Rami Levy Hashikma Marketing

History

Rami Levy Hashikma Marketing was founded by Rami Levy (born 1955, Jerusalem, Israel), one of six children of an Israeli-born father and Iraqi-born mother. He grew up in poverty in a one-room tin shack with a shared kitchen and bathroom in the Nachlaot neighborhood. Shopping with his mother in the nearby Mahane Yehuda Market (the "shuk"), Levy came to the realisation that there were price differentials available to wholesalers, who preferred selling to retailers to dealing with individuals. Upon completing his army service in 1976, he began selling goods at wholesale prices directly to individuals out of a 40 square metres (430 sq ft) stall that his grandfather had left to the family on Hashikma Street, one of the commercial streets of the shuk. He named his new company after himself and the street he was located on.

Levy said he initially bought goods from a wholesaler and sold them at cost. After three months, he bought goods directly from the importer whilst maintaining his wholesale selling prices, thus becoming the first discount store in Israel. In the early 1980s Levy opened his second, 80 square metres (860 sq ft) store. He opened his first supermarket in Talpiot in 1992; he has since opened two other supermarkets in Talpiot to accommodate business.

In May 2007 the company, with eight branches and a market valuation of NIS 430 million, made its initial public stock offering on the Tel Aviv Stock Exchange. Within two years, the number of branches doubled to 16.

Rami Levy introduced supermarket price wars to Israel by promoting low prices and discounts in advance of Jewish holidays. For example, for one week in 2008, the chain sold milk for less than the price of water, and drove headline prices of chicken down to 0.79 shekels per kilo. For Rosh Hashanah 2010, it again grabbed headlines by offering chicken, apples and honey at 1 shekel per kilo (13 cents per pound). Similar promotions were carried out for Passover 2011.

In 2009 the chain's discounting policy began to make a dent in the market share of Israel's leading supermarket chains, Shufersal Ltd. and Blue Square-Israel Ltd. Industry analysts attribute the chain's success to Levy's management strategy and marketing skills. Rami Levy Hashikma Marketing stock trades in the TA-75 and TA-100 indexes at a market cap of NIS 1.77 billion (US$474 million)(2011).

Locations

Rami Levy supermarkets are located in several Jerusalem neighborhoods as well as in Afula, Haifa, Kastina, Mevasseret Zion, Modiin, Nesher, Netanya, Pardes Hanna, Ramat Gan, Rosh Haayin, Tiberias and Zichron Yaakov. There are also four locations in the West Bank: Beitar Illit, Gush Etzion, Sha'ar Binyamin, and Mishor Adumim. Levy's stores in the West Bank are often cited as a model of Arab-Jewish coexistence, as Arabs and Jews shop and work there side-by-side.

In 2010, the locations in West Bank, which attract thousands of Palestinian shoppers and top Palestinian Authority officials, – and which are staffed by both Arabs and Jews, were targeted by the PA's anti-Israeli goods campaign. For several months the PA attempted to discourage Arabs from shopping at Rami Levy supermarkets, culminating in an official boycott of the chain in September 2010. At the same time, there were concerns among some Orthodox Jews in the area regarding security and especially the issue of intermixing between the male Arab shelving staff and the female Jewish cashiers. All these issues have been largely put aside by the local populations, as witnessed by the multi-ethnic crowds that fill the stores on any given afternoon.

In-house brand and outlet stores

Rami Levy Hashikma Marketing markets a house brand called Hamutag (Hebrew: המותג‎‎, lit. "the brand"), which includes food, detergents, and toiletries. Some stores have "Pizza Hashikma" and "Burger Hashikma" outlets which sell fast food at a discount. The chain also includes an in-house store called Yafiz which stocks low-priced clothing and shoes for men, women, teens, children and infants.

Real estate development

In 2000 Rami Levy purchased a plot in the Har Nof neighborhood of Jerusalem zoned for 100 housing units. He also invested 145.5 million NIS (US$36.3 million) in land for 265 apartments in the Holyland complex. In 2008, he bought the rights to SBH Sha'ar L'Yerushalayim for 15 million NIS (US$3.95 million), making him the controlling shareholder of a company that owns land on Hebron Road zoned for 240 housing units, a hotel, and commercial and industrial space. In 2009 he bought Delek Real Estate's share of the Jerusalem Railway Station compound on Derech Beit Lehem (Bethlehem Road) for about 13 million (US$3.6 million); the site is zoned for 1000 housing units. In 2010 Levy partnered with Amikam Ben-Zvi and Housing and Construction Real Estate to buy 13 million NIS (US$3.6 million) worth of land in the Givat HaMatos area in Jerusalem, also zoned for 1000 housing units. However, Levy blames slow progress on developing the company's recent acquisitions on bureaucratic red tape by planning authorities.

In 2011 Levy made headlines with his bid to take over the development of the Nof Zion luxury housing product in the East Jerusalem neighborhood of Jabel Mukaber after developer Digal made a debt settlement with creditors. When the identity of the competing bidder – Palestinian-American businessman Bashar Masri – was announced in the Israeli newspapers, nearly 77 percent of bondholders voted to negotiate with the group of Jewish investors headed by Levy.

Rami Levy Hashikma Marketing owns 65% of the land on which its supermarkets stand, including approximately 35,000 square metres (380,000 sq ft) of land in Mevasseret Zion, Modiin, Gush Etzion, and Pardes Hanna. The company uses its own equity – estimated at NIS 500 million (US$139 million) – for its commercial real estate purchases.

Cellular communications

In September 2010 Rami Levy Hashikma Marketing became the fourth company in Israel to receive a mobile virtual network operator license from the Israel Ministry of Communications. The company previously announced in a 2010 statement to the Tel Aviv Stock Exchange that upon receiving this license, it would open a new subsidiary, Rami Levy Hashikma Marketing Communications Ltd., and sell advanced mobile telephone services in its supermarkets. In February 2011 Rami Levy signed an agreement with Israeli mobile phone provider Pelephone, allowing the supermarket chain to use Pelephone's infrastructure to provide cellular phone services. In December 2011 Rami Levy Communications went live with the opening of two branches in Jerusalem. Rami Levy Communications is the first MVNO to buy blocks of minutes from other cellular companies and resell them to consumers for less than the providing company charges.

Personal

Levy employs 20 family members in his business, including his wife, Chief Financial Officer Adina Levy, and Vice President of Operations Shmulik Levy, and many of the stores are managed by relatives. Rami and Adina Levy have four children and live in the Gilo neighborhood of Jerusalem. Levy is also a member of the Jerusalem City Council as part of Mayor Nir Barkat's Jerusalem Will Succeed faction.