How Shufersal is confusing you: The mystery behind the price hike

The international supermarket chain ALDI, the sixth largest in the world, has 9,100 stores in the U.S., Australia, and Europe, but it does not have a private label under its own name.

Don't get confused—ALDI, the discount store founded by the Albrecht brothers from Germany, produces almost all of the products it offers, from bleach to cornflakes, but it deliberately does not put its name on the packaging, giving it a competitive edge on the shelves and the ability to adjust prices, either lower or higher, as needed without angering consumers, since, theoretically, there is no connection between the products and the chain.

It seems that Shufersal has decided to adopt this unique approach. Beyond the appearance of variety on the shelves, it has significant profit potential. A few weeks ago, the company announced the near-term phasing out of the private label brand Shufersal.

Like ALDI, Shufersal will continue to produce the same products it used to, but it will give them new names—one of which, XPO, is the name of one of the lines of cleaning products recently introduced in stores. But unlike the international chain, Shufersal is dancing to the tune of "confuse them, don't pay attention," and is using the "ALDI-style" tactic in a unique and puzzling way.

And here's the twist: Normally, when a clearance sale is happening, prices go down to get rid of the stock. But amazingly, right now, the prices of Shufersal's private label products have gone up. Why is this happening? To make the new private labels, which are identical to those of the Shufersal brand, more attractive in terms of price, even when sold under a different name, during promotional campaigns.

And here's another anomaly. When examining the price list of XPO, before the attractive promotion, it is found to be more expensive than the Shufersal private label brand. The obvious conclusion is that the Amir brothers, allegedly, are relying on consumer confusion. Few consumers will compare the ingredient lists of each product to those of competitors and realize that it is the same product, exactly, and track the changing prices following the cancellation of the promotions.

The change in the private label is just one move in a series of radical changes that the large retailer in Israel has undergone since being sold to Yossi and Shlomi Amir. The two, who found success with the Fresh Market chain and made a handsome exit when it was sold to Paz, are working to make Shufersal a more innovative and profitable company through centralized management, cost-cutting, and neutralizing external dependencies.

These changes included relieving senior employees, severing ties with external consulting firms like Storenext, and transferring various systems management to in-house teams. Since the ownership transfer, Shufersal has shown significant profitability but is testing consumer loyalty, who are now looking for discounted prices.

"The move led by the Amir brothers," explains Dr. Hezi Gur Mizrachi, founder of the Israeli Retail Institute, regarding the shift to brands that are not identified with the chain, "positions Shufersal not just as a retailer, but also as a wholesaler.

"Shufersal will be able to compete on price and market its products to other retailers, while maintaining high competitiveness and, at the same time, preserving its long-standing brand if it wishes. The problem is that the significant increase in private label prices may weigh heavily on consumers. Pasta, chocolate, cleaning products, and even organic items under Shufersal's private label have increased by 16% to 78%."

But it's not just private label prices that have gone up. In a recent survey conducted by the Retail Research Institute in October 2024, it was found that Shufersal Deal's shopping basket is about 16.5% more expensive than Rami Levy's and 9% more than Yochananoff's. These figures make Shufersal Deal, the network's cheap format, less attractive.

In order to compete in the discount market and attract more customers, the chain converted some Cash and Carry stores, which were intended for wholesalers, into Food Wholesale Distributors, also targeting the general public and offering lower prices in dozens of percent compared to those at Shufersal Deal and in large packages.

As a complementary step, the Amir brothers relaunched the Yuniverse chain, which operated in the past and failed, in an attempt to provide a cheap and popular purchasing solution while balancing price and quality, in order to increase purchasing power and attract customers from the lower-middle and lower socioeconomic classes who shy away from the expensive image of the Shufersal brand.

"The future of Shufersal," says Dr. Gur Mizrachi, "will be tested in its competition with international players like Carrefour, which offers products at attractive prices alongside high-quality service. Shufersal will need to find a balance between preserving its old brand while applying profitability measures and maintaining consumer loyalty, which is now under test."

From Shufersal, it was reported that "Shufersal is constantly working to expand the variety of products to allow customers to choose from a wide range according to their needs. The new XPO line for home care and cleaning products is now being launched at attractive promotions in the network, in stores and on the website. Contrary to what is alleged in a misleading and false manner in the article, XPO products are not copies of the private label products. Shufersal will continue to offer customers promotions on a variety of brands, including its own brand."