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Keep it Cheap

They started out selling milk and bread out of a truck. Who would have thought the company that sprang up from that early-morning venture would net them 140 million shekel? But Aryeh Baum has no desire to retire. Instead, he’s creating more and more stores for budget-conscious shoppers to fill up their carts and get out in a hurry.

Aryeh Baum, joint owner of the Osher Ad chain and a trailblazer in Israel’s retail supermarket industry, asks to see the list of questions. He reads rapidly: “‘What’s my background?’ Not interesting. ‘How did I go from being an avreich in Ashdod to the owner of a huge supermarket chain?’ Not interesting. ‘What did I do before that?’ Not interesting. So tell me again, why did you want to interview me?”

Baum — enthusing, evading, explaining, smoking, drinking coffee, accelerating from zero to a hundred in a fraction of a second — is the visionary half of the two-man team that changed the way chareidim (and all other budget-conscious families) shop. He praises his partner, Avrum Moishe Margulis, as the one who focuses on the day-to-day details of the business. “He’s one of those men of action who knows how to turn the wildest dreams into reality. He’s a cannonball,” Baum effuses of his partner and long-time friend.

That’s the combination that got them started one day in 1995. Baum, then a 26-year-old Gerrer kollel yungerman living in Ashdod, turned to his beis medrash colleague, 25-year-old Avrum Moishe, with an idea: “What do you say we open up a little business, selling bread and milk early in the mornings — making life easier for our neighbors and making some cash on the side?”

Baum envisioned the truck; Margulis ordered it. The next morning, Margulis rose at five to accept the order of bread and milk and the sale began.

Baum and Margulis continued to operate their joint venture, but Reb Aryeh — who easily talks about his ADHD diagnosis and how he manages it — soon realized that the technical end wasn’t his forte. When he worked the cash register, he could never remember how much milk cost or how much to charge for the bread. “Ask your mother how much milk costs,” he said to one girl. “Tell me, how much did you pay Avrum Moishe yesterday for the bread?” he tried to verify with another customer.

“Aryeh,” friends tell him, “Take a little Ritalin and you’ll settle down.” Thanks but no thanks, he says. “Why should I take it? It destroys my creativity and limits my imagination.”

He’s still not good with prices or other small, annoying details, but that hasn’t stopped him from creating a multimillion dollar business. “Even when I’m in an Osher Ad store, I’m never sure what’s a cucumber and what’s a zucchini,” he admits.

Back to the bread-and-milk sale, which soon morphed into a neighborhood mini-market, followed by a grocery in nearby Kiryat Malachi — which sucked in their investment and left the young avreichim in the red.

“When you fail, there are two options,” says Baum “The first is to throw up your hands in despair and close shop. But then you waste your ‘tuition’ –—your payment in the university of life. And so we chose the second option, to analyze and understand what had happened, why we’d gone under, and try again. We thought we’d failed because we were located in an industrial zone instead of in the city center, although today I know that that analysis was flawed. Many of our Osher Ad stores are outside residential areas and are successful. The real problem was that we didn’t understand the business. We didn’t really know what we were doing, how to look at income and expenses, how to price properly and to take into account operating expenses.”

Actually, they began to figure that out when they noticed a branch of Club Market, smack in the middle of town on prime property, limping along, always empty. “So I said to myself, If it’s not working for me and it’s not working for them, then at least let’s do it together,” Baum relates. He got into his “kollel” car and drove up to Haifa to meet with the chain’s owners — polite, well-mannered businessmen who couldn’t quite figure out how to deal with the young, imaginative Gerrer chassid who had landed upon them with some vague idea of a joint venture.

“They made it clear that they had dozens of branches around the country and they had no interest in my proposal to solve their problems in one failing branch in Kiryat Malachi. But then they remembered that they had long wanted to break into the chareidi market. They looked at me, thought it over, and then said, ‘You know, we’ve always wanted to target the chareidi population. Maybe we can do that together with you?’ ”

And so Glatt Market, a subsidiary of Club Market, was born. Baum and Margulis were the managers (they had no ownership shares), with Baum in charge of dreams and Margulis in charge of realizing them.

“And then we began to learn,” Baum recalls. “We spent hours sitting in the Club Market offices, grilling financial managers and strategists over every detail. We asked and asked. We listened. We did research. We read a lot. We received a treasure that is hard to quantify — the accumulated experience of a veteran company that we would never have gotten on our own.”

 

Excerpted from Mishpacha Magazine. To view full version, SUBSCRIBE FOR FREE or LOG IN.

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