Upping the Kamaaina Rate
How Hilo Hattie transformed from a tourist-only shop into the
To get a sense of how Island retailer and manufacturer Hilo Hattie has changed over its 40-year history, Hawaii Business didn't need to look any farther than its own archives. In a 1975 issue, the magazine featured Hilo Hattie founder Jim Romig. At the time, locals regarded the company, known mainly for its kitschy aloha wear, as "just for tourists." The 1975 story noted: "While Romig looks ahead to the day when his wares might be purchased in volume by local residents, the main goal for the time being … is giving the tourists what they want."
In recent years, Hilo Hattie has waged a campaign to wipe out that perception. And the results are measurable. While Mainland visitors still constitute the bulk of Hilo Hattie's business - between 80 percent and 85 percent - its kamaaina market has doubled in the past two years. "Now, kamaaina make up 10 percent of our business," says Paul deVille, president and chief executive officer. "It's a relatively small percentage, but the sheer fact that it's doubled in two years shows there's a real focus."
The reason for the retailer's growing local popularity is its handling of market segmentation, deVille says. Somewhere along the way, Hilo Hattie recognized that residents and visitors usually don't have the same clothing tastes. Likewise for seniors and teens. That forced the company to figure out how to please almost everyone: four different lines for four different markets.
Explains deVille: "There's Island Traditions, where we've developed a lot of the subtle prints you'd see on Bishop Street. The Luau Lifestyle is what we're best known for - loud, colorful prints. Two-and-a-half years ago, we started our Contemporary Aloha Lifestyle, silks that are higher end. … Our fourth lifestyle is brand new, Surf's Up. It's going after the youthful market with branded goods, such as Quiksilver."
But Hilo Hattie has expanded much more than its product lines over the past four decades. The company began in 1963 as a small Kauai store between Lihue and Kapaa. Today, there are eight locations throughout Hawaii and six on the Mainland - California, Nevada, Florida, Arizona and, believe it or not, Tennessee. In 1996, Hilo Hattie launched its online store, which, last year, racked up about 23,000 sales transactions.
Earlier this year, Hilo Hattie signed on with online selling giant Amazon.com. Under the agreement, Amazon began featuring Hilo Hattie products in its virtual marketplace - a move that should further extend the Island company's marketing reach.
Hilo Hattie is a 20-year veteran of Hawaii Business' Top 250 list, so the retailer has seen its share of ups and downs. This past year happened to be one of the latter. The company earned $64.1 million in gross sales, down from $73.2 million the year prior. The 12.4 percent sales drop reflects the general weakness in the visitor economy, deVille says.
That doesn't faze Jim Romig, who now serves as Hilo Hattie's chairman. "The first 40 years were great, and the next 40 will be even more exciting," Romig says. "I never dreamed we'd be where we are now. We've already laid the groundwork to establish ourselves as 'the store of Hawaii,' and we plan on being around a long time."
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