Israel flag Israel: Buying and Selling

The distribution network in Israel

Evolution of the Sector
Consumer spending has been driving Israeli economic growth in recent years, but retailers in the country do not appear to have been the beneficiaries of booming private consumption. According to the latest data available from the US Trade Department, the fast-moving consumer goods (FMCG) segment sales reached USD 12.17 billion in 2018, of which USD 9.1 billion were from food products. The Central Bureau of Statistics estimated that in 2019 private consumption of non-durable goods increased by 3.9% and accounted for the vast majority of total private consumption.
The retail food market faces slow growth, limited competition, and high prices. Changes have been noted in the shoppers’ basket: facing high food costs (19% higher than the OECD average), Israeli consumers are opting for more affordable products, with an increase in the sales of private label products. In addition, the introduction of the " Food Law ", Law for Enhancement of Competition in the Food Sector, is a major government regulation which imposes various restrictions on retailers in term of pricing, number of outlets in the same area, etc.

Although small grocery stores are the most important retail channel in the country in terms of numbers of stores, they struggle to compete with the supermarkets, due to more competitive prices and longer operating hours. There are three main retail food sub-sectors in Israel: supermarkets located on the outskirts of the main cities (however, supermarkets chains are increasing their activity and presence in the centre of cities and online), traditional markets with a limited range of products located in the neighbourhood and convenience stores located on the high streets or gas stations. It is estimated that 16.9% of household expenditures are dedicated to food products (US Trade Administration).
Market share
Foodstuffs are distributed through supermarkets, traditional markets, convenience stores and open air markets. Sales in supermarket chains account for over 60% of total retail food market sales. The top ten chains haveover 700 outlets. The three leading supermarket retailers are Shufersal, Yenot Bitan and Rami Levi, which have an overall market share of 56% (US Trade Administration, 2019). Israel’s largest retail producer and seller of non-kosher products is Tiv Ta’am. Over the last decade discounters have seen considerable growth
Convenience stores count around 900 outlets, while small independent neighbourhood grocery stores dominate the market in terms of number of outlets with approximately 5,000 outlets (although the number is declining).
Retail Sector Organisations
Federation of Israeli Chamber of Commerce
Ministry of Economy and Industry

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Latest Update: May 2022

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