French supermarket chain Carrefour opened 50 branches throughout Israel yesterday. In the first stage these outlets include three Hypermarket branches with stores of up to 4,000 square meters including in Beit Shemesh. This branch and the one in Ra'anana were chosen for the official launch ceremonies attended by senior representatives of Carrefour and its Israeli franchisee Electra Consumer Products (TASE: ECP).
Why did the company choose Beit Shemesh, with 70% of its population from the haredi community for its flagship store. Looking at the data about the city provides a clear answer. Beit Shemesh has been one of Israel's fastest growing cities in recent years and the city is expected to double in size in the coming decades.
Composition of the population
Until 2000, Beit Shemesh was just another small town in the Jerusalem region. For the previous 45 years the city had not managed to cross the threshold of 25,000 residents. But in 2000 came the first leap, as the city nearly doubled its population to 45,000. By 2005, the city had 65,000 residents even though Modi'in to the north was attracting many of Beit Shemesh's young couples. In 2015, Beit Shemesh crossed the 100,000 threshold and today the city is home to 157,000 residents - growth of 238% in less than 20 years. The city continues to grow at an annual rate of 9.4% and according to the masterplan - yet to be approved - Beit Shemesh hopes to have 360,000 residents by 2040. At the rate that the city is growing this figure might have to be revised upwards.
Economic consulting firm Czamanski & Ben Shahar owner and CEO Tamir Ben Shahar says, "Most of the budgets are allocated to haredi society and not to secular society and Beit Shemesh represents an alternative to Jerusalem."
Plans for the expansion of the city are backed by actions on the ground. Several new neighborhoods are currently under construction and being occupied. Planning for two more new neighborhoods in the south of the city, with 1,150 apartments, is now being promoted, and in March 2021 the policy for the urban renewal of Beit Shemesh was approved, which aims to add 10,000 new housing units to the 8,000 existing units in the old neighborhoods of the city.
The number of households, and housing units has been steadily increasing over the years. As of 2021, there were roughly 26,000 households in Beit Shemesh, compared with 18,000 households in 2011 - an increase of 43% within a decade; There were 25,000 apartments in the city is, as of 2021, up 45.8% from 2012. The increase in the number of housing units over this period was the biggest among Israeli cities with a population of over 100,000.
Most of Beit Shemesh's residents are young, a figure that can also support plans for the city's future growth: 51.9% of the residents are children up to the age of 18, and only 4.9% are over 70 (compared to the national average of 14.7%). According to the municipality's data, the largest age groups in the city are 0-5 years old, 6-12, and 22-39.
Consumer volume
The increase in population, the one that is already happening and the one that is expected, is certainly a factor in Carrefour's choice to open a major branch in Beit Shemesh, but it is not the only one. "Globes" found the consumer habits of the city's residents and the segmentation of monthly expenses proves that Beit Shemesh has great potential for a new retail player, certainly one that offers significantly lower prices than those of rivals in the market.
Central Bureau of Statistics data are for 2019 provide a general picture of the city's residents consumer habits. The most significant figure, probably, is the number of persons per household in Beit Shemesh, 4.92 persons - a number that puts it in top place among all Israel's largest cities, including Bnei Brak. Such a number naturally translates into high household spending, which are also reflected in the data: NIS 17,707 average monthly expenditure, higher than Bat Yam and Holon, for example, and at a similar level to Rehovot and Ramat Gan.
The average household expenditure on food in Beit Shemesh on is one of the highest among Israel's large cities - NIS 2,567 per month (a rate of about 14.5% of the monthly consumer spending). It should be noted that in 2017 food expenditure made up about 20% of monthly spending of the city's residents, and this has been reduced, among other things, due to the increase in housing expenses out of total monthly spending. The expenditure of Beit Shemesh residents on furniture and home equipment, products that Carrefour also offers in its branches, is the highest among the major cities: an average of NIS 828 per month, 4.7% of general monthly expenditure.
Ben Shahar says, "Today, a large part of the population has average and above socioeconomic characteristics, so it is no longer a poor city. It is ranked 63rd in the national ranking of cities according to investment per resident, and while the national average is NIS 4,200, in the city net investment per resident is NIS 2,300."
The average monthly salary in Beit Shemesh was NIS 9,659 in 2021, significantly lower than the national average of NIS 12,925.
The city's location
Another reason for Carrefour's decision to open a branch in Beit Shemesh relates to the city's strategic location. While the city has become more haredi in recent years, there are also many secular residents living to the north, as well as huge commercial zones serving not only the city's residents but also the many surrounding kibbutzim and moshavim.
Ben Shahar says, "The southern part is actually a separate city with more haredi commerce, with each neighborhood having its own commercial center. In the northern part of the city, there are two big centers, the Power Center and the Big Fashion mall. There is another center opposite them - the city gateway center- where there is a branch of Rami Levy and all of these serve the residents of Beit Shemesh, the Mate Yehuda area, and the residents of the moshavim and kibbutzim in Emek Elah, All of them have a population with high socio-economic attributes. In addition, it is an area characterized by high tourism, including wineries."
He adds, "Carrefour, like Ikea, chose Beit Shemesh not because it is the most suitable place but because it was a default choice. The Jerusalem Municipality has not succeeded in developing land so they have all gone to the nearest location - Beit Shemesh."
Beit Shemesh currently has branches of Rami Levy, Shufersal Deal, Victory, Yesh Hesed, Osher Ad and other haredi chains. "The good news for Carrefour will be its ability to bring kosher products and increase the amount of products," concludes Ben Shahar.
But according to him, the strictly kosher issue has a great significance on the consumer habits of the city's residents. "They shop first in their stores, and only then in stores that are defined as 'secular', including Carrefour," he observes.
Published by Globes, Israel business news - en.globes.co.il - on May 10, 2023.
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