Hawaii’s retail landscape has been filling out lately, and that’s not an observation based merely on a glance at the Black Friday and holiday shopping crowds.
Like everywhere else, conventional stores vie with online shopping sites for customer attention, but there are some hopeful signs of fuel for continued growth in brick-and-mortar retail. Some of it’s already coming into view. Ka Makana Alii, the new mall in Kapolei, opened in time for the high shopping season.
There are the new arrivals to the redeveloping Kakaako, the high-end shops in Waikiki catering to the tourists, and what seems to be the final buildout of Hawaii’s pre-eminent Ala Moana Center.
But in this atmosphere of cautious optimism, the caution may be the most critical element. Green shoots of expansion can wither if conditions aren’t right, so many retailers are watching with interest but not jumping in yet.
Can the public sector help private business succeed? Only in a limited sense, the experts affirm.
Of course, there are physical enhancements government can provide as a support to business growth, such as improved infrastructure. And the planning going into transit-oriented development along the Honolulu rail alignment — a primary nexus for this potential — includes some of that.
On the whole, though, the proper goal of elected leaders and the agencies they direct is still to add as few burdens as possible. Pono Chong, who formerly held one of those political posts as a member of the state House, now serves as vice president of business advocacy for the Chamber of Commerce of Hawaii.
“For most of our members, it’s to minimize regulation and its effect on investment and let the market decide what is successful,” Chong said. “Reduce costs — and let market forces sort out the right mix of businesses to meet the demand.”
There has been pent-up demand, even this long after the Great Recession. Projects such as Ka Makana Alii stalled for more than a decade, due to the deep-freeze on financing caused by the economic downturn, and land use hurdles.
Some data show a continuing shortage of retail space, with rising business rents as a result. JLL Research, part of the real estate services firm Jones Lang LaSalle IP Inc., issued a report for the third quarter of this year.
That report notes that construction of retail space in Hawaii is still constrained, compared to primary and secondary markets elsewhere in the country. This keeps rents up for landlords, of course, but it also suggests there’s still room for growth.
The question is: Can the Hawaii market sustain that growth? Chong said his association members are taking a wait-and-see approach; some stakeholders already like the consumer interest they see.
Rich Hartline, vice president of development for DeBartolo Development in Hawaii, builders of the new Kapolei mall, said expansion plans for the center will hinge on how fast the community grows alongside it.
Like every other developer in this sector, this one has observed the changing customer preferences since the advent of online shopping. Many shopping centers find they need to become centers offering food, entertainment and diversions, too, Hartline said.
The brick-and-mortar store, in order to make it worth a shopper’s while to contend with traffic and parking, has to offer attentive service to compete with the convenience of the online emporium. And often both forms can work in tandem.
“One can’t survive without the other,” he said. “Everybody’s realizing it. People want to buy something online sometimes, but then if it’s not working they want to go to the brick-and-mortar to exchange it or get something else.”
To be sure, their success is not guaranteed. There are many demands on the Hawaii resident’s purse, even in periods when unemployment is low and people do have greater financial security.
The state Department of Business, Economic Development and Tourism issued a Honolulu consumer spending report earlier this year which underscored a well-known fact of life in the islands: Honolulu consumers spend a greater share of their money — 71.8 percent — on the basics of housing, food and transportation.
Hawaii residents are enthusiastic shoppers — there are retailers who move here and find their top-selling store is the Hawaii outlet. Still, they have to be selective about how they spend their dollars.
Creating a successful retail environment can yield vibrant social centers for the community, as well as employment opportunities. And for those planning the future urban environment, encouraging the conditions for that to flourish, along a new transit line or wherever people naturally gather, should be the objective.
