place that offers a reasonable price with delivery from Petah Tikva, so I buy large quantities and freeze it.”

‘Everything has become expensive, but we’ll keep on giving the kids soft drinks, cakes and candy on Shabbat. We won’t spare them anything: The Lord always ensures that we have a festive Shabbat,’ says Michal, a mother of five from Bnei Brak.

The recent price hikes for soft drinks might, however, be a blessing in disguise for her community, Leah admits: “Haredim aren’t health conscious. We eat a lot of sugar here, give the kids sweets nonstop and use primarily white flour. I don’t buy challah. It’s too expensive and I prefer to bake my own using spelt flour.”

“Everything has become expensive, but we’ll keep on giving the kids soft drinks, cakes and candy on Shabbat. We won’t spare them anything: The Lord always ensures that we have a festive Shabbat,” says Michal, 37, a mother of five from Bnei Brak. “The only thing that has changed is that I have stopped buying single-use plastics because of the price. I always thought it was wasteful anyway, so we just switched to regular dishes and I am happy about that.”

Michal doesn’t patronize local stores or go for the collective shopping option. “It is crowded and messy, and you have to lug the kids and strollers all over just to save a few shekels. I can’t really get used to that – maybe because I am originally from Tel Aviv and became religious only recently. I don’t buy unfamiliar brands; I don’t like their taste. I buy what I am used to. I am not representative [of the Haredi community], because both my husband and I work, but it definitely feels like things have become more difficult. I know plenty of families who used to get by fine, but now need assistance from charities and welfare agencies.”

Miriam, who owns a store in Bnei Brak that sells packaging and disposable goods, says the price hikes affecting those products hasn’t led to a reduction in the number of consumers, but rather in the volume of goods they purchase. “People still have to celebrate bar mitzvahs and other happy occasions,” she explains, “and they still want fancy cutlery and dishes, but if they used to buy three packets of each thing for an event, today they buy things according to the number of guests. Some products have seen a 180-percent price hike, and we aren’t even talking about imported goods: They take forever to arrive and are expensive. The Haredi sector is still celebrating and shopping,” Miriam says, “just with a little more thoughtfulness.”

Most of the people we interviewed said that in general these days, what seems cheap to the secular consumer is expensive for Haredim. The most recent data provided by the Central Bureau of Statistics (for 2018) shows that the average monthly gross income for a Haredi family is 14,745 shekels – 58 percent lower than the secular average (23,235 shekels).

On the other hand, Haredim know how to be frugal in ways that their secular counterparts would find challenging. Even though the number of people per household is higher in the religious community, the monthly outlay for basic expenses per household is 16 percent lower than in non-Haredi households – 14,651 shekels as opposed to 16,936 shekels. That gap is mainly due to differences in outlays for communications (internet, cable TV, etc.) and transportation expenses (comprising 11 percent of the Haredi monthly budget, as compared to 21 percent of the secular Jewish one). In practice, there is no significant difference between the two sectors in the proportion of household budget used to cover groceries, but Haredi consumer culture leans toward modesty and frugality, plus the collective purchasing options and bulk buying of unmarked brands reduces their expenses.

Yoel Toledano, a partner at BDO-Israel Accounting and Financial Services and head of its Haredi division, reckons that cost-of-living increases will particularly boost the economizing trend among Haredi yeshiva students – particularly in families in which the husband studies in a kollel and the wife is the primary breadwinner.

“We are bound to see a tightening of the belt when it comes to transportation, celebrations, collective purchasing and other areas. Simultaneously we will witness an increase in requests for assistance from large charitable agencies. Haredi consumers and suppliers,” says Toledano, “had been making do with the current inventory of single-use plastics, a staple among big families. The new tax is being felt hardest at Purim and [in advance of] Pesach, and afterward.”

There are dozens of charities and hundreds of local NGOs offering assistance to needy Israelis, to the tune of millions of shekels a month. Toledano believes that food price hikes have sparked a modest rise in requests to them for financial help.

“Our greatest fear, as a company that employs dozens of spouses of yeshiva students, is the government freeze on funding for preschools,” he says. “As a result, the kollel student’s wives may decide to stay home with the kids. My assessment is that this is the issue that might lead to the greatest financial burdens.”

Bulking up

At a Bar Tov supermarket outlet on Shlomo HaMelekh Street in Bnei Brak, there is only a light trickle of shoppers when we visit. According to Ron Avivi, the store manager for the past eight years, most shoppers show up on Wednesday evenings. “The recent price hikes are insane,” he says. “People aren’t shopping. It started with disposable items, continued with soft drinks and now even household cleaning products are more expensive. Consumer traffic remains the same as before, but the average shopping outing costs less: People think twice about grabbing things off the shelf. There is a serious downturn in business. So far, many products haven’t been affected by the crazy price increases, but everyone knows it is only a matter of time. When they announced the tax on single-use goods, people bought in bulk in order to stock up.”

According to Avivi, soft drink companies will likely take the biggest hit over time, particularly those producing the cheaper brands popular in the Haredi sector, particularly Kristal: The fluorescent-colored beverage that once cost 2 or 3 shekels per liter costs about 6 shekels today. “I don’t get the price increase on soft drinks,” Avivi says. “Soft drinks are an important part of the Haredi shopping basket, and this has a significant impact on families. Now people prefer to buy soda and juice concentrates, even though their cost has also increased significantly.”

Ezer, the father of five, says he feels the pinch. “There used to be specials and sales, now there are hardly any. Wherever they didn’t hike up the prices, they canceled the sales. Once I could buy three six-packs of beer on special, now I can only buy one. There is a feeling that the government wants there to be large gaps – between very wealthy and very poor people, so there is no middle class. It makes it easier for them to govern. We tighten our belts wherever possible, buy less and smaller quantities of things, but still pay more at the checkout counter. It has reached the point where, to help out, my parents bring a challah and extra soft drinks for Friday night dinner.”

Some Haredim think one way to fight the rising cost of living is by means of a consumer boycott. According to Amos Harel, 35, a newly religious taxi driver from Beit Shemesh and father of three, he and his family have stopped buying certain products. “We saw on the social networks how people started chatting about the more expensive prices, we talked about it on our family WhatsApp group, and came to a joint decision not to buy goods from companies that have raised prices. Even if the price returns to what it was before, we still won’t buy them.”

Harel told us that things have changed at home: “My wife and I would drink a six-pack of Coke Zero a week, and for Shabbat we would buy a serious amount of soft drinks for us and the kids. We would spend around 500 shekels a month only on drinks, and now it’s 800 shekels. I could afford this because we are a small family, relatively speaking, but I refuse to fork over such sums to these corporations. We don’t buy from them anymore, we watch the kids’ health, it’s even better. These companies won’t have a choice but to lower prices, otherwise they will suffer significant losses when people stop purchasing. We will stop or buy from competing companies that haven’t increased prices. I hope others will follow, but the problem is that we Israelis tend to forget quickly. The consumers absorb a hit, they boycott for a month – and then come back. People will carry on shopping as before, maybe a little less, but after the initial shock – they will be back.”

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