That must be the question Michael Dell ‘s MSD investment fund and Fidelity Investments will be looking for the answer to, after they both make significant investments in Rami Levy’s fast growing Israeli based supermarket chain.
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/ By Yoel Bermant /
When people talk of business success in Israel generally speaking their first thoughts move in the direction of the world of high-tech were many companies have enjoyed considerable success over the years. However what the majority of people, especially those living outside the country, we will not be aware of is that one of the most remarkably successful companies to manage on the Israeli business scene over the last twenty years or so is a family owned supermarket chain goes under the title of Rami Levy, after its owner and founder.
Levy who built his supermarket chain up from a single store in the heart of the Jerusalem open market into a chain numbering more than twenty massive supermarkets spread out throughout Israel with a turnover approaching $500 million. The ultimate goal of the chain is to reach fifty outlets, at which point Rami Levy himself maintains it will have reached saturation level as far as customer coverage in Israel.
The Rami Levy marketing policy is very straightforward. Stack em high and sell them cheap, with a minimal advertising budget and a strong emphasis on offering the best price. When compared to the other supermarket chains in Israel, Rami Levy settlement has the least frills, but visit one of the supermarkets in his chain from when they open at 7:30 AM and close at 23:00 you will find them jam packed with people, as well as the highest proportion of staff to customer anywhere in the country.
There is a general consensus that that Israel has become recently westernized in its flavour over the last decade or so, yet the Rami Levy supermarket chain still remains in a throwback the first corner store that its charismatic yet unassuming owner first opened less than forty years ago. In fact Rami’s enterprise, which has now grown to considerable proportions, still trades under it full title of Rami Levy Shuk Hashikma, after the tiny street corner store where his first outlet was situated within the Machene Yehuda Open Market (Shuk) in the heart of Jerusalem.
This mark of humility and aherance to the humble roots and values which were instilled in Levy as a young man, are what has made Rami Levy something of a people’s champion, as well as his desire to compete against the other supermarket chains in Israel, knocking a very considerable dent in their market share, and making his company increasingly profitable in an ever competitive market.
These may well be the tenets that caused Michael Dell through his private investment firm MSD Capital to acquire a further 4.8% holding in Rami Levy’s 650, 000 maximum share issues paying out $38.60 per share for a total $25.4 million. With a previous purchase MSD total shareholdings in Rami Levi now stand at 6.18% of the value of the company.
Not long after MSD had completed their second purchase of shares in Rami Levy, following hard on their heels were Boston based financial services company Fidelity Services who purchased 5% of the company shares paying out $27.8 million.
These respected investment companies both taking considerable shares in Rami Levy raises the question- What do they see in this company that is only a bit player in the global business stage. As both as private concerns they are not obliged to provide any answers to the curious.
What they must see in Rami Levy is the following:
- The solid family stamp that runs through the company, with the man himself as well as his wife and three of his four children involved in the day to day running of the business.
- The solid financial foundations that the company has been built on, with most of the branches of the supermarket chain are situated on properties that the company owns.
- The massive wave of support that the company enjoys from the Israeli public.
- That Rami Levy Shuk Hashikma as a company is unafraid to calculate risks and are prepared to diversify, being the first company to take advantage of changes in legislation in the cellular phone market in Israel, helping to break the monopoly on what had become a very overpriced market and in the process stimulating further good will among the Israeli consumer.
These appear to be the vital ingredients to success which these investment companies have identified and with no reason to suspect that Rami Levy’s devoted following will have always have complete confidence in supporting the company, no matter whatever direction they take.
Thus why is that from the day that he opened his first modest corner shop in HaShikma Streetin 1976 Rami Levy has followed a very simple path- to give the customer what they want and at the best price, with no frills attached and a personal touch that has remained as strong today.