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The end of a prolonged recession, combined with Israel’s strong economic growth will enhance the opportunities that lie ahead for Israel’s leading food retailer, Blue Square Israel Ltd. (BSI).
"The retail food market in Israel is still young, with only a 50 percent penetration rate, compared with 75 percent in Europe and 90 percent in the States," says Yoram Dar, Blue Square’s President and CEO. "The forecast is that retail stores in Israel will attain a 75 percent penetration rate within the next five years. So there is still a lot of room for growth."
In the fourth quarter of 1999, Blue Square initiated a program designed to lower company expenses and increase revenues. "The program is based on three parallel efforts," said Dar, "an organization-wide efficiency program, reorganization of the logistics center, and a new flexible approach to store formats and locations. We are on track in implementing the program, and are satisfied with the results."
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Net profit for the second quarter rose by 113 percent to $9.1 million, while in the first half of the year, net profit rose by 70 per cent to $19.6 million.
The company also plans to expand operations, to further increase profits.
"Our strategic plan includes the opening of thirty to fifty new stores, and we expect to significantly increase profits by he year 2004. The stores to be opened will target specific sectors of Israel’s heterogeneous population, and we shall launch more MEGA outlets – stores with a new, exciting format," added Dar. MEGA outlets are super-size value stores, with approximately 5,000 square meters of selling space, and a wide range of items, offered at the lowest prices in the country.
"These MEGA stores are now among our top performers, with significantly improved sales per square meter and per employee. By the end of 2000, we plan to add two additional MEGA stores, making MEGA a nationwide chain of six stores."
Blue Square also plans to expand the range of services to clients. It will increase its revenues by opening banks, pharmacies, restaurants, newsstands and electrical goods shops, in stores in its nationwide chain of super markets.
"As a first stage in implementing this one-stop-shopping concept, we have opened in-store pharmacies, called Pharm Stores, in many of our outlets, and will open more in he next five years," Dar said.
Blue Square is one of the pioneers of cutting-edge, one-on-one marketing strategies. With information obtained through its Buy & Bonus scheme, Israel’s first and largest customer loyalty program, the company has created a databank of the buying patterns of over a million families. It has begun to analyse this data for marketing purposes.
E-commerce is also central to BSI’s plans. "There is no question that the virtual supermarket will someday become an everyday reality. We are now finalizing our strategy for e-commerce retailing. With the goal of opening a world-class website, we're currently perfecting our e-commerce business plan," Dar said. "We are confident in our ability to continue to lead Israel’s food retailing revolution."