The Big Zol supermarket chain plans to open 15 new stores in Arab towns within the next five years with an investment of NIS 80 million (about $20.9 million).
In preparation for the move, the supermarket ordered a survey from the Geocartographic Institute of 500 Arab Israeli respondents. The survey found that 68% of Israel's Arab citizens prefer to purchase Israeli-made products.
The poll was conducted in Arabic among Muslim, Christian, and Druze respondents in a sample representative of the adult Arab population in Israel.
The survey also found that 50% of Arab shoppers buy their groceries in local mini-markets. However, in recent years, there has been an increase in Arab patrons making their food purchases at supermarkets in Jewish towns, with a 37% increase.
In addition, the average monthly grocery expenses per family in the sector have remained static for the past four years. The average Arab family spends NIS 2,120 (about $550) on foodstuffs, with the average outlay per capita on groceries 19% lower than the average in the Jewish sector.
It seems that the Arab sector tends to spread its shopping over a relatively high number of sales points – the vegetable seller, the butcher, and the bakery, for instance. On average, the Arab family purchase groceries at 4.2 different sales points, versus the average Jewish family, which visits an average of just 3.2 sales points. Furthermore, nearly half of the households in the Arab sector in Israel purchase foodstuffs at least five different sales points.
'Arab yuppies make more use of credit cards'
Big Zol seeks to challenge this purchasing habit. The chain intends to open stores in large Arab villages adjacent to Jewish population centers. In addition, the chain asserts that it has identified locations that draw customers from all the sectors, such that the stores will also serve Jewish patrons who travel on Saturdays and holidays.
The list of villages includes: Sakhnin, Pekiin, Nazareth, Tamra, Shfaram, Isfiya, Kfar Qassem, Qalansawe, east Jerusalem, and Rahat. Supermarkets from other chains already operate in some of the towns.
Big Zol reported that the sales forecast for the first three years in the newly opened stores is NIS 105.5 million (about $27.5 million) in the first year, NIS 269.7 (about $70.4 million) in the second year, and NIS 532 million (about $138.9 million) in the third year. The market potential in the foodstuffs market alone in the Arab sector is between NIS 446 million (about $116.4 million) and NIS 490 million (about $128 million) per month.
According to Big Zol's business plan, the chain will break even 10 months after it starts operations.
Big Zol CEO Yusuf Ashkar said, "We are the only chain that comes from the sector, we are familiar with its needs and preferences, and understand the heart of the Arab customer. I am well acquainted with the consumption habits in the sector, which, by the way, have changed a lot in recent years as the rest of the chains don't see this frankly like we do. Already today we serve a sizable section of the sector. We know what kind of personal attention needs to be provided, what to offer, how to address this public, which channels to advertise on, and more. We will know how to match ourselves to the sector better than any other.
"The Arab public is ripe for and expecting to do its grocery shopping at the large supermarkets near its house, as it already does on many occasions in stores located outside of the Arab towns. In the cities and large villages, there is a status of Arab yuppies, which includes young couples and singles, who increasingly use credit cards."