Don't worry ... A Brazilian pediatrician turns into a toy king--despite himself.(Retailing)(Rihappy)

Thinking about a career change to try your luck in business, even though you have no corporate background? If so, you may want to consider the experience of Ricardo Sayon. The Brazilian pediatrician had a hell of a bumpy ride but, with a little bit of hick and perseverance, he has made it big in the toy business.

In 1990 Sayon quit his practice to take over the management of a handful of money-losing toy stores that his wife had launched as a pastime two years earlier. She had jokingly named the first store Rihappy, as in "Happy Ricardo."

Today, Rihappy is among the top toy retailers in Brazil, with more than 70 stores and 1,100 employees. According to the national toy manufacturers association, Abrinq, Rihappy has close to an 8% share of the US$327 million wholesale toy market. Sayon and several leading manufacturers say his market share is double that when taking into account toys that are imported or made by companies that are not members of Abriq.

What is most notable about Sayon's success story is that he neither had a clue about running a toy retailer nor any interest in doing so. Indeed, when they opened the first store in 1988, the couple looked for suppliers in the phone book and accidentally called a competing retailer. "This is the stupidest loss-making business I've ever seen," Sayon recalls saying in 1990 after Rihappy was hit by an economic downturn.

Faced with bankruptcy, Sayon tried to give the stores away but found no taker. When he went to personally return some merchandise, one of his top suppliers. Estrela, offered him a deal. Eager to have strong retailers, the toy manufacturer would give him advice and supply him toys at a discount, improving Rihappy's margins.

There was one condition: Sayon would have to open three stores per year at a location chosen by Estrela. Uncertain, Sayon decided to give it a try for six months. "We had no idea what we were getting into," he says.

Yet that was the Beginning of the turnaround for Rihappy Previously Sayon placed stores where his friends, family or patients happened to have property. Now they were being strategically placed according to commercial feasibility studies and potential consumer demand. Staffers were trained and the stores got facelifts. Many now include miniature playgrounds where kids can test the toys,

Sayon began studying business models for toy stores in Brazil and abroad. The result for Rihappy was a mix between U.S. chains Toys "R" Us and the now-bankrupt Fan Schwartz, that is, Rihappy would be a discount store With an emphasis on customer service.

"The store needs to be a world of dreams," says Sayon." I need to attract not only parents but kids as well." According to Sayon, there are two types of customers: Buyers that seek the toys their kids want and simply search for the cheapest, and buyers that want to choose the right toy and need advice in doing so. Rihappy targets the latter, while offering them a good price. In November of 2003, Sayon launched a pilot project in partnership with U.S. toy manufacturers Mattel and Fisher-Price, placing trained consultants in six Rihappy stores to advise shoppers on the benefits of and recommended age for each toy

Cheap imports. The plan worked. "He has competitive prices and good service. Customers, particularly here in Brazil, like that additional attention," says Jose Luiz Jesmar, president of supplier Jesmar Brazil. "I think his business model has a future."

When it comes to restricting what kinds of toys he sells, Sayon has a hands-off approach. For example, while he personally would ban guns in public, Sayon believes playing with toy guns as child could help teach adults to use them properly "As a former pediatrician, I learned that it's not up to me to judge what toys parents should buy for their kids. So, the company doesn't take a position on controversial [toys]."

Not everyone in the industry likes Sayon. Some domestic manufacturers, those who helped Sayon's chain grow by giving him favorable financial terms in paying for their supplies, are disappointed that nearly half of the toys he now sells are cheaper imports. Tariffs that protected Brazil's toy industry began falling in 1991 and opened the door to cheap imports front China. "Unfair competition from China is a big problem for us," says Synesio Batista da Costa, president of Abrinq.

Sayon thinks there is market potential for 229 Rihappy stores in Brazil. In order to grow, he is thinking about professionalizing top management. Along with new faces, there is likely to be new money as well, he says. "Opening to outside capital will become inevitable at some point," Sayon says.

Even so, Sayon longs for his previous profession. "Even today I think I made a mistake," he says. "I wish we hadn't opened that first store."

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