Ariel Koenig and Avi Horowitz, former managers of the toy chain Hyper-Toy, have set up a new toy warehouse chain called Toys-Market. Toys-Market will try to grab market share from the existing toy chains: Toys-R-Us and Hyper-Toy. It will also try to compete with the small chains and neighborhood stores. The manager are specific in declaring that they are targeting "the price oriented market, and not those looking for entertainment".
In the first stage, the new chain will operate in the ultra-orthodox sector. From there they will target other areas, setting up 400 sq. m stores aimed at lower and medium income classes. The first store will open in Bnai Brak.
Toys-Market general manager Avi Horowitz said that the store will offer a mix of products similar to the other toy chains, but prices will be 15-20% cheaper. According to him, this is possible because of smaller margins and lower operating expenses. The products will be supplied by local suppliers. Some items will be imported directly from the Far East at the beginning, and from Europe, mainly Spain, at a later stage.
$4.5 million will be invested in the new chain. The chain plans on opening 15 branches nationwide; all will be owned by the company.
Why did you choose to target the ultra-orthodox market first?
Horowitz: "I don’t believe that it is possible to ignore half a million ultra-orthodox Jews who live in the country. The ultra-orthodox cannot shop at the secular shopping malls because those malls violate the Jewish Sabbath [the stores are open on Saturday, ed.] and prices are high. When a father takes his son to those stores, he is exposed to computer games and other things problematic to the ultra-orthodox. Advertising will be local, since stores of this size will not attract buyers living an hour away".
Koenig and Horowitz set up the Hyper-Toy chain in 1991. After 3 years, Mitzpe Kinneret of the Dovrat-Shrem group became partners. One year later, Eliezer Fishman became a partner. In August 1996, Fishman bought out the two partners, and after two months, bought out Mitzpe Kinneret, becoming sole owner of Hyper-Toy. Horowitz told "Globes" that there is no provision in the agreement with Fishman forbidding him from setting up a competing toy-store chain.
Hyper-Toy confirmed these developments. However, it does not see the need for Toys-Market. Hyper-Toy general manager Ofer Gensher said: "I believe that the toy market in Israel is not large enough to justify competing sub-chains. Maybe a specific neighborhood can justify it, but the Haredi sector does not justify it. I don’t understand their thinking".
"I don’t see that prices can be 20% lower on the same range of products since our prices are low enough. I believe lower prices will come at the expense of product quality. In terms of mass-marketing, there will be a regression back to south Tel Aviv. I believe that they will hide behind several brands priced at cost, and will try to generate profits elsewhere. After we have exhausted the potential for our current type of store in Israel, we will examine the potential for sub-chains in more specific sectors".
Eliezer Fishman is an owner of "Globes".