Delicatessen Shop

Industry Data

According to estimation, there are currently approximately 550 active registered delicatessen shops in Israel, in addition to approximately 100 small, unlicensed shops.

Delicatessen Types

There are four types of shops:

Ø  A shop located in a city’s center, specializing primarily in meat products and special delicacies. Some shops integrate a prestigious grocery shop into the business, and additionally sell dairy products, baked goods, etc. On the other hand, some delicatessen shops are integrated within stores specializing in meat products.

Ø  Marketplace delicatessen- a more simple shop specializing in sales of salads, fish, and pickled food. Marketplace delicatessens are slowly becoming obsolete. They specialize primarily on one type of product, usually of low quality, mainly cheese, sausages, or pickled food.

Ø  Delicatessens specializing in product sales to specific target markets - mostly products intended to supply products for immigrants of the Commonwealth of Independent States. Most of these are located around marketplaces and are characterized by low-price, independently imported, unique products that do not hold a Kashrus Certificate.

Ø  Prestigious delicatessen shops offering homemade products—“Private Label”, and other well-known quality products. These are located in prestigious areas such as Tel-Aviv’s “Gan Ha’Ir” and “Kikar Ha’Medina”.   

Competition

Until recently, a delicatessen shop's main competition stemmed from other similar shops located in the same geographical vicinity.In recent years, competition has intensified following a number of primary changes:Supermarkets, Mega-Delicatessens, and chain delicatessens.

 

Vendors

Some of the food supply for delicatessens is imported, and some is locally manufactured.

The current market trend is for manufacturers to advertise using merger agreements and strategic partnerships. Most small delicatessen shops self-import special, unique products coordinated according to their target market.

 

Private customers of medium socio-economic level or above. Average customer age is 30+.

 

The target market varies according to the delicatessen shop’s location and nature. Some delicatessens are simpler, and some are targeted towards a specific market, such as shops specializing in products from the Commonwealth of Independent States.

 

Marketing Resources

Primary marketing resources in the industry include: Word of mouth  along with advertisement in various media.

Factors Affecting Success

  • A well-designed delicatessen shop that radiates of quality and aesthetics and is equipped with advanced equipment raises its customers’ appetites and increases sales.

Ø  Central location.

Ø  Good, courteous customer service.

Ø  Quality food products appropriated to the potential target market.

Ø  Proper financial planning which includes sufficient operating capital resources.

 

Entry Barriers

Ø Seasonality- as sales are seasonal (sales significantly decrease in the summer), profitability is not stable.

Ø In spite of the increase in demand for good quality ready-made food, the products sold at delicatessens are perceived as luxury and therefore consumption is affected by the general state of the economy.  

Ø Retail chains add a significant element of competition.

Ø High cost of equipment

Ø Ministry of Health regulations.

 

Financing:

Industry revenue and profitability

Segmentation of products to pre-packed and sliced products demonstrates that sliced products are considered more profitable in comparison to pre-packaged products, as the latter are also sold at retail food chains. Dairy products carry lower profitability rates, however in comparison to the decrease of meat product sales in the summer, there is an increase in dairy product sales during this season.

 

The table below illustrates operational profit from delicatessen revenue according to business and product:

Type of Product sold

Specialty delicatessen

Clientele

Delicatessen

Stand

Marketplace Delicatessen

Delicatessens located in

city centers

Meat products

15%-24%

 

17%-23%

23%-36%

Seafood products

20%-25%

13%-15%

16%-26%

22%-34%

Pickled foods

18%-25%

17%-24%

23%-35%

26%-38%

Specialty cheeses

15%-20%

11%-15%

13%-24%

28%-34%

Salads

11%-15%

 

17%-25%

29%-40%

Dairy products

11%-14%

 

12%-18%

12%-19%

Canned goods and grocery products

16%-19%

 

15%-23%

15%-21%

Weighted profit rate

16%-23%

13%-22%

18%-29%

22%-32%

 

Licenses and Certifications:

 

In order to establish a delicatessen shop, Ministry of Health licensing is required, as in any business selling food products.

If non-frozen, non-processed meat, poultry, or fish are sold, a Ministry of Agriculture permit is also required.

 

Risk Level

Businesses in the delicatessen industry are characterized by mid-high risk levels due to the retail chains' significant entrance into the market in 2003-2004.

 

 

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