As throngs of tourists have returned to Hawaii and hotel, restaurant and bar workers were ushered to the front of the line for COVID-19 vaccinations, Tina Yamaki, president of Retail Merchants of Hawaii, heard a common question from some retailers who primarily serve tourists.
“Some of our members were like, ‘What about us?’” Yamaki said.
In the end, even though the state still officially has made hotel, restaurant and bar workers a priority, Yamaki, through her lobbying efforts, managed last week to get access to just one of Oahu’s vaccination centers for retail workers: a site at Leeward Community College.
That story is in some ways emblematic of the situation facing Hawaii’s retail trade businesses. While hotels and restaurants have taken a beating during the COVID-19 crisis, retail businesses have also been hit hard.
The good news is tourists are coming back, which is potentially good for shops in places like Ala Moana Center, the state’s flagship shopping mall and a hive for visitors.
The bad news is that retailers still face steep challenges: as much if not more than hotels in some ways, and Hawaii’s nascent economic recovery is leaving many of them out.
While the COVID-19 crisis has hurt the entire U.S. economy, by some measures Hawaii has been the hardest hit. As of January, the state’s unemployment rate was the nation’s highest, at around 9%.
Meanwhile, while hotels and restaurants have suffered enormous job losses, so have retailers. The state had 10,000 fewer retail trade jobs at the end of 2020 than it had in 2019, the University of Hawaii Economic Research Organization reported in its economic forecast for 2021, published earlier this month.
The forecast notes that, according to Colliers International, Oahu’s retail market lost 107,586 square feet of occupancy during 2020. And even big names have taken a hit. Ala Moana Center, UHERO notes, 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, also has taken a hit. In its annual report to shareholders for 2020, issued in February, A&B reported that 199 of its commercial real estate, or CRE tenants sought rent deferrals in 2020, and 107 sought other lease modifications, with some tenants getting both. The value of all this was $12.3 million. The company reported another $19 million in lost revenue due to uncollectible tenant billings.
As of February, the landlord still hadn’t collected all rents from the last quarter of 2020, A&B said, although no tenants had thrown in the towel and closed.
“As of February 12, 2021, all of the Company’s properties within its CRE portfolio remain open and substantially all of its existing tenants remain open and operating in some capacity,” the company reported. “Further, as of this date, the CRE portfolio tenants have paid approximately 84% of their fourth quarter billings and 84% of their January 2021 lease billings (which includes base rents and recoveries from tenants).”
Adding to the challenge, particularly for Oahu retailers, is that international travel to Hawaii, namely from Japan, is virtually nonexistent. So while hotels might be filling up in Waikiki, they’re not filled with the monied Japanese travelers who like to shop.
“It’s a very uneven experience in retail; you can just see from the foot traffic,” said Sumner La Croix, a University of Hawaii professor emeritus of economics. “Some stores are doing well, and others aren’t.”
One store doing reasonably well on a recent afternoon, at least in terms of foot traffic, was the high-end David Yurman jewelry boutique in Ala Moana Center.
Cory Quon, the store manager, said he was happy that tourists have come back to Hawaii. He had just gotten word about Yamaki’s vaccination program, he said, noting that it’s impossible to stay 6 feet away from a customer, per COVID-19 guidelines, while working at a counter showing expensive jewelry.
“I always thought it was something they would initiate right away,” Quon said.
Even as retailers who cater to tourists struggle, there’s been one bright spot for others: the support of residents who see the value of supporting local businesses during the crisis.
Shie Clark, owner of the 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 pivot and expand her online sales, which have increased 170%.
“It’s been good to have so much local support,” Clark said.
Doug Johnstone, president of Ward Village, said Clark is just one example of a retail tenant who has adapted by expanding online, using available outdoor space creatively and taken other steps to work through the crisis. Howard Hughes Corp., which owns Ward Village, has tried to work individually with tenants to work out solutions to financial problems, he said.
“A lot of credit goes to how the retail operators have adapted and recalibrated what they do,” he said.
Clark’s Ward Village neighbor, Aly Ishikuni-Sasaki, owner of MORI by Art + Flea, has also made her way through the pandemic.
In fact, business has been good enough that Ishikuni-Sasaki has opened Bās Bookshop in Chinatown, which eventually will include an attached bar and a cafe.
“People probably think we’re insane for doing this,” she said. “But you can’t just sit around waiting for a miracle to happen.”
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