'Get ideas in Tel Aviv' (archives)
Photo: Yoav Galay
Israel's ultra-Orthodox turn to consumer clout
'There's no doubt their numbers make them a market force,' says religious consultant who helps Israeli companies target ultra-Orthodox customers. Commentator: Obedience to religious law and rabbis tends to translate into collective shopping habits
Israel's ultra-Orthodox community, which has traditionally used violent protests and political clout to push its agenda, is turning to a new tactic to get its way in this overwhelmingly secular society: market power.
The fast-growing community has emerged as a consumer powerhouse, using classic market muscle to drive the development of products catered to their needs, and to push companies to curb practices it finds offensive.
Religious Sector Employment
Tani Goldstein
Head of the Knesset's Finance Committee speaks at an Industry, Trade and Labor Ministry conference on religious sector employment, attributes Israel's recovery from global financial crisis to God
Cell phone companies customize phones for them, food chains operate supermarkets tailored to their tastes, and investment houses are offering "kosher" places for the ultra-Orthodox to park their cash without running up against Jewish restrictions on lending and investing. Threats of a boycott - not violence - led a leading clothing maker to remove billboards featuring scantily clad models from a major highway.
"There's no doubt" their numbers make them a market force, said Arieh Frenkel, a religious consultant who helps Israeli companies target ultra-Orthodox customers. "They take advantage of their clout."
The ultra-Orthodox, a community of 700,000 who live in isolated enclaves across the country of around 7 million, are Israel's poorest sector. About 60 percent of the men do not work, instead pursuing state-subsidized religious studies. In keeping with the religious injunction to "be fruitful and multiply," ultra-Orthodox families are large, with an average of seven children. Some 60 percent of the community lives below the poverty line.
But that hasn't stopped the ultra-Orthodox from turning their growing numbers and unique spending habits on food and clothing into market clout.
All major Israeli supermarket chains now have discount operations whose food meets an exceptionally stringent level of religious supervision. Packaging is aimed at large families, offering big volume at lower prices.
Spending also has been driven by a small but growing number of ultra-Orthodox who have pursued lucrative professions like law, accounting and technology. Not only do they spend money, they also expose their communities to a wider world where buying opportunities abound.
"They go to work in Tel Aviv and get ideas of what's out there," said Rachely Greenwald, an ultra-Orthodox public relations executive at the Trio advertising firm.
By virtue of their upbringing, the ultra-Orthodox are obedient to religious law and their rabbis - an experience that tends to translate into collective shopping habits, religious commentator Kobi Arieli said.
"The rabbis don't tell you which pasta sauce to use," Arieli said. "But when you get used to reciting the same (religious) texts that 1 million other people say every day, you become, willy nilly, part of a herd," he said.
'Profit always has to be the motive'
For marketers, this is an important lesson because they can capture large numbers of people in one go, or alienate them en masse, as several company owners have discovered to their dismay.
The Shefa Shuk discount food chain was boycotted by some ultra-Orthodox for more than a year and a half because the chain's owner operates a separate convenience store chain, AM:PM, whose hours violate the religious ban on working on the Sabbath. Some rabbis also blocked Shefa Shuk from advertising in ultra-Orthodox communities and newspapers.
The pressure eventually led the AM:PM chain to close some branches on the Sabbath.
Last fall, the FOX clothes chain ditched an ad campaign featuring supermodel Bar Refaeli lying next to a male model, with only a blanket covering her torso. Another ad showed the two locked in a kiss.
The images were replaced by more chaste advertisements. FOX said it replaced the ads after receiving complaints, noting it is "a fashion chain that appeals to the general public and all its sectors."
The flight schedule of El Al, Israel's national air carrier, is another case study in the evolving power of the ultra-Orthodox.
In the 1980s, El Al, then state-run, began grounding its planes on the Sabbath and Jewish holidays because religious lawmakers in the governing coalition demanded it. Because of the lost revenue, economic analysts had once expected El Al to resume a seven-day-a-week schedule after it passed into private hands.
But that didn't happen: Six years after it was privatized, El Al continues to fly a short week. The ultra-Orthodox, a loyal consumer niche, had threatened to boycott the airline unless it signed a pledge not to fly on the Sabbath.
Technology is another area where ultra-Orthodox consumers have left their stamp.
Recognizing the value of cell phones, rabbis reached an agreement with one mobile phone operator to create stripped-down, "kosher" devices filtered to block access to sex sites and other objectionable material. Other cellular carriers were quick to follow.
"Kosher finance" is another hot topic. Jewish law prohibits Jews from collecting interest on loans, so banks have created a way to circumvent this rule. The religious borrower and lender become partners in a "business transaction," with the borrower paying a set return on investment in accordance with a religiously compliant formula.
The notion of "kosher finance" has also spilled over into the stock market. Investment firms have begun catering to religious investors to meet the mounting demand for stocks and bonds in companies that don't violate Jewish law. They might avoid companies, for instance, that operate on the Sabbath or produce non-kosher food.
"Profit always has to be the motive," says Rabbi Aryeh Dvir of Jerusalem, a leading figure in promoting "kosher" investment. But "the objective is that professionals will operate according to religious law."
