Sunday, November 14, 2004

Sadie Gouveia was tickled when Ernest Stevens of Jamba Juice, gave her a sample of its smoothies during grand-opening ceremonies last month. Jamba Juice and other retailers say they've been disappointed by foot traffic since the Wal-Mart and Sam's Club complex opened.

Not-so-super block

A month after Wal-Mart Stores
Inc. opened its Hawaii superstore,
results are falling short

One of Wal-Mart Stores Inc.'s key points in promoting its controversial Keeaumoku Street superstore was that nearby merchants would enjoy spillover business.

But some businesses in the area -- including those on Wal-Mart's very doorstep -- say they are still waiting for that super dividend to materialize.

"We thought it would bring in more business but it hasn't really helped us," said Sara Jang, owner of Parasol, which serves coffee, shave ice and other refreshments directly across the street from the two-story retail building.

It's only been one month since the complex's Oct. 14 opening, and the Christmas shopping season is yet to begin, but many of the merchants in the area lament that the store so far has brought more action to the streets, but not necessarily to their cash registers.

That includes some of the businesses directly in the double-decker store's shadow.

Wal-Mart is charging premium rents for the six retail slots on its Keeaumoku frontage known as the Shops at Keeaumoku, and Wal-Mart received interest from more than 50 companies vying for them. But business so far has not met expectations, according to managers of most of the establishments.

"We're not really getting the overflow (business) we expected," said Kyle Zakahi, manager of the Jamba Juice outlet, whose comments echoed those of several of the merchants.

Part of the problem is the shops' location, they say. The entrances to the first-floor Wal-Mart store and the Sam's Club membership warehouse upstairs open directly onto the complex's massive parking structure. But the Shops at Keeaumoku are around the corner and largely cut off from that customer flow.

Moreover, they say there is a lack of signs alerting shoppers to their presence and that after shopping, Wal-Mart customers are prevented from wheeling their carts around the corner by electronic sensors that cause the carts' wheels to lock up.

"We'd like to see more of the flow from out of the store; not just from the store to the parking lot," said Nick Augusta, manager of the site's Starbuck's outlet.

Wal-Mart store manager Walter Lott said he's never heard any of the complaints and would address them if he did. He also points out that the shopping cart restrictions are designed to meet community concerns by keeping them on the premises and out of the surrounding neighborhood.

"We want everyone to be happy. If (the tenants) need something, we'll try to give it to them," he said.

But even business inside the superstore hasn't quite lived up to expectations. Though Wal-Mart is still in hiring mode, needing 75 more workers, according to spokeswoman Cynthia Lin, Sam's Club announced on Thursday that it was laying off about 90 of its employees.

Sam's Club spokeswoman Jolanda Stewart said Friday those workers were not needed because business at the site, perched three parking levels above the street, "was not as good as we thought" it would be.

"We at Sam's Club have veterans in place, club managers, directors of operations, and others; based on their expertise, we're not seeing what we felt would happen," she said.

With a few exceptions, the feeling is mutual across the street, where some businesses, far from getting a boost, are hurting.

Pak Jong, who owns the Ichiban Restaurant on Rycroft Street, is one of a handful merchants in the area who said yesterday they are either selling their businesses or considering doing so, caught between dwindling business and the higher rents commanded in the area since the superstore's plans were first announced.

Pak says she'll have sold her restaurant by the end of the month after watching her core customer base -- workers from the nearby HMSA Building -- lured to the superstore on their lunch break, she says.

"Before, was always busy. But not now," she says, gesturing at a largely empty restaurant at lunchtime.

Retail analyst Stephany Sofos said she was surprised that the past month hasn't been more productive for more businesses, but said the tectonic shifts in shopping patterns caused by a Wal-Mart's presence can be expected to cause some short-term disruption, though businesses will benefit in the long run.

"This is a whole new style of shopping that has come into the area and it will take a little bit of time for it to stabilize," she said. "The companies that can adapt and change their product line to complement Wal-Mart's will do well. But they're going through a learning curve right now."

Businesses in the area should not expect to get a sudden and free shot in the arm, said Jay Cho, manager of the Sorabol Korean restaurant. Cho took out newspaper ads timed with the superstore's opening last month and is seeing some benefit.

Though the numbers of regular, ethnic Korean patrons is unchanged, Cho said the restaurant has seen a slight increase other customers, often with Wal-Mart bags in hand.

"We're getting a lot of calls now from people asking where to find us," he said.

He plans to advertise more during the Christmas shopping season to grab more of the Wal-Mart crowd.

Companies ultimately may have to cede some territory to Wal-Mart, while focusing on their own strengths, said Roy Fukushima, manager of Tower Records.

Fukushima expects that Wal-Mart will take some sales of more mainstream DVD and music selections, pointing to the recent release of "Shrek 2", but that Tower will cater to hard-core music lovers who come to Tower for its deeper selection.

"Aside from that, it's hard to tell what will happen. We'll have to wait and see but we're not worried," he said.



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