Twenty years ago, Ron and Jerry Azarkman sold watches and electronic products door to door in the city's Central American enclaves. Seated in the modest living rooms of customers, the Israeli-born brothers began an intimate study of risk and reliability.
"[Now] you call it credit. Then, it was 'Take a watch. You have $5? I'll come and pick up another $5 next Friday,"' said Ron Azarkman, chief executive of what eventually became the La Curacao department store chain.
Today, the brothers' empire has surpassed $100 million in annual revenue, employs nearly 1,000, and is poised for major expansion. A newly built store opened in South Gate last month, extending the company's reach beyond the Central American community it once exclusively targeted to millions of Mexican-born consumers. As many as eight more Los Angeles County outlets are planned for the next three years.
Stores in Pico Union and Panorama City offer everything from furniture and appliances to computers, toys, books and music. But the Azarkmans have achieved dominance with initiatives that go beyond selection to the heart of immigrant needs.
An export program enables customers to purchase merchandise for relatives in their home countries. Music, food and entertainment are staples at the stores, where kids "can jump on the beds and we will not get upset," Azarkman said. But most of all, La Curacao has won its following and much of its revenue through credit.
Throughout the years, the Azarkmans have mastered a system to assess the behavior of so-called phantoms--consumers with no credit history and no prayer of obtaining one through banks or traditional department stores. Today, the chain sells 97% of its merchandise on credit to a whopping 400,000 consumers who carry the La Curacao private-label card.
This year, the company began offering a general purpose Visa and MasterCard in collaboration with Arizona-based Direct Merchants Credit Card Bank. The cards open a world of options for La Curacao customers, only 10% of whom carried them before. The program also cements La Curacao's position as a savvy middle man for banks eager to tap immigrant spending power. Promoted so far only in stores or by word-of-mouth, the initiative has attracted 35,000 cardholders.
"The purpose is to give our consumers the fairness of access to credit cards, like anyone else," Azarkman said in the first interview he has granted about the company. "I am saying, 'Here is a credit card. You can use it anywhere in the world, and I'm going to do everything in my power to be your first choice.' "
La Curacao has its critics. A bitter labor dispute has clouded the reputation of management. Some question whether the company's interest rates are too high. And La Curacao's partner in the new card, Direct Merchants Bank, is the subject of a consumer lawsuit for unfair business practices.
One thing is certain: La Curacao has successfully tapped a massive consumer base often ignored and misunderstood by retailers. Nearly 4 million shoppers a year pass through its Pico Union outlet, and 2 million have visited the Panorama City store annually since it opened in 1995.
"La Curacao has been a tremendous concept," said Jose Legaspi, a Montebello-area commercial real estate broker and developer. "They have taken an overall department-store format, made it look like a mercado and manned it with people who understand the Latino consumer. They're able to provide what the consumer wants."
The brothers grew up in Tel Aviv, where they briefly operated a small retail store. Jerry arrived in Los Angeles in 1978 and started the door-to-door venture, West Coast Catalog. In 1980, Ron joined him, and they opened a tiny Burbank showroom. They spoke neither English nor Spanish but quickly found a loyal consumer niche.
"We figured out the Hispanic market was underdeveloped," Azarkman said. "We found it easier to tap into; it was pretty sizable and not recognized by the mainstream."
The following year, the pair moved to the heart of Pico Union, where they handed out televisions and stereos, often with no down payment and only customers' first names as collateral.
The brothers got burned from time to time, but they learned from their mistakes. They also honed their Spanish and English skills. By 1985, they launched a formal credit department. Today, 11% of revenue comes from interest generated by credit operations, Azarkman said.
The civil wars raging in Central America fed a steady stream of immigrants into Pico Union through the 1980s and early 1990s. Most had shopped in their home countries at La Curacao, a Dutch-owned chain similar to the Azarkmans'.
The brothers took the name, working out a deal with the Dutch entity. The relationship continues today. Customers make selections here, and goods are delivered to relatives from stores in Central America and Mexico. Products not carried by the local stores are shipped directly.