Hawaii retailers more cautious
A survey finds that more people expect a downturn in business
Hawaii retailers aren't as optimistic as they were a year ago, but still remain hopeful for the industry after two years of growth.
In a semiannual Business Banking Council survey, only 15 percent of local merchants are "very optimistic" for 2006 compared with 52 percent at the beginning of 2005.
Still, following a record year in tourism that saw 7.4 million visitors flock to the state, 58 percent of retailers are "somewhat optimistic," 40 percentage points above where they were a year ago.
"More people say in the next couple of years they see kind of a downturn," said Barbara Ankersmit, president of QMark Research & Polling, which conducted the study for sponsor American Savings Bank. "They're kind of thinking it can't go on as good as it has forever, so they're being cautious. I don't think they saw as much growth as they hoped this Christmas season."
The survey, based on 454 random interviews conducted from Jan. 10 to Feb. 3, was presented at the council's luncheon yesterday at Maui Divers' Jewelry Design Center in Honolulu.
The latest survey found that merchants who rely on nonresident shoppers reported that 37.9 percent of their customer mix consisted of eastbound visitors, indicating increased spending from the Japanese. That's up 13 percentage points from a year ago, and the highest percentage since the question was asked three years ago.
The optimism index, which reflects a business' general outlook for the economic future of the state, had a 131 reading, down seven percentage points from a year ago. The index, however, was up from 129 in the last survey during the second quarter of 2005.
The performance index, which measures changes in employment, gross revenues and profit before taxes in 2005, was 123, up two percentage points a year earlier.
"When the (overall) performance index is up and the optimism index is down, it shows me that people are doing good now but are a little worried about the future and sensing it will go down," Ankersmit said.
While most businesses and particularly retailers may be lowering their sights, panelists at yesterday's retail industry forum bucked the survey results, saying they see an even brighter future for their own operations.
Savina Wendin, vice president of retail sales for Maui Divers Jewelry, said the chain of 54 outlets is expected to grow by about 10 this year, with another 100 employees to be added to its work force of 370. She said Maui Divers is experiencing the same employee shortage as other Hawaii businesses and is pursuing all avenues to find more help.
"We're extremely optimistic," she said. "We're not pessimistic in any way. We feel the market will continue to grow and we're planning more expansions and seeing an increase in sales."
Russell Watanabe, president of Watanabe Floral Inc., said he's also optimistic and for the first two months of this year has seen an increase in total revenue, as well as a 6 percent increase in the average store purchase.
Even small-business owners, such as Renee Chun of dog boutique Bark Avenue at Koko Marina Center in Hawaii Kai, said she expects better times from her two-person operation.
"I'm optimistic because the amount that Americans spend on their pets is still increasing," she said.
Carol Pregill, executive director of Retail Merchants of Hawaii, said she doesn't think businesses fully grasp how much the increase in the state general excise tax on Jan. 1, 2007, will affect them and consumers. While the GET will remain the same on the neighbor islands, it will increase to 4.71 percent from 4.16 percent on Oahu to pay for the mass transit system that Mayor Mufi Hannemann is pursuing.
About two-thirds of the businesses said they would not be affected because the cost would be passed on to customers while 25 percent said it would decrease total sales volume.
"It's got to have an effect when things cost more," Pregill said. "This tax will be on every single thing a business buys because businesses are also consumers."