Quietly, almost without our having noticed, a new group of merchants has arisen in Israel with a specific target market: immigrants from the former Soviet Union.
In recent years, grocery stores have opened for this target market, as have bookstores, shops renting Russian-dubbed videos, and even fashion boutiques geared towards this group. The signs over the stores are in Russian only, and the sales-persons are Russian speakers. Even the products are familiar, similar or identical to those found in the target market’s countries of origin.
There are an estimated 1,200 stores geared towards Russian speakers, operating in Israel today, almost half of which sell food. The main centers for the shops are the cities of Ashdod, Upper Nazareth and Rishon Lezion, although there are stores in other urban areas, such as Jerusalem.
Member of Knesset Yuri Stern is one of the immigrant entrepreneurs’ strongest supporters. In the past 6 years, he has managed a division within Israel’s Federation of the Chambers of Commerce, which deals with encouraging immigrant entrepreneurship.
Four years ago, a non-profit organization was established for the promotion of private entrepreneurship within the immigrant community. Today, after having been elected to the Knesset, Stern is now forming a lobby to advance the same cause. Stern is also waging battle against Minister of Finance Dan Meridor’s intention to change the terms for receiving aid from the Fund for Advancement of Small Businesses.
"The western world recognizes that encouraging small businesses is both positive and advantageous," says Stern. "There is an accepted practice of creating frameworks whose goal is to assist small businesses with information, services, funding and mentoring."
"In Israel, the development of small businesses was begun at the Chambers, but development over the last few years has been accelerated, and immigration from CIS has speeded that development dramatically."
Stern received a great many immigrants at his division in the Chambers of Commerce and he was able to guide and assist them. But isn’t it a problem to base so many of these retail businesses on the immigrant market?
"There’s nothing negative in a free market economy," says Stern. "So long as the entrepreneur profits, its a positive thing." The immigrant target market is not a problem, not even from a social point of view. "All the institutions told the new immigrants 'First, learn Hebrew, learn business, work for others.' But we, on the other hand, gave them the green light. It’s important to understand that this is the most important thing for the new immigrant's self-respect and absorption into Israeli society."
It turns out that the main problem for all small businesses is in marketing. Because marketing expenses are not working capital ones, the main cut planned for the Fund for Advancement of Small Businesses budget, says Stern, will significantly affect the small businesses’ ability to invest in marketing.