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Rolling with the Punches

City Mill is no stranger to overcoming hardship. It's been doing it for decades

In 1900, eight months after City Mill (then a lumber-importing and rice-milling business) was founded, the Department of Health ordered a fire to control the infectious bubonic plague in downtown Honolulu. The fire spread and destroyed the new, uninsured City Mill building - and the $60,000 in capital that founder Chung Kun Ai, a 34-year-old Chinese immigrant, had invested went up in flames. Chung Kun bounced back quickly from the disaster, talking investors into reinvesting so he could get the business back up, but it was only the first of many crises City Mill would encounter over the course of its 104 years in business.

FAMILY TIES: Steven Ai and sister, Carol Ai May, prepare to battle the big-boxers. Photo: Olivier Koning

Its earliest hardships included the financial panic of 1907, yet another building fire in 1919 (fortunately, this time it was insured), and the Great Depression. By the 1940s, City Mill, although the largest rice-milling business in Hawaii, was still struggling to find its identity. The company abandoned the rice mill to focus on selling construction material to the armed forces, and by the end of World War II, City Mill had emerged as one of the largest suppliers of building materials in the Pacific. Then in the mid-'50s, Chung Kun's son, David Ai, who had taken over the company, shifted focus yet again, venturing out of wholesaling and into retailing.

"A lot of people made fun of him. They'd say, 'You're going to sell one piece of lumber at a time, when you could be selling a whole load? Are you crazy?' But that's how City Mill has overcome many obstacles - by changing to meet the needs of the market," says Carol Ai May, vice president and marketing manager of City Mill Co. Ltd. and granddaughter of Chung Kun Ai. "That was true in my grandfather's day, and it's still true today."

City Mill founder Chung Kun, son David, and grandson Steven round out three generations of Ais. Courtesy: City Mill Co. Ltd.

Even with a 6.7 percent increase in gross annual sales last year, which thrust the company up 15 spots, to No. 126 on this year's Top 250 list, Carol says she and her brother, Steven, City Mill president and chief executive officer, are constantly tweaking their business approach to adapt to changing market conditions. Nowadays, City Mill's biggest challenge is avoiding being eaten alive by the big boxers. To counter the invasion of the brand-name mega-chains, Carol and Steven have made several big changes since taking over in 1992. They've implemented a competitive pricing campaign, called "Priced Right Everyday." They honed customer service, increased inventory by 20,000 items, and opened three new retail stores, for a total of eight locations across Oahu. In comparison, Home Depot and Lowe's have just two stores each on Oahu.

"Now that the big guys are here, we've got to offer something that they can't," says Carol. "In this case, it's convenience. People won't drive if they don't have to, and for people who aren't doing major renovations - the people who need to fix a leaky faucet or pick up a part - hopefully those people are visiting their friendly neighborhood City Mill."

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