Friday, November 16, 2001

This is a rendering of a Nordstrom shoe store that will be built
at Ward Centre, in addition to a 150,000-square-foot full
department store to be built on VictoriaWard Ltd. property.

New battle in
isle retail

The entrance of Nordstrom steals
some Macy's thunder

By Rick Daysog

Hawaii's retail industry, long dominated by a single entrenched department store chain, is headed for a new era of competition with the entrance of two high-profile mainland retailers.

Yesterday, Seattle-based Nordstrom Inc. unveiled plans for a 150,000-square-foot department store in Kakaako, as part of landowner Victoria Ward Ltd.'s $200 million development of its existing retail properties.

The proposed department store -- Nordstrom's first in Hawaii -- was announced about a week before rival Federated Department Stores officially transforms the state's largest and oldest department store chain, Liberty House, to its Macy's brand.

For Hawaii consumers, the head-to-head competition between the two mainland chains will mean increased choice, better values and a higher attention to customer service, retail experts said.

"They'll keep each other on their toes," said Kurt Barnard, president of Upper Montclair, N.J.-based Barnard's Retail Trend Report. "The level of retailing and the level of competition will definitely go up."

Barnard said that both companies will be taking a close look at their merchandise mixes and inventories and will work hard to adapt them to local tastes.

Consumers also will see increased advertising, better product display and a heightened attention to customer needs, Barnard said.

Nordstrom, which does not plan to open its new department store until the fall of 2005, will be facing a competitor that's much bigger in Hawaii.

With its $200 million purchase of Liberty House in July, Macy's takes over a plantation-era retailer with a dozen department stores throughout Hawaii.

Several of its stores are larger than the planned Nordstrom department store while Macy's flagship Ala Moana location is about double the size of the planned Nordstrom.

"Nordstrom has to establish a particular brand identity and image in Honolulu," said Barnard. "It has to make itself stand out as the store of choice."

Carol Pregill, executive director of the 200-member Retail Merchants of Hawaii, believes the entrance of Nordstrom and Macy's will only make retailer better in Hawaii.

Although the two companies will definitely take business away from local retailers who have been hit hard by the recent economic downturn, Pregill believes their new ideas and new products will force local companies to work harder to attract shoppers.

"We've had so much bad news lately so that a new retailer coming to Hawaii is good news," Pregill said. "We like to see new retailers come to Hawaii. It makes our industry more interesting."

For landowner Victoria Ward Ltd., the proposed Nordstrom department store creates a form of critical mass to generate additional development.

During recent years, the local landowner has added a number of high-profile tenants, including a 16-screen Consolidated Theatres cinema complex, a 34,000-square-foot Nordstrom Rack off-price outlet, and Dave & Busters, an arcade-theme restaurant.

Victoria Ward has said that it plans to build an additional 400,000 square feet of retail space to complement the new department store. The company also plans to build several upscale residential high-rises on its properties.

Steve Sofos, president of Sofos Realty Corp., which works with many retailers in Hawaii, said the Nordstrom deal will help the company attract new brand-name retailers.

It also will help attract private developers of residential and office buildings once the construction market improves, he said.

"Having Nordstrom now gives them credibility as a major player on a national level," Sofos said. "Now, its easier for Victoria Ward to go out and get the Crate & Barrels, the Pottery Barns and the Best Buys."

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