In the past decade food prices in Israel have increased sharply, more than the OECD index and faster than the consumer price index. The food market is centralized and controlled by monopolistic food manufacturers and importers, and aggressive retail chains. Today, prices for common food and household items in Israel’s periphery can be up to 100% higher than in the center.
In order to increase the purchasing power and decrease the financial gaps in peripheral communities, JAFI, together with IVN, intends to establish a chain of social groceries based on a business model that will significantly reduce family grocery bills together with a social model that will empower members of local communities most in need, using their untapped potential to bring about meaningful social change and social justice.
- Goal: To offer consumers a grocery bill that is 17% less than that of Israel’s leading discount chain.
- Infrastructure: 40 stores in the first 4 years; simple design; located in inexpensive and accessible neighborhoods
- Products: Limited variety that includes only essential products for normal household management
- Procurement and Distribution: Purchase from small and medium local suppliers, at good prices; unique distribution model with outsourced logistics center managed by professional distributor
- Operating: Low operating costs; open 49 hours a week; slim management head office and small store staff
- Prices: “Every Day Low Price” strategy
In late 2015, we began the pilot year, which involves the establishment of six stores in Sderot, Arad, Beit Shemesh, Yerucham, Kiryat Gat and Beit Jann. The first store, in Sderot, opened in October 2015.
This model, in four years, will improve the lives and standard of living of approx. 24K households (approx. 120K people), and that’s just the beginning! By implementing this business model for a chain of grocery stores, allowing for sales at particularly low prices, in conditions of financial equilibrium, while maintaining service and quality, we expect that after 4 years from the establishment of all 40 stores, the supermarket chain will be self-sustaining without the need of philanthropic dollars.