DISCOUNTING: They Can Get It for You Wholesale (Almost)

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At first the Rosenbergs thought that by limiting their customers to union members, they could sell low and avoid hassles with manufacturers. But JGE's advertising has riled competitors and brought it into conflict with anachronistic Fair Trade laws, which keep prices up by authorizing manufacturers to set minimum retail costs for their products. General Electric, Sony and other major appliance makers will not deal with JGE because it sells well below the fixed price. Thus the brothers are forced to buy where they can—through cooperatives or from friendly wholesalers and distributors. "We get up a little earlier, and we find the stuff," says Charlie.

When Panasonic sued JGE for fracturing the Fair Trade laws, Jerry refused to pay a fine, salivating at the thought of how much JGE's good will and sales would be buoyed if he were dragged off to jail for cutting prices. Panasonic saw the same sort of result and let the matter drop. In a recent counterattack, Jerry hired a clutch of scantily clad models—at $25 an hour—to parade before New York's city hall chanting: "Make GE stop hurting our Jerry!"

The Rosenbergs were born on Manhattan's Lower East Side. For all their sudden wealth, they still live modestly, sharing a two-family house ten blocks from their store. Charlie, who attended City College and had ambitions to be a musician, is a gaunt, sad-faced version of his ebullient brother and is one of the shrewdest buyers in town. Jerry, who dropped out of high school at 15 after setting a school record by playing hooky 61 straight days, is the crudely charming front man. Unable to fully believe in their new-found fame and fortune, the brothers continue to worry that somehow it will all be taken away, perhaps by the Fair Trade dragon. Says sad Charlie: "We get up in the morning as if we were sitting on a bubble." Still, the brothers are not daunted. Their newest plan is a move into auto sales at big discounts. Hear that, Detroit?