International Market Place is booming with business

The new upscale International Market Place opened nearly a year ago with 30 shops and restaurants in the heart of Waikiki, unrecognizable from the previously cluttered maze of kiosks selling cheap souvenirs and trinkets.

The once kitschy bazaar has since grown to 80 stores and eateries and expects another 12 to 14 tenants to open by year’s end. The 345,000-square-foot marketplace, anchored by Saks Fifth Avenue, will celebrate its first anniversary Aug. 25.

“We expect to be 85 percent occupied at year’s end,” said General Manager Michael Fenley, who didn’t disclose sales in the center’s first year of business. “What we’re seeing is steady and sustained growth. The center hasn’t stabilized; it’s still a work in progress. We’re still getting our message out to visitors and kamaaina and hotels, so people are still discovering us.”

The marketplace, with a capacity for 100 tenants, has close to 2,000 employees. That’s expected to grow to about 2,500 when it is fully leased next year.

Two stores have closed. Both were owned by bankrupt women’s fashion retailer BCBG, which is shuttering locations nationwide.

“Unfortunately, that happens from time to time in the current retail climate,” Fenley said. “It’s happening all too often. We’re not fully insulated from that.”

Another challenge the center and its merchants face is building a solid workforce. Hawaii’s unemployment rate has remained low: 2.7 percent for the fourth consecutive month in June. The local building boom has also made it difficult for merchants to build out storefronts due to high costs and a lack of skilled labor, Fenley said.

“The available labor pool is not as large as we would like, so we have to get creative. We have to be aggressive,” he said. “That’s a major challenge for every business in Hawaii, but when you’re opening a new business that needs an entire new staff, that’s even more of a challenge.”

Still, the complex has been able to attract significant foot traffic from both tourists and kamaaina, largely due to the 58,000-square­-foot Grand Lanai, which has half a dozen restaurants and two more opening in the next few months. Center executives are seeing more local shoppers than anticipated: as much as 40 percent of its customers.

“We’ve been pleasantly surprised in that kamaaina have responded very well to our offerings, largely, we believe, as a result of our restaurant offerings. We originally thought it was going to be closer to 90-10 (tourists-locals),” Fenley said. “When they come to eat for lunch, dinner or happy hour, they also tend to stay and trickle down to shopping on levels one or two.”

The $400 million, open-air center will unveil a statue of the late Hawaii entertainer Don Ho on Aug. 13 on what would have been his 87th birthday, and offers nightly hula performances as well as a weekend concert series. It also has set up areas for people to take selfies, gather and be a part of the entertainment.

“One thing retailers and developers are recognizing is that retail is very competitive and what customers want today is not just selection and merchandise, but they want an experience,” Fenley said. “I remember a time not too long ago when it was all about convenience, run in and run out. Now people want to stay and enjoy their shopping trips. They like to record and take pictures of their experiences and post it on social media.”

The center has seen a 20 percent increase in customers over the past few months, largely because of new openings such as Tesla, The Street and Burberry, Fenley said.

Jonathan Lee is director of operations for The Street, a restaurant concept set up to feel like a market with 13 different food venues, which opened in May.

“It’s been great, surprisingly,” Lee said. “International Market Place was always kind of the place you’d go shopping for goofy stuff. With the new one I thought it’d be interesting to see what happens with it. It’s been such a nice breath of fresh air. Sixty-five to 70 percent (of customers are) kamaaina. We are priced for kamaaina, and we’re doing a lot more family business than initially anticipated. We’ve done very little advertising outside of word of mouth.”