Isle retail Despite hundreds of millions of dollars in new retail projects, Hawaii's retailing industry continues to face tough global economic challenges.
still facing tough
times, exec says
Former Liberty House head
believes the outlook isn't goodBy Rick Daysog
rdaysog@starbulletin.comThat's the assessment of the former head of the isles' largest department store chain.
John Monahan, who led Liberty House, believes that the sluggish U.S. economy and the continued weak Japanese economy has hurt the local retail environment -- just as it is emerging from a decade-long slump.
"We're just a cork bobbing in the middle of the ocean," Monahan. "I don't have to tell you things are tough."
Monahan, who was the guest speaker at a conference by the International Council of Shopping Centers at the Outrigger Wailea Resort yesterday, recently stepped down as Liberty House's president after Federated Department Stores Inc. acquired the 152-year-old local retailer for $200 million. Federated plans to convert Liberty House's 11 department stores into Macy's department stores.
Monahan noted that Liberty House -- which emerged from three years of bankruptcy protection earlier this year -- had been enjoying its best year in a decade before the mainland economy began to soften last year.
"I was incredulous last October when we saw signs of slowing ... and folks in the state government said it wouldn't affect us," Monahan said.
The somber outlook comes as many of isles' retailers and shopping centers are expanding. Earlier this year, DFS Hawaii opened a $65 million Galleria complex in Waikiki while the Honu Group, developer of the King Kalakaua Plaza at the ewa end of Waikiki, is in the middle of a major expansion of its retail project.
More recently, Outrigger Enterprises announced that it plans to build a $300 million retail entertainment complex at the site of several of its low-rise and mid-rise Waikiki hotels.
Monahan believes retailers who succeed in the new environment will be those who identify the lifestyles of their core customers and deliver merchandise that mirrors those lifestyles.
He noted that many mainland retailers such as The Gap, Old Navy and Banana Republic and big department stores like Saks Fifth Avenue and Nordstrom Inc. have lost touch with their core audience in recent years. As a result, they have struggled recently.
At the same time, retailers that have remained focused, such as Target Corp., have flourished.
That lesson was hard-earned at Liberty House, which came under criticism during the 1980s and early 1990s for neglecting local consumer tastes. Monahan noted that when Liberty House filed for Chapter 11 protection in 1997, company managers decided early on to refocus on the local customer.
"At Liberty House, we needed to get our heads off of 7th Avenue and onto Kapiolani Boulevard to really understand," he said.
Monahan said he expects the new management at Macy's to continue that focus on the local consumer. Macy's will do a significant amount of its buying locally, will retain most of the company's Hawaii staff and will keep all 11 department stores open.
Who would have "believed that Macy's would be operating a store in Hilo?" Monahan asked. "Jerry Garcia summed it up best: 'What a long strange trip it's been.'"