Shufersal Enlists McKinsey for Efficiency Program in Bid to Save Millions

Shufersal, one of Israel's largest retail chains, has initiated a comprehensive program aimed at saving hundreds of millions of shekels annually. To spearhead this ambitious endeavor, Shufersal has engaged the expertise of McKinsey & Company, a renowned global management consulting firm.

At present, McKinsey is diligently working on a plan to enhance operational processes throughout Shufersal's marketing network. Key areas of focus include optimizing private brand expenses, procurement procedures, delivery operations, and supplier relationships. The objective is clear: achieving greater cost-effectiveness without compromising the quality of service.

It is important to note that Shufersal vehemently denies any intention of resorting to mass layoffs among its branch employees. However, industry observers cannot entirely rule out such a possibility, given that previous streamlining efforts were primarily concentrated at the company's headquarters and did not extend to its branches.

Approximately a year ago, CEO Uri Waterman, acting under the guidance of the board of directors, implemented an efficiency plan that resulted in the layoff of 120 employees at the company's Israeli headquarters, amounting to 10% of the workforce there. This initiative also encompassed the closure of unprofitable branches and the divestment of holdings in startup companies.

Despite facing challenging market conditions, Shufersal managed to post a second-quarter profit of NIS 73 million, reflecting a 7% increase compared to the same quarter in 2022—a year widely regarded as one of the company's toughest. However, Shufersal's overall revenues dipped slightly by 0.4% to NIS 3.7 billion, even though this year's figures included revenue generated from Passover preparations.

The broader food retail sector experienced a 1.6% decline in the same quarter, with total revenues reaching NIS 3.3 billion. This dip can be attributed mainly to a 2.4% decrease in same-store sales. In contrast, competitors such as Rami Levy and Tiv Taam reported increased sales during the same period.

In response to inquiries regarding the ongoing efficiency program, Shufersal issued a statement, clarifying its objectives: "As previously communicated, Shufersal periodically reviews its logistical and operational processes to enhance efficiency, ensuring it can adapt to its evolving needs. The ongoing efficiency assessment is not focused on personnel-related matters and does not encompass employee layoffs."

As Shufersal continues to explore avenues for operational improvement, the company's stakeholders and the broader retail industry will be watching closely to see how this strategic move will shape the future of one of Israel's retail giants.