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Big Box Stores

Just What Shoppers Want or Just Plain Evil?

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Maui County Council has considered an ordinance similar to the Kauai ban. Riki Hokama, then serving as Maui Council's chair, says he introduced the legislation at the request of constituents. The proposal would forbid stores of greater than 90,000 square feet of retail space if they either stocked more than 25,000 different products or devoted more than 20,000 square feet to groceries. That's language similar to other anti-big box proposals in Hawaii and on the Mainland.

While the issue remains alive, it is not at the top of the Council's agenda now, Hokama says, in part because of the weak economy.

"With the bad economy right now, everybody is looking for a bargain," Hokama says. "I hope we will still see value and support our local businesses, but people have to make tough choices."

A group called Save Maui Now is circulating a petition that says, "These stores are an economic disaster most places, but in a place like Maui, they are especially destructive to the economy, environment, infrastructure, and island way of life that makes Maui the paradise it is."

Hokama understands the dilemma of saving money vs. buying local. After all, he explains, he favors Maui-brand Roselani ice cream, but often picks it up at his local Big Box.

The Iwilei area of Honolulu, once solely an industrial and warehousing district, is now home to the largest concentration of adjacent big-box stores in Hawaii. It's also home to a series of small businesses – almost all of them restaurants and fast-food outlets – that feed off the traffic that big boxes attract.

Survivors and Feeders

While big-box stores have killed some local competitors, others have survived.

Locally owned City Mill and Hardware Hawaii stores, for instance, have held their own despite mega-competitors such as Lowe's and Home Depot.

Big boxes also sometimes act as magnets for small retailers who cluster around the mega-stores and feed off the traffic they generate. An entire retail neighborhood grew up around Costco after it opened in Salt Lake (now the site of a Target store). The same thing happened when Costco moved to Iwilei, where the satellites include Hawaiian Furniture and Lamp Co. and the fast-food restaurants Max's of Manila, Quiznos Sub and L&L Hawaiian Barbecue.

"It's a symbiotic relationship," says Mike Manning, who has been with Costco for 19 years and was eating lunch at L&L recently. "L&L shops at Costco, so it works for everybody. Small mom-and-pop markets do the vast majority of their shopping at Costco, so it seems to benefit everyone in the community."


     Drawing shows the planned Target store in Kailua.
    Illustration: Courtesy of Target

Targeted Suburb

Old-timers in Kailua still call it Holiday Mart. But the all-in-one department/grocery store with its eccentric mix of Japanese, Hawaiian and standard merchandise, most recently called Don Quijote, is no more.

The Japanese owners sold out to Mainland giant Target, which intends to open a 130,000-square-foot store – somewhat smaller than other Targets in the Islands – by the summer of 2012.

The prospect delights many residents and riles others, who fear their once-sleepy beachside community is about to be further upsized and over-retailed out of its identity.

"What Target is doing, with the complicity of (landowner) Kaneohe Ranch, is planning a store that is much larger than what the community itself needs," says Mollie Foti, a longtime resident and a leader of the Keep It Kailua group.

Various planning initiatives, including a sustainable communities plan for Windward Oahu (though never formally adopted by the City Council) designated Kailua as a residential, small-scale community. That plan, and a follow-on plan sponsored by Kaneohe Ranch, specifically rejected big boxes, Foti says.

"But Kaneohe Ranch turned around and spit on their own plan," she said.

All of this frustrates Mitch D'Olier, CEO of Kaneohe Ranch. "I understand the concerns," D'Olier says, "but this will not be much different from (Don Quijote)."

The Don Quijote outlet was a chain department store with a 90,000-square-foot footprint and outside ownership, in this case from Japan, D'Olier notes. The owners were uninterested in extending their lease or buying the land, and the run-down property has had few improvements in recent years. It is time for a change, he says.

Target promises to pump $40 million into its store, including at least $1 million in traffic improvements to Hahani Street. Hundreds of trees will be planted, the parking lot rebuilt with a permeable membrane that will allow groundwater to recirculate, and the architectural design will focus on Kailua's identity.

In addition, Target has already given money to many causes in the local community, including a recent grant of about $200,000 to help build a new library at Blanche Pope Elementary School in Waimanalo.

In contrast, D'Olier says, the owners of Don Quijote gave virtually nothing back to the community.

What about Target's impact on surrounding smaller retailers?

"Target will be a better neighbor for small business than someone like Costco," he says. "It will cause more cross-shopping. They are as much like a Macy's or Sears as they are like the big-box guys. For businesses in Kailua, it is way better to have Target in Kailua than far away."

But Foti and other critics say their concern is not specifically about protecting small local businesses. Rather, it is in keeping the personality of Kailua as a residential community. Target and stores like it will draw traffic from throughout the Windward side, putting more congestion into an already congested town.

"With a store that large, it has to draw traffic from Kaneohe, Waimanalo and Hawaii Kai," Foti says. "Our streets are impossible already. They are trying to put a size-11 foot into a size-9 shoe."

Sarah Bakken, the Arizona-based manager of communications for Target, says her company has gone out of its way to respond to community concerns. That's one reason the company downsized the Kailua store from original plans. She also says much of the additional space will go toward enclosing a loading dock as a consideration to neighboring apartments.

Bakken acknowledges Target's target audience goes beyond Kailua. "We are looking at surrounding communities to support our store." But Don Quijote did precisely the same thing, she says.

"It's the same market."

Drawing shows the planned Target store in Kailua.


What is a "BIG BOX?"

Big boxes are generally considered to be large, industrial-style buildings or stores of 20,000 square feet to 200,000 square feet.

Within that definition, the state Department of Business, Economic Development and Tourism offers at least four categories:

Category killers: specialty stores offering a variety of goods in a particular category, such as Sports Authority, Office Depot or Toys 'R' Us.

Discount department stores: stores such as Walmart that offer a wide variety of merchandise at low prices and operate at a high sales volume.

Outlet stores: where manufacturers and department stores offer discounted items, such as at Oahu's Waikele Premium Outlets.

Warehouse clubs: Membership operations such as Costco and Sam's Club, which offer a wide variety of discounted items.

There are other retailers that are technically not big boxes but still dominate their markets. These include chains such as McDonald's or 7-Eleven, in which the large number of individual stores make up for the small size of each.

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

May 3, 2011 03:21 pm
 Posted by  konaken

Hawaii stores, could, if they wanted to, fight back. Many Big Island big box stores sell more local produce than the big Hawaii owned groceries! It would be nice to buy local from local but if I can't i'm gonna buy local being sold by a mainland big box.. Its not price, its just that they sell it and others dont.

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