As throngs of tourists have returned to Hawaii and hotel, restaurant and bar workers have been brought to the front row for COVID-19 vaccinations, Tina Yamaki, President of Retail Merchants of Hawaii, heard a common question from some retailers, mainly… serve tourists.
“Some of our members asked, ‘What about us?'” Yamaki said.
Though the state has still officially prioritized hotel, restaurant and bar workers, Yamaki’s lobbying last week managed to gain access to just one of Oahu‘s vaccination centers for retail workers: a location at Leeward Community College.
In a way, this story is emblematic of the situation Hawaii‘s retail businesses are facing. While hotels and restaurants have been badly hit during the COVID-19 crisis, retail businesses have also been hit hard.
The good news is that tourists are coming back, which is potentially good for business at places like the Ala Moana Center, the state’s flagship mall and a visitor beehive.
The bad news is that retailers still face major challenges: in some ways as much if not more than hotels, and Hawaii’s nascent economic recovery is leaving many of them out.
UHERO: 10,000 retail jobs will be lost in 2020
While the COVID-19 crisis has wreaked havoc across the US economy, in some ways Hawaii has been hardest hit. In January, the state’s unemployment rate was the highest in the country at around 9%.
Meanwhile, while hotels and restaurants have suffered huge job losses, so has the retail sector. The state had 10,000 fewer retail jobs at the end of 2020 than in 2019, the University of Hawaii economic research organization reported in its 2021 economic forecast released earlier this month.
The forecast notes that Oahu’s retail market lost 107,586 square feet of occupancy in 2020, according to Colliers International. And even big names have been hit. UHERO notes that the Ala Moana Center has lost brands like Banana Republic, Ann Taylor, Williams Sonoma, and Forever 21.
Alexander & Baldwin, which owns much of the commercial real estate in Kailua’s main shopping district known as Kailua Town, has also taken a hit. In its 2020 annual report to shareholders, issued in February, A&B reported that 199 of its commercial property or CRE tenants requested rent deferrals and 107 other lease modifications in 2020, with some tenants receiving both. The value of all of this was $12.3 million. The company reported an additional $19 million in lost revenue due to bad tenant bills.
As of February, the landlord has yet to collect all of the rent from the final quarter of 2020, A&B said, although no tenant has thrown in the towel and closed.
“As of February 12, 2021, all of the Company’s properties in its CRE portfolio will remain open and essentially all of its existing tenants will remain open and operational in some capacity,” the company reported. “In addition, to this date, tenants of the CRE portfolio have paid approximately 84% of their fourth-quarter bills and 84% of their January 2021 lease bills (including base rent and tenant repayments).”
An additional challenge, particularly for Oahu retailers, is that international travel to Hawaii, particularly from Japan, is virtually non-existent. While Waikiki hotels may be filling up, they’re not filled with the well-heeled Japanese travelers who love to shop.
“It’s a very mixed retail experience; You can only see it from foot traffic,” said Sumner La Croix, professor emeritus of economics at the University of Hawaii. “Some stores are doing well, others are not.”
One store that did reasonably well, at least in terms of footfall, on a recent afternoon was David Yurman’s high-end jewelry boutique at the Ala Moana Center.
Cory Quon, the store manager, said he’s glad tourists have returned to Hawaii. He just found out about Yamaki’s vaccination program, he said, noting that under COVID-19 guidelines it’s impossible to stay 6 feet from a customer while working at a counter stocked with expensive jewelry.
“I always thought it was something they would initiate right away,” Quon said.
Even as retailers supplying tourists are struggling, there has been a ray of hope for others: support from residents who see the value of supporting local businesses during the crisis.
Shie Clark, owner of We Are Iconic boutique in Ward Village, said she’s had support from her local customers and, like many other businesses, has been able to quickly grow her online sales, which are up 170% to rotate and expand.
“It was good to have so much support on the ground,” Clark said.
Ward Village President Doug Johnstone said Clark was just one example of a retail tenant that has adapted by expanding online, making creative use of available outdoor space and taking other steps to manage the crisis. Howard Hughes Corp., which owns Ward Village, has attempted to work individually with tenants to work out solutions to financial problems, he said.
“A lot of credit is deserved for how retail companies have adjusted and recalibrated what they do,” he said.
Clark’s Ward Village neighbor, Aly Ishikuni-Sasaki, owner of MORI by Art + Flea, has also struggled through the pandemic.
In fact, business has been so good that Ishikuni-Sasaki has opened Bā’s bookshop in Chinatown, which will eventually include an attached bar and cafe.
“People probably think we’re crazy for doing this,” she said. “But you can’t just sit around and wait for a miracle to happen.”
“Hawaii’s Economy in Transitionis supported by a grant from Hawaii Community Foundation as part of the CHANGE Framework project.
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