The implications of CVS Caremark’s acquisition of Navarro Discount Pharmacy are larger than indicated by the relatively small size of the deal.  

The implications of CVS Caremark’s acquisition of Navarro Discount Pharmacy are larger than indicated by the relatively small size of the deal.  

With more than 7,600 drug stores, CVS Caremark is already the second-biggest pharmacy operator in the United States, as well as the No. 2 provider of specialty medications. With that kind of scale, the addition of 33 outlets in Florida and Navarro Health Services would not, at first glance, seem to rise to the level of a major event.

The deal does, however, have the potential to make a difference on both the tactical and strategic levels. Navarro’s $340 million-plus in annual sales will go a long way toward enabling CVS Caremark to close the gap with Walgreens in the battle for supremacy among retail pharmacy operators in the Miami/Fort Lauderdale/Pompano Beach region, where prior to the transaction the market leader held a 10 percentage point lead.

More important, the acquisition of Navarro will strengthen the company’s position in the Hispanic marketplace as a whole. Founded by immigrants, Navarro, now the largest Hispanic-owned drug chain in the United States, traces it origins back to Cuba, where Jose Navarro Sr. opened his first drug store in 1940. Since moving the business to this country following the Cuban Revolution, Navarro has developed considerable expertise in meeting the needs of Hispanic shoppers.

That knowledge is particularly important in Florida, whose 4.4 million Latinos comprise almost 20% of the population, and other states where Hispanics already account for a double-digit share of residents — California, Texas, New York and Illinois. Understanding how to connect with members of that demographic group will be vital for retailers in the future. The Census Bureau projects the population of 53 million Latinos now living in the United States will grow to 128.8 million by 2060.

Navarro, which in an unusual decision for CVS Caremark will continue to operate under its current banner, gives its new owner a leg up on the competition with its insights on the Hispanic consumer and such programs as the Vida Mia private label line. The acquisition also dovetails with CVS Caremark’s expansion in South America, where 17 months ago it purchased the Drogaria Onofre chain in Brazil.

Taken together, those moves show the extent of CVS Caremark’s commitment to serving the burgeoning Hispanic population.