Israeli products occupy Manhattan 20Aug13 August 20, 2013

Haaretz    -    19 August 2013

1678492271NEW YORK — With a recitation of the blessing for affixing a mezuzah, and the Michal Negrin case in her signature romantic, crystal-blinged style holding the ritual scroll affixed to the door jamb, the Israeli designer’s Soho store was officially open for business.

The tiny store, which opened August 12, is chock-full of Negrin’s products: rings, earrings, necklaces, wrist-watches, objets including hamsas and crosses on the walls, trinkets like key rings and decorative boxes, all of them festooned with crystals and Victorian cabbage roses. A large chandelier, priced at $16,000, hangs from the store’s high ceiling and is ringed by tiny dangling crystals and small flowers fashioned from more colored crystals.

The first Michal Negrin shop in New York City, on one of Soho’s most trafficked blocks, is the latest of a panoply of Israeli companies that have opened up retail outlets here: Next door is Israeli soap and body-products purveyor Sabon, which has 11 stores in New York City and opened its first U.S. store a decade ago. The Michal Negrin boutique is also just down the block from Israeli-owned Café Bari, and a couple of blocks away from Aroma Espresso Bar, which has four cafes in Manhattan and six more in other heavily Jewish parts of the country. But this part of Soho — call it Nachalat Binyamin West — may have the densest concentration of Israeli retail outlets anywhere in the U.S.

Israeli products are increasingly found in the most prosaic American retail establishments. Sodastream seltzer makers are sold in Wal-Mart, Costco and Bed, Bath & Beyond, big-box stores ubiquitous along the sides of American highways. Ahava body creams and beauty products are also sold by Bed, Bath & Beyond, as well as Macy’s and Lord & Taylor department stores, along with the Ulta and Ricky’s beauty supply stores and many dozens of independent pharmacies, even in Arkansas and North Dakota.

Despite the efforts of BDS groups to generate boycotts of products manufactured beyond the Green Line, even Israeli companies that do some of their manufacturing there are finding retail success.

And the Israeliness of many of the products, like Sodastream, is not an overt part of their identity here.

Sodastream, which began selling its seltzer makers in the U.S. in 2002, has more penetration in consumer markets here than any other Israeli product, according to Joseph Altobello, a consumer and household products analyst at Oppenheimer & Co., a U.S.-based investment bank with an office in Tel Aviv.

“Sodastream is the only Israeli name that I would know of” among Israeli products sold in the U.S., Altobello said in an interview. The “Israeli label is neutral. The vast majority of people would view it neither good nor bad. Products succeed on their merits. There are some groups that have issues, but overall, I’ve never had anyone say I’m not buying a Sodastream because it’s an Israeli company. Ever. Where a product is made matters far less than ‘does it make sense for me in my life at this price point?’“

While Sodastream is widely available, it has only found moderate success at this point, he said. “Their advertising is ubiquitous but the machine only has about one percent household penetration. The U.S. is the largest beverage market in the world, so one percent is not so bad. If you look at other mature markets in Europe, and in Australia, you’re looking at household penetration for Sodastream north of three and sometimes north of five percent. They would hope that the U.S. becomes a mature market like they are.”

Rosebud was the first Israeli products-focused store in Soho. It opened a decade ago, several blocks from where the Michal Negrin store is now located, to huge press coverage. Its owner, Fern Penn, is an unabashed champion of Israeli fashion and opened up her boutique to bring it to the sophisticated Soho shopper. But it closed this summer, a victim of rising rents in the neighborhood, and became a “boutique within a boutique” on the Upper East Side where a friend of Penn’s gave her space in an upscale Dutch designer-focused store.

Asked if the “Made in Israel” focus was a positive or negative for shoppers, Penn said, “honestly, it was never controversial and people are amazed how good the fashion is from Israel. Nobody has any idea that there is a fashion industry in Israel. Now people from all over the world now are wearing Israeli-made products because of what we’ve done.”

Penn said that in her decade in Soho she had 7,000 customers, including Whoopi Goldberg. “Many, many of them are repeat customers from all around the world. From Asia, South Africa, even the Arab countries, from Saudi Arabia, Dubai and Qatar,” she said. Did they know they were buying Israeli-designed and manufactured products? “They didn’t ask and we just didn’t get into it. I laughed my sides off after they left, but they loved the clothes.”

Negrin, who designs all of her products and has a staff of 200 produce them in Bat Yam, was in town for her Soho store opening, which is her second standalone in the U.S. The first opened in a mall in Paramus, N.J., in June.

She has 25 stores in Israel and 65 worldwide, she said in an interview at the Soho shop. The first opened in Paris two decades ago and the next will open in Sydney at the end of August. “I feel really blessed we can create the world that we like,” she told Haaretz. “Our slogan is ‘live the fantasy,’ and we live the fantasy every day.”

A group of five investors headed by attorney Oren Heiman owns the pair of U.S. stores and plans to open 22 more around the country at a rate of two each year. The investors, who have anted up $12 million in total, plan to open their next stores in 2014 at JFK airport and at the mall slated for the World Trade Center site.

“Israeli designers have a lot to say in the U.S. market and we’re hoping that this will be proof that it is a viable business,” said Heiman, managing director of Shiboleth, a firm based in Tel Aviv which he describes as the largest Israeli law firm in North America. “We’re hoping that many Israeli fashion and jewelry designers will follow suit.”

Anat Frumkes and Ilana Cassouto-Hadar, a pair of Israeli mothers shopping with their 12-year-old daughters, chatted in Hebrew as they waited to cross Broadway at the corner of Spring Street, just down the block from the new Michal Negrin store.

The two friends visiting from the town of Nirit said that they aren’t fans of Negrin’s style and had not seen the store, but that they hope Negrin succeeds here.

“She was the first” Israeli jewelry designer to develop a following outside of Israel, said Frumkes, the CEO of Israeli investment bank Migdal Capital Markets, in Tel Aviv. “She was a pioneer. And we like successful women.”

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