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Blog / Feb. 06

Cuban Snapshot: A Vacation in Paradise (with Shopping on Hold)

Doug Campbell

When Barack Obama initiated a thaw in relations with Cuba in 2014, aimed at easing travel restrictions for certain categories of Americans, restoring diplomatic relations and working toward a rollback of the economic embargo, people and businesses across the US had reason to consider the opportunities that might follow over time. After more than 50 years of isolation, could the island have a future as an open destination for American tourists and a new market for US and international retailers?

I had that question in mind when, as Canadians, my girlfriend and I visited Cuba on a recent vacation. Based on part of what we saw, the potential for that future clearly exists. The State-owned, foreign-run resorts of Varadero, on the northwest coast of the island, are not much different from all-inclusives found throughout the Caribbean. Exquisite beaches, beautiful accommodations and “whatever-you-want” service allowed us to relax in the lap of luxury.

In Havana, a city of more than two million people, upmarket hotels book at $500 a night and offer the quality and amenities to justify the price. Along the capital’s colorful Obispo street, a bustling destination alive with vibrant Cuban music and irresistible Latin beats, we saw shops, bars and restaurants restored to their once-and-former glory—and to thoroughly modern standards. And our tour guide, Jorge, who lined up work and drivers on his cell phone from the passenger seat of his classic ’56 Chev, reflected the kind of ambition that always drives growth.

Everybody Knows a Guy…

But this view is tempered by the reality that most Cubans live with day-to-day, and by the persistent limitations imposed by the socialist regime. The State continues to run and/or control retailing and most other businesses, except for the smallest personal enterprises selling only domestic goods. Store shelves routinely reveal shortages of products we would consider to be basic necessities.

While opportunities for private investment in real estate and some tourist-related enterprises have expanded in recent years, most of them are well beyond the reach of average Cubans, who earn less than $25 per month. And heavy taxation—which supports free, high quality education and health care with more doctors per capita than almost any country in the world—makes it difficult for an individual to really get ahead.

As a result, a thriving black market helps almost everyone get by. Goods in high demand are “diverted” from the official supply chain or acquired unconventionally from overseas. In addition to being offered the island’s famous cigars at deep discounts from “alternative” dealers, we saw cars being filled with diesel from back-yard “stations”—60-gallon containers discretely hidden in sheds—as well as locals wearing branded clothing and accessories that would generally not be available in local stores.

While expressing genuine pride in his country, Jorge acknowledged these facts of life: “Welcome to the real Cuba,” he said. “Everybody knows a guy who knows a guy.”

Unrealized Potential

Official options may be limited, but economic and consumer aspirations don’t seem to be in short supply. Will major American and Canadian retailers eventually be able to meet them? Time will tell.

Current regulations don’t permit private foreign retailing, and current levels of local income would not easily support it. Without a fundamental shift in political values and structures, whereby enough of the economy is opened to spur domestic growth and many more Cubans are allowed to participate in it, neither JCPenny nor WalMart will be locating in Havana anytime soon.

In the meantime, an opportunity to visit Cuba should not be passed up. It isn’t yet a shopper’s paradise, but the climate, beaches, architecture, music, culture and people will reward you in other ways, and they will undoubtedly deliver a wealth of experiences you won’t soon forget.

For more on the future of retailing in Cuba, see Cuba Rising, from the October 2016 issue of Stores magazine, and Understanding the Evolving Cuban Consumer, from Boston Consulting Group.