Sounding Board: Cuban import makes good

Fidel Castro forced the successful Navarro drug chain out of Cuba, and it has become South Florida’s benefit. It is not your typical rags-to-riches story. Then again, Navarro’s is not your typical chain. However, this 32-store discount druggist in South Florida with over $350 million in sales, is becoming serious competition for both supermarket and drug retailers and could, under the right circumstances, be the first nationwide Hispanic chain. Not bad for stores that average 20,000 square feet. I might be getting a little ahead of myself since the narrow world of drug or pharmacy retailing is not my usual beat. In fact, my thinking has been somewhat parochial, believing that the entire industry consisted Walgreens, CVS and Rite Aid. Everyone else simply did not make a difference—which is what some said about independent grocers a few years ago. Walgreens and CVS are usually the most watched. Their propensity for adding grocery to the mix and rethinking the entire drug store experience has been discussed ad nauseum. I had heard about Navarro’s Discount Drug stores for many years but did not know much about them until I spoke recently with Albert Garcia who heads up its pharmacy operations. This is clearly a story worth telling and a valuable lesson for chains and independents on how to compete in a world of giants by becoming a community store and helping customers navigate the increasingly complex and frustrating healthcare universe. Jose Navarro opened his first store in Havana, Cuba in 1940. It became so successful that he opened a second one. Both quickly became a part of everyday life on the island and a healthcare destination for a population that did not have broad access to doctors or the money to pay for them. Enter Fidel Castro. By 1961 “The Beard” confiscated private businesses and the family left for the U.S. where they opened a small store in Miami’s Little Havana, again becoming an integral part of the Cuban community. By 2007, Navarro’s had 20 stores and was itching to expand. However, capital was scarce and the company did not want to overextend itself. So a majority interest was sold to private equity firm MBF Healthcare Partners. This not only enabled Navarro’s to expand its store base, but also operate a 300,000-square-foot distribution center in Medley, Fla. that stocks some 300,000 SKUs of national brands and private label products. The main appeal of Navarro’s is that the stores remain essentially unchanged and appeal to a growing Anglo customer base that come to Navarro’s for specialty grocery items they cannot find anywhere else and an assortment of upscale fragrances that rivals many department stores. Then, there is the company’s extensive Vita Mia private label, with over 1,000 SKUs in everything from food to sexual wellness items. A major wholesaler is considering taking on Vita Mia for its independents, according to Garcia, a significant move given the rapid increase in the Hispanic population in so many areas. “Part of our success is also the ability to target different groups,” says Garcia. ”When we go into a community with a lot of Columbians and Venezuelans, we make sure we have the products they want. We know which Hispanic groups like to use Colgate versus Crest and what soft drinks they like.” In healthcare, Navarro’s already has the 14th largest prescription business in the country, a Health Services Division that operates two “closed-door” specialty pharmacies to manage “high-touch” diseases like hemophilia and HIV and a fulfillment center that synchronizes multiple medications for 3,000 patients so they do not run out in the middle of the month. The chain is also managing all Medicare patients in the state of Florida for Florida Blue Cross/Blue Shield. But this may only be the beginning since Navarro’s is licensed in 30 other states and plans to be in all 50 this year. The fact is that the company has other ambitions and, when pressed, Garcia believes that Navarro’s business model is strong enough to eventually go national. For now it is exploring additional opportunities in Florida and nearby states so as not to over-invest in transportation, marketing and operations. However, groups in Texas, California, the Northeast and other areas, have made serious overtures, trying to get Navarro to open in their markets. The only question is when and where. So, all of you who are planning to be around in a few years—stay tuned!