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“Star” on the Rise

For Star Markets Ltd. Chairman and CEO John T. Fujieki Jr., there’s no business like the supermarket business

Photo: Jimmy Forrest
Even the most successful of family businesses must change with the times. That's what Star Markets Ltd. Chairman and CEO John T. Fujieki decided in 2004, his 30th year in the supermarket industry.

Faced with an uncertain economy and mounting competition from big-box chains such as Costco and Sam's Club, Fujieki pulled the trigger on an ambitious renovation - "Around $1.7 million to $2 million," he estimates - to the company's flagship Moiliili store. Besides an aesthetic facelift, the store expanded its inventory by 5,000 new items, from upscale health foods and organic produce to imported cheeses.

Fujieki's grandparents, Tsunejiro and Mika Fujieki, started a small mom-and-pop store called Kakaako Meat Market in 1929. His father, John Fujieki Sr., helped the business expand; in 1954, he opened the first Star Super Market in Moiliili. Today, there are 10 Star Market stores: six on Oahu, three on Maui and one on Kauai.

John Jr. started working at Star Markets in 1974, shortly after graduating from Chaminade University with a degree in business administration. "I started out as a meat cutter," says Fujieki, 55. "I enjoyed it. It was a great learning experience, and eventually I got to learn from all the different department supervisors. I grew up in the business, and so this was something I always wanted to do."

He assumed his current position in 2001. He currently sits on the board of directors of the Chicago-based Food Marketing Institute, which conducts research, education, industry relations and public affairs programs for its 2,300 food retailers and wholesale members worldwide.

HB: What impact do the big-box chains like Costco and Sam's Club have on Hawaii's supermarket industry? Do you see them as bigger competitors than Foodland or Times?

A: Well, they're a different type of competitor. But they have a big impact. They take volume away from everybody, across the board. And it's not just our industry, but the industries of everything that they sell. It affects volume. On top of that, the money they make doesn't stay in Hawaii. It goes back to the Mainland.

HB: Did the big-box chains play a role in your decision to renovate the Moiliili store?

A: Definitely. We had been looking at how the supermarkets in Northern California were doing things to combat a similar situation. We watched them for three, four, maybe even five years, until the time was right for us to do it. So the changes

we made to our Moiliili store are a hybrid of what's been done in Northern California, but not as upscale. The more upscale you go, the more prices would have to go up.

We tried to keep our prices as reasonable as possible for our customers.

HB: Tell us about the changes you made.

A: We added 5,000 new items. We didn't delete a bunch of things, either. We expanded our deli. We expanded our bakery. We expanded our liquor and wine section by three times its previous size. We also brought back the salad bar. We had one in the past, but the trend then was to get out of it, so everybody did. We feel the need is there again, so we came back with the salad bar and an olive bar. We also have our hot food bar for smaller families, who want the convenience of being able to pick up something and run. With so many two-income households in Hawaii, it makes things a lot easier for them.

We also added about 150 new cheese items from all around the world. There's more of a demand for cheeses than there used to be. In the past, the Asian community wasn't big on cheese. But that's changing, plus we have more of a cosmopolitan population base. More people are getting used to drinking wines and eating cheese.

HB: What's the response been like? Are you happy with the results so far?

A: The response has been very good, and we're getting a lot of positive feedback. Tentatively, I'd say our volume looks good. We're still evaluating the GP [gross profit], and from there we'll fine-tune our product mix. It's exciting. Basically, we're looking at [the Moiliili store renovation] as a prototype for our chain.

HB: Your lease for your Kahala Mall store expires in 2007, and reports have indicated that the mall is considering bringing in another food chain. Have there been any new developments?

A: Well, we're in the process of negotiating now, so I can't say much about it.

HB: What do you foresee for the local supermarket industry in the next five years?

A: I think everybody will have their own niche. As for the big-box chains, we can react faster than them. We can give better service and do a better job of listening to customers. I feel that people here want to support local businesses. We give back to the community. You don't always see that with the Mainland companies.

FAST FACTS:
According to the Food Marketing Institute, 83 percent of Americans eat home-cooked meals at home at least three times per week. The average sale per supermarket customer transaction in 2003 was $25.28. Also, consumers make an average of two trips per week to the supermarket.

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