Hawaii retail market faced exodus, but some are optimistic
Feb. 5—Times are tough for those in retail, but some retailers are still forging ahead with the opening of new stores, with hopes of better times to come.
Major retailers have closed within the past 12 months, including Macy's at Windward Mall, Longs Drugs at Mililani Marketplace and, most recently, the Apple Store in Waikiki.
The exodus continues, with Macy's announcing another planned closure at Kukui Grove Center in Lihue, one of five it is closing nationwide this year, along with a reduction of its workforce by 3.5%.
Still, the holidays kept cash registers ringing, with more than 200 million shoppers in the U.S. spending an average of $321.41 during the five-day holiday weekend, according to the National Retail Federation.
But many consumers are still feeling cash-strapped this year, and retailers will have to work hard to adapt to changing market trends.
The cost of doing business in Hawaii, meanwhile, keeps rising, according to Tina Yamaki, president of Retail Merchants of Hawaii.
"You had an increase in minimum wage," said Yamaki, "so a lot of businesses are figuring out, 'How do I pay for this increase?' Everybody's pay goes up because you can't have someone who just started a position making more than their supervisor. You've got employment taxes. You also have health insurance for people go up."
This poses more hardship for smaller, locally owned businesses and mom-and-pop shops that don't have the deeper pockets of national retailers.
"Going around to some of the malls, you're seeing stores that have closed or are in the process of closing," said Yamaki, who calls them quiet closures. "They were open one day and are closed the next. There's no going-out-of-business sale."
The Colliers fourth-quarter retail report for 2023 said the vacancy rate on Oahu rose to about 6% from 5.54% the same time a year ago. There was a net loss — or space vacated by retailers — of about 59,000 square feet.
Since the onset of the COVID-19 pandemic, Oahu's retail vacancy rate has fluctuated between 5.1% and 7.25%, said Colliers.
"Despite numerous challenges faced by retailers, a full retail market recovery, once deemed insurmountable, now appears achievable," said Colliers.
Colliers cited record highs in retail sales, the addition of jobs to the retail sector, and growth in visitor arrivals in 2023, saying that "optimism has reemerged in the retail marketplace."
TAKING THE RISK
Some local entrepreneurs are indeed still taking a risk — and setting up shop.
On Friday morning a line of eager customers stood outside of Crumbl Cookies' grand opening at Aina Haina Shopping Center, its second location on Oahu.
Franchisee Jesse Folsom from Oahu's North Shore brought Crumbl Cookies, a Utah-based dessert chain, to Kapolei nearly two years ago, with a good enough response to open the second shop in East Honolulu.
"When Kapolei opened, we were so excited and got so much love from that community," said Chazlynn Duran, store manager. "In Kapolei we had so many people coming from Kaneohe, Hawaii Kai side, even Laie."
So it made sense to choose a spot in East Honolulu for the second store, she said.
Crumbl Cookies is open extended hours, from 8 a.m. to 10 p.m. Mondays to Thursdays and 8 a.m. to midnight Fridays and Saturdays.
Duran said the store has hired 65 workers, mostly part time, and is looking for more to help mix the cookie dough and operate the balling station and cash registers.
Crumbl offers in-store and curbside pickup, which can be ordered via its app, for its more than 300 flavors, which are rotated weekly. A third location is in the works, she said.
FROM MAUI TO OAHU
Several retailers who lost their stores to the devastating fire in Lahaina on Aug. 8 also have opened new stores elsewhere on Maui and on Oahu.
Coco Nene, a local business owned by Kent and Lori Untermann, with its own line of home decor and gifts, lost its flagship store on Front Street in Lahaina.
But Coco Nene, which also manufactures its own products, quickly worked to open up new stores at Waikoloa Kings' Shops as well Maui Harbor Shops in Maalaea, giving displaced employees a place to work.
And on Oahu the company recently held a grand opening for its flagship store at the International Market Place in Waikiki.
The new store is in a new and larger, 3,500-square-foot space on the ground floor, after previously having been on the second floor, according to store manager Dani LaBelle.
"It's just a big difference," she said. "The holidays were great. The entire company pulled together after Lahaina, and working around the clock, we got through the holidays."
Among Coco Nene's most popular sellers are custom-made "longboard letters" that people use as displays to memorialize their visits to Hawaii.
Another store is slated to open soon in Kihei.
KaiAloha Supply, a Maui-based ocean apparel and accessories retailer, announced earlier this month plans to open two to three new stores in the next six months.
After losing two shops on Front Street, the retailer created an online collection to honor Lahaina town and opened a new store at Kihei Kalama Village on Maui.
KaiAloha also plans to open a new store soon on the third floor at Ala Moana Center.
The retailer said with more than $245,000 raised in its Maui Strong Fund, it has been able to financially assist its employees, their families, community members and nonprofits affected by the wildfires.
But this year, KaiAloha Supply is "building back better" and actively looking for opportunities to expand.
Colliers also noted that retailers such as Target, Chick-fil-A and Scratch Kitchen opened new locations, which helped maintain Oahu's retail vacancy rate.
In the first seven months of 2023, Oahu's consumer spending rebounded to a record high, according to Colliers, with the state Department of Taxation having recorded nearly $17 billion in retail spending, which surpassed 2022 levels by 5.35%.
OAHU'S RETAIL MARKET IN 2023
>> Retail vacancy rate: 6.02% (up from 5.54% a year ago)
>> Net absorption: Loss of 59,021 square feet
>> Average retail asking base rent: $4.32 per square foot per month
Source: Colliers 4th Quarter 2023 Retail Report
Retail closures (closed or closing)
>> Macy's, Windward Mall
>> Consolidated Theaters, Koko Marina Center
>> Longs Drugs, Mililani Marketplace
>> Apple store, Royal Hawaiian Center, Waikiki
>> Don Quijote, Waipahu
Source: Star-Advertiser research
