Growing organically


POSTED: Friday, December 11, 2009

Despite tough economic times in 2009, one locally based company decided to grow in a big way.

The Islander Group of Mililani, a distributor of Hawaiian books, music and stationery, was on a fast-track growth trajectory this year, completing four acquisitions that expanded its line of products significantly.

“;The management team made the collective decision that since we didn't cause the recession, we were not going to participate in the recession,”; said Chief Executive Officer Jeff Swartz.

The top priority was to keep all of the company's employees, according to Swartz, especially since many have been with the Islander Group since its inception 17 years ago.

“;We started 2008 full of hope and optimism, but when Aloha Airlines and ATA went out of business, we started getting concerned,”; said Swartz, “;and by midsummer we knew Hawaii was in for some challenging years ahead.”;





        A brief look at The Islander Group, distributor of Hawaiian, books, music, stationery, health and beauty products, souvenirs and more:

» CEO: Jeff Swartz


» Headquarters: Mililani


» Employees: 140


» Warehouse space: 100,000 square feet


» No. of bar codes: 7,000-plus


Source: The Islander Group




So the management team revised its five-year business plan into a survival plan in September.

That meant reorganizing the sales team, adding on more responsibilities to the management team and finding ways to grow the business to compensate for losses expected this year. The goal, according to Swartz, was to increase the company's sales volume by 30 percent.

In February the company acquired B&B Distribution and its line of sun care products. In March the Islander Group purchased the assets of Anderson News, a magazine distribution company shut down by its Canadian operator.

In October the Islander Group bought Hawaiian Perfumes, further expanding its line of health and beauty products. On Dec. 1 it acquired Island Imports, which had been selling handcrafted wooden bowls, trays and salad sets since 1955.

Former owner Charlie Clowe said his father, who founded the company, was ready to retire, and it was an ideal time to sell. Clowe will stay on to lead the Island Imports division for the Islander Group.

The Islander Group was founded in 1992 as Booklines Hawaii, a book distribution company, but now offers more than 7,000 unique products.

The products are in stores all around Hawaii—from ABC Stores to Longs Drugs, Target, Kmart, Walmart, Costco, Sam's Club, Walgreens, Hilo Hattie and all major airport and hotel gift shops.

When Target opened its first stores on Oahu this year, the Islander Group not only got a new client, but an opportunity to offer its products to 400 Target stores on the mainland.

The Islander Group also distributes its products to 70 Kmarts in Southern California, as well as Kroger supermarkets on the mainland.

The company sorts and packs its products from a 50,000-square-foot warehouse in Mililani, as well as another 50,000 square feet of warehouse space on Kauai, Maui and the Big Island.

While the Islander Group is a distributor of books, music and videos, an in-house product development team creates its own line of products—from aloha-print coolers to beach towels, perfume and postcards.

One key to remaining unaffected by the economy, according to Swartz, is to grow organically without increasing debt. The company decided early on that all acquisitions would be financed in-house, without borrowing from the bank, according to Swartz.

“;We've seen too many companies borrow more money than they can pay back, and then put themselves upside down,”; said Swartz. “;While we want growth, we are not prepared to grow if it means putting our employees' jobs at risk.”;

The Islander Group also owns its real estate, including the Mililani headquarters, and its fleet of 28 delivery trucks.

It targets companies that round out its line of products. Typically, employees of the acquired company are offered a job.

With Island Imports the company grew by 25 more employees.

Swartz declined to disclose annual revenue, but says the company has never had an unprofitable year.