Toys-R-Us Israel starts parallel Lego imports

The franchise says the move will cut prices by up to half.

Toys-R-Us Israel Ltd., owned by Fishman Holdings, has launched parallel imports of Lego, after the importer, Ilanit Toys Ltd., refused to lower prices for the retailer, which is seeking to lower prices for consumers.

Toys-R-Us Israel claims that importers are charging margins of hundreds of percent, resulting in an unreasonable increase in retail prices. One importer sent out a letter to scores of importers calling on them not to cooperate with Toys-R-Us Israel and even stop deliveries of toys to it.

During negotiations with Ilanit Toys in recent weeks, Toys-R-Us Israel threatened to launch parallel imports if prices were not lowered. "Importers have exclusivity on brands and they dictate the prices to consumers, hiding behind retailers, which are perceived as overpriced. For example, prices for the Lego and Playmobile brands are as much as three times as high in Israel than abroad. The Lego importer claims that there are customs duties, but Lego comes from Denmark, imports from which a free from customs," Toys-R-Us Israel CEO Iri Shahar says.

Shahar says that prices for brands that Toys-R-Us Israel imports directly are similar to prices overseas.

Toys-R-Us Israel will institute direct import of Lego gradually, beginning on Friday. As a result, the price of Lego Fire Truck will fall to NIS 130 from NIS 260. Shahar said that, within two weeks, the toy store would sell a very wide range of Lego products at lower prices.

Parallel imports of Lego are part of a wider campaign by Toys-R-Us Israel. It also wants to initiate parallel imports of a large number of other toy brands in order to lower consumer prices.

"We're initiating parallel imports because we have no choice," says Shahar. "We'd be happy to cooperate with all the toys importers in Israel if they would substantially lower prices so that every child could buy the leading brands at a fair price. Toys aren’t only for the rich."

Ilanit Toys declined to respond to the report.

Eliezer Fishman is the controlling shareholder in “Globes”.

Published by Globes [online], Israel business news - - on September 1, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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