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LA CURACAO OFFERS AMERICAN RETAIL DREAM

By Molly Knight

Since 1980 La Curacao has been operating under the motto “Un Poco de Sus Pais” (A little bit of your country). But the Los Angeles-based Hispanic department store chain says what it is really giving its customers is a piece of the American dream. This is because La Curacao offers its largely Spanish-speaking immigrant clientele the chance to build a credit rating, which they will need not just for credit cards but, later on, for other privileges difficult for newcomers to obtain, such as mortgages and car loans. The company says the La Curacao card is the first American credit card eight out of 10 of its customers have ever had. And without La Curacao and others willing to extend credit to those lacking a credit history, sources say, many a dream of homeownership would remain unrealized. “They play a huge role, because they’re offering these people a chance to build credit,” said Susanna Whitmore, senior vice president of business development at New American Dimensions, a Los Angeles-based market research and consulting firm specializing in multicultural retail. (La Curacao is not a client.)

The chain’s founders, brothers Jerry and Ron Azarkman, came to the U.S. from Israel in 1977. One of them began hawking video games he had acquired from a Los Angeles wholesaler. Going door to door, the skilled horse trader worked out little financing schemes with his cash-strapped clients, such as the Salvadoran woman who paid for her game in two installments and also invited relatives over for a demonstration of additional wares.

Eventually, even some of these customers got involved as a commissioned sales force pushing not just games but also radios, stereo record players and the like. The second Azarkman joined his brother in 1980 and soon the two opened their first store on Olympic Boulevard in the Pico Union district of Los Angeles.

Business boomed until the Los Angeles riots of April 1992, when the store was destroyed. “People were driving up into the store and just loading everything into their cars because the store was at street level,” Whitmore said. “The looting was tremendous. They lost everything.”

The Azarkmans declined requests for an interview with SCT.

When the company rebuilt the West Olympic location in 1993, management went to great lengths to make sure the store would not be ransacked again. “They totally changed their model,” said Whitmore. “They raised it above street level and added parking lots with different types of gates to make it really difficult for people to get in and out quickly.”

Since then, the Azarkmans have opened five additional La Curacao stores in Southern California — in Huntington Park, Lynwood, Panorama City, San Bernadino and South Gate. The company says it plans to open about 20 more by 2010 and to expand to San Diego and San Jose, as well as to Las Vegas, to Phoenix and Tucson, Ariz., and elsewhere in the Southwest.

The 100,000-square-foot units sell mainly furniture and electronics, but the merchandise extends even to the likes of jewelry and car tires. Sources call this a particularly smart move, given that La Curacao targets customers who prefer one-stop shopping. “Their product assortment is broad and captures those categories in which Hispanic consumers have high interest,” said Terry Soto, CEO of About Marketing Solutions, a Burbank, Calif.-based consulting firm that specializes in the U.S. Hispanic market, though it has done no business with La Curacao. “La Curacao’s customers are typically recently arrived Hispanics who are comfortable shopping in an environment that is friendly and relevant to their specific needs.”

This culturally friendly environment uses Mayan and Aztec architecture for the stores, a Spanish-speaking staff, bilingual signage and live mariachi bands. The marketing scheme is singular too. “The way they advertise is totally different,” said Whitmore. “They’ll have a TV and say, ‘This is what it costs per month,’ rather than [citing] how much it costs total. That’s how they appeal to their low-income shopper.” And yet that low-income shopper may wind up paying $629 for a Phillips 20-inch LCD TV that retails for $449 at Best Buy. After these immigrants have lived in the U.S. for a while and gotten familiar with mainstream retailers, they catch on to that, says Whitmore. “Once they’ve been here for five to 10 years, they realize that at a store like La Curacao, they’re getting gouged,” she said. “They have these payments and they’re never finished.”

The company estimates that it has issued nearly 1 million credit cards, some 300,000 of which remain active. Close to 75 percent of the applicants get approved, and these cardholders account for 90 percent of the chain’s sales. Anyone 18 or over with a valid address and phone number and who can prove they earn at least $400 a month is eligible. La Curacao employs an unorthodox means of approving applicants. Because most of them have no credit history, the company conducts personal interviews to assess family connections, housing and job status and the like.

Under La Curacao’s credit program, users can draw cash on the credit card to transfer to relatives in the old country. This is particularly enticing to poor immigrants eager to make a better life for loved ones back home. But the 23.99 percent interest rate the store charges for these cash advances can create financial hardship, Whitmore says. “Relationships with credit is very different back home — it’s very short-term,” said Whitmore. “Here your credit rating is permanent. Missing a payment is not good.”

So to contends that the high rate is meant to be commensurate with the risk La Curacao assumes in offering credit to first-time cardholders. “They are not the best-priced option,” Soto said. “But the fact that they offer the items under one roof, they deliver excellent service in Spanish and they make the products accessible through accessible credit makes them an excellent choice among recently arrived Hispanics who often are not given this choice by mainstream retailers.”

Even so, says Whitmore, as immigrants get used to U.S. stores, they tend to shop elsewhere. “La Curacao’s customer-service people offer personal attention,” said Whitmore. “But Hispanic consumers feel that salespeople at Best Buy and Circuit City are more knowledgeable about electronics and other specific goods they’re looking for.”

Still, one of La Curacao’s major selling points is that it has warehouses in El Salvador, Guatemala and Mexico. Cardholders receive catalogs in the mail twice a month offering appliances and furniture they can buy for their relatives in those places.

CuraTel, the telephone carrier it created and owns, supplies local and long-distance phone service. In addition, CuraTel has joined up with Internet provider Pasito.com to offer an easy Web hookup. Whitmore says these services will appeal to the immigrants but that their children will probably go elsewhere. “If La Curacao wants to keep these customers, they’re going to have to understand that the culturization process is happening more and more quickly, and they’re going to have to respond to compete with places like Best Buy and Circuit City,” said Whitmore.

Ikea, Levitz and RadioShack are out there too, and even the department stores, of course. “Now that these places are increasing their focus on having a Spanish-speaking personnel, La Curacao is going to have difficulty luring customers that way,” said Whitmore. “Still, they fill an important niche in this market.”And for many immigrants, the store also helps bridge the gap between dream and reality.