Navarro embarks on multifaceted growth strategy

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MEDLEY, Fla. — Navarro Discount Pharmacy has made a habit of thinking outside the small box.

While it has just 29 drug stores, and they’re all in one county, the retailer has of late ventured into e-commerce, a mobile pharmacy app and creation of the first bilingual Hispanic private label, all the while beginning a dramatic expansion. That effort entails the addition of 22 stores in the next three to five years.

The first of those units — and the company’s first new store in three years — premiered this summer in North Miami.

“We are focused on growth,” says newly named chief executive officer Juan Ortiz. “Cash flow is good, and we’re exceeding our financial targets.”

The latest store presents a new prototype including a distinctive sign package, color palate, enhanced merchandising plan, unique services, a pediatric window, fragrance counter, cell phone kiosk and photo department. The merchandising caters to the specific product needs of the community, notes Ortiz, while emphasizing value pricing and product assortment, staples of the company’s strategy.

He adds that hitting the goal of 50 stores will depend on the economy, and that Navarro has the flexibility to change with the times. “If nothing else, we’re very good at adjusting to circumstances. The focus is to continue to grow. The appetite certainly is there from the ownership group and from the management team. Having said that, the caveat is that we’re watching the local economy and keeping our ear to the ground.”

The company is even setting its sights beyond southeastern Florida, perhaps with an entry into Orlando, or out of the state.

“This is the goal,” Ortiz comments. “We have already expanded with our e-commerce capabilities and our wholesale division, which allow us to reach customers beyond our traditional brick-and-mortar operation.” The e-commerce initiative offers a unique product assortment that, for the most part, is unavailable at stores in the user’s local market, he notes.

And new additions on navarro.com will include products in the Vida Mia private label line, which Ortiz says will be the first bilingual Hispanic brand offering assortment and quality across all categories.

“We saw an opportunity to extend our offering and use the valuable suggestions that our very own customers provided,” he relates.

He says the retailer weathered the recession with the backing of its ownership group, headed by majority owner MBF Healthcare Partners, a private equity group that bought control of the company in 2007.

Ortiz, who had been the chain’s chief financial officer before being named to the top spot last month, started with the company in August 2008, and the economy went into a tailspin the following month.

“September is when the world went to hell,” he says. “It’s been an interesting ride. The first 18 months of my tenure were very challenging.”

The chain had just integrated 11 units acquired from Sedano’s Pharmacy, and the downturn forced a quick adjustment to a rapidly deteriorating economy that hit South Florida especially hard. Ortiz spent a lot of time restructuring the business and oversaw the closure of four stores.

From the beginning Ortiz emphasized the importance of the company’s relationships with its suppliers, especially during challenging times. The backing of the company’s supply chain “is key to our success,” he notes. “I make it a point to keep them up on our progress.”

After a year and a half sales started coming back up and margins began moving in the right direction. Ortiz, in the meantime, kept the expense line under control, positioning the company for growth through its current wide-ranging initiatives.

Navarro’s diversification under MBF is exemplified by the chain’s ownership of Magellan Distribution Solutions LLC, which supplies other retailers and exporters.

“As part of our growth strategy and due to the volume of business we do, we are able to extend our business operations above and beyond our core group of retail stores,” Ortiz remarks.


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