GEORGE F. LEE / GLEE@STARBULLETIN.COM
Shoppers browsed racks of slippers yesterday at the McInerny store at the Royal Hawaiian Shopping Center in Waikiki. The 145-year-old retailer said it will close its doors by the end of January, the victim of falling sales at its tourist-focused locations.
McInerny victim One of Hawaii's oldest retailers operating under its original name, McInerny, is closing its doors, a victim of its shift to a predominantly tourist business and intense competition from stores that sell the same merchandise to the same people.
of changing tastes
The venerable Hawaii retailer
will 'bow out gracefully'By Russ Lynch
rlynch@starbulletin.com"We expect to be out of business by the end of January next year," with the remaining 13 stores closed, said Michael Windsor, president and chief executive officer of McInerny parent InterPacific Hawaii Retail Group Ltd.
"We decided to bow out gracefully," he said.
Once a huge name in Hawaii retailing, McInerny was founded in Honolulu in 1857, by a ship's carpenter, Patrick Michael McInerny, who saw a shortage of household items and ship supplies and opened his own retail store.
Starting from a downtown Honolulu shop, McInerny grew to be a prestige retailer, selling suits to governors and dresses to senators' wives.
But it is time to close it down, Windsor said.
"Three months ago, when we announced we would close three stores, we were just looking at downsizing," to see if we could survive long-term, he said.
"We concluded we are a generic, tourist-related business with no manufacturing of our own and we have to make money at the retail end against so much more competition, and it just isn't working," Windsor said.
Having already closed its Ala Moana Center store in 1999, McInerny embarked on a new round of downsizing and in the last few months it closed the 35,000-square-foot McInerny Galleria in the Royal Hawaiian Shopping Center in Waikiki and moved some of its parts into another McInerny location, 25,000 square feet, in the same center.
It also closed tourist shops in the Kahala Mandarin Oriental and the Hilton Hawaii Village.
But it wasn't enough and there is no point in trying to hang on, Windsor said.
McInerny had sales of about $18 million last year, down 25 percent from 2000, and expects to see that drop to $15 million this year. Profit margins are so tight in its type of retailing that those numbers mean there is no future, Windsor said.
The business now has 13 stores and more than 100 employees, but all that will disappear within about six months.
In the early 1970s, a Japanese business, part of the Seibu Group, bought the McInerny assets, not the company, and set out to expand the business in visitor destinations. The Seibu subsidiary sold the stores a little more than 20 years ago to InterPacific, which already had the Andrade and Carol & Mary businesses.
"Naturally, looking at the overall retail picture and personally as a kamaaina, it's always a little disheartening when we see a name disappear that was always a part of the retail picture," said Carol Pregill, executive director of the Retail Merchants of Hawaii trade association.
"But you have to look at the big picture," and that is all about the bottom line, she said. "The total numbers are there for us, in retailing as a whole," she said, but the volume is going to the off-price discount/wholesale businesses.
Stephany Sofos, president of real estate and business consulting company S.L. Sofos & Co. Ltd., said it is hard to compete in today's economy, especially when big national retailers such as Macy's can buy the same merchandise in volumes that earn them big discounts.
A decade ago, McInerny had a "great concept" and opened brand-name stores within stores in its Waikiki complex, selling Tommy Hilfiger, Christian Dior, Bass and other brands in a boutique environment.
But the manufacturers soon learned that Hawaii is a very good market and opened their own stores and discount or off-price outlets, competing directly with the existing retailers, Sofos said.
Rodney Pontillo, managing director of the retail services group of commercial real estate firm Grubb & Ellis/CBI Inc., agreed.
The discount outlets brought new competition and McInerny "had all their eggs in one basket," retailing to tourists in resort areas, he said.
"It's sad but it was inevitable. We all could see it happening," said Pontillo, who once worked for Andrade, a retail group that became part of McInerny along with the now defunct Carol & Mary.
