US (HAWAII). Business confidence in Hawaii is at its highest for seven years as retailers broaden their target market.
A Hawaiian retailer of fashion, jewellery and gifts, Hilo Hattie, is being held up as a successful example of how to go for a mixed customer base of locals and tourist visitors. The company which has six stores on the Hawaiian islands (in Kauai, Honolulu, two in Maui and two on Big Island) and five on the mainland US had sales in the “tens of millions” last year with rapid growth.
Other major shopping locations such as the Royal Hawaiian Shopping Center – a monolithic cement fort in Hawaii’s busiest resort area – are also enjoying a recovery. During much of the 1990s, many local residents never once set foot in the centre. Those who did often received second-rate treatment from salespeople, who preferred the big commissions they earned from Japanese shoppers. A few shops catering to locals survived on the upper level, but recently there have been the first big-scale new openings such as a branch of the restaurant chain the Cheesecake Factory.
Survey results by the Business Banking Council revealed that local business optimism is at its highest in seven years, with local spending expected to rise. Of the retail businesses participating, 37% said their customer base is a mix of locals and visitors, 53% said their base is entirely local and 11% cater exclusively to visitors.
Randy Yeager, president of Retail Strategies, the company which leases the Royal Hawaiian Shopping Center said: “There seems to be optimism on both the local and visitor fronts and that would seem to favour all businesses, most strongly those that can cross over into both sectors.”
Customers are also spending more per head, according to the Business Banking Council study. More than half of the businesses surveyed said the average amount a customer spent over the last year increased from the previous year, while only 4% said it had decreased.
Hilo Hattie president Paul deVille attributes his success to a new strategy of going after a mixed customer base, a direction it took more than three years ago and continues to expand on.
“It has been successful for us,” deVille said in an interview for Pacific Business News. “It’s been a good move and it certainly has impacted positively on our sales and profitability. It’s really been an incremental business. ” He said Hilo Hattie’s key to local appeal is its delivery of high-quality fashion at a good value, with a large selection. The company changed its priorities after seeing the impact of visitor fluctuations due to unpredictable events like September 11 2001.
Despite the climb of the Yen against the Dollar in 2003 and into this year, Hawaii’s most profitable tourism market stubbornly refuses to return to past form. Hawaii felt its fair share of the continued decline in the Japanese traveller market, which dropped a further -19.2% last year. Today Japanese visitor numbers are still a whopping -32% less than the 1997 peak of 2.2 million. Although that tally may show a slight rebound in 2004, with JTB predicting a rebound in families and middle-aged and elderly travellers to Hawaii.
“If you walk down Kalakaua now you will see more sunglass shops, Tommy Bahamas, things that are appealing to both US and Japanese travellers, as opposed to a time when there was nothing but Louis Vuitton and Prada,” the director of Hawaii operations for Starwood Hotels and Resorts Keith Vieira said recently.
But for now Japanese visitors are still the biggest spenders in the islands on a per visitor basis. “We aren’t going to abandon the Japanese market, but we have to shore up the US group market. I think it will take longer than people think to come back to 2000 levels,” said Vieira.