ByKen Sakamoto, Star-Bulletin
Yvonne Angut shops at the Grocery Outlet in Waianae Mall
while Virginia Williams looks over the products in the store's
frozen-foods section. They say shopping there saves
enough money to go to the movies.
The 20,000-square-foot store, which will sell canned, packaged and frozen foods and some non-grocery items at 40 to 50 percent off normal retail prices, is part of the redevelopment of the GEM property into shopping and business center called City Square. The Kapalama GEM store has been closed since early 1994.
Former GEM owner Glenn Kaya, who holds the master lease and is developing the property with partners, said one of the old Kapalama buildings was torn down, a new one erected and the old main building completely refurbished. Another major tenant will be the city's driver licensing operation and a satellite city hall.
Joe North, a spokesman for the City Square leasing agent Marcus & Associates, said the main former GEM building has about 50,000 square feet of leaseable space and the new building has 9,500 square feet.
"There's also an additional 40,000-square-foot building planned," North said. That development will depend on how the leasing goes.
"We're going after a few national chains typically found in strip shopping centers," North said. He expects some local businesses to be there in support of the city's activities, including insurance and finance companies.
The first Grocery Outlet was opened in June in the Waianae Mall by Glenn S. Nakamura, a 20-year veteran of the Pay'n Save stores, now Hawaii regional representative for Berkeley, Calif.-based Canned Foods Inc., which developed the Grocery Outlet concept. CFI is the supplier of the low-priced goods to the local owners.
What makes the low prices possible is CFI's buying power, said Greg Geertsen, vice president of real estate at CFI.
Most of it is brand-name merchandise. Examples, Geertsen said, include packages that have been replaced by new ones of a different size. CFI buys all the old-size merchandise and moves it out to the retailers.
Since most grocery items these days carry sell-by dates on the package, or perhaps the date of manufacture, much of it would go to landfill unless it was snapped up by a business with the ability to move it out quickly and sell it cheap before the pull date, he said.
When Del Monte mistakenly left out the cherries when it packed fruit salad in cans with labels showing a maraschino cherry, CFI jumped in, Geertsen said.
"We put it out on the shelf labeled 'cherry not included' and sold it for half price," he said.
And CFI has been selling Hawaii-made items on the mainland, such as promotional packages of Hawaii-bottled Pepsi-Cola that were not sold by the time the event they promoted was finished. The promotional package no longer makes sense but the product is the same as any Pepsi and the price is right, Geertsen said.
CFI feeds more than 100 Grocery Outlet stores across the country.
The Waianae store has been a success both for its own business and for the community, Nakamura said. "We're the way to welfare reform," he said, noting that many of the Waianae customers are welfare recipients who get a lot for their little money.
He said the store has many regular customers who drive to Waianae from as far away as Waimanalo. "They come maybe once a month and stock up," Nakamura said.
The GEM location is central and should attract customers from all over the island, he said. The owner-operator of the Kapalama store has yet to be named. Jason Hasegawa, also a Pay'n Save veteran, is owner-operator at Waianae.
Geertsen said the Grocery Outlet stores don't advertise anywhere and depend on word-of-mouth. One reason is that it is selling brand-name merchandise, obtained at special prices, that other stores also sell. "The manufacturer doesn't want its old item positioned against a new one," Geertsen said.