The Price is Right

Retailing pioneer Glenn Kaya leveled the economic and social playing fields by lowering prices

January, 2007

It is hard to imagine, especially in the age of WalMart and the Internet, but, once upon a time, deep discounts on merchandise were not only rare in the Island retailing world, but also illegal. For 30 years, from 1937 to 1967, Island retailers enjoyed the protection of the Hawaii Free Trade Act, which was designed to shield large manufacturers and small businesses from the volatile and fragile marketplace. Basically, the Depression-era laws fixed prices, giving distributors the primary authority over how much retailers could charge their customers.

In 1957, this comfortable status quo was permanently disrupted when an energetic GEM Discount department store assistant manager—in Kaya’s words, “filled with piss and vinegar”—burst upon Hawaii’s unsuspecting retail world. For the then 30-year-old Glenn Kaya, a World War II veteran, the freedom to offer and purchase merchandise at deep discounts was not only a financial victory for consumers, but a social and political one as well.

“Many of the business policies [in the 1950s] were a carryover from the plantation days,” says Kaya, now 79 years old and a shopping center owner. “It was the way things were done and people accepted it. Frigidaire was a subsidy of Hawaiian Electric, and, if you wanted something from General Electric, you had to deal with Amfac, which also owned Liberty House.”

For 10 years, Kaya, who rose quickly up the Kansas City-based discount retailer’s corporate ladder, fought the law and, for 10 years, the law won. Kaya went to court. He went to the state Legislature and, of course, he went directly to the people. Slowly, the landscape changed, one discount at a time.

In April 1967, Gov. John Burns signed a bill rescinding the Hawaii Fair Trade Act. After signing the document, he told an aide to send the pen to Kaya, who was then heading GEM’s regional office in San Francisco. “He deserves this,” said Burns.

Hawaii’s shopping world and economic landscape haven’t been the same since.

Although he was a man on a mission, Kaya was actually an accidental retailer. After three and a half years at the University of Michigan on the G.I. Bill, Kaya returned to Hawaii in 1950, thinking more about politics than competitive pricing. Hawaii was a land in transition, with many young lions, most of them World War II veterans, returning from Mainland universities intent on breaking down the Islands’ plantation-era institutions and mindsets.

Kaya had grown up in Wahiawa and had experienced the plantation’s social and economic inequities first hand. At 15, after a hard day’s work in the punishing summer heat of a Central Oahu pineapple field, Kaya made a vow to himself that he (or anyone else) should have more opportunities than fieldwork. The memory of heat waves rising above the Wahiawa horizon kept him focused on his studies while at the University of Michigan. When he returned to the Islands, a job offer for a position as an office boy at a Big Five firm ignited the political fire in his belly.

“That [job offer] really rubbed me the wrong way. I got cocky and told the interviewer that I didn’t go to college to become an office boy,” says Kaya. “Needless to say, I didn’t get a job there. I was motivated by my plantation background, and when you’re young you have a lot of Man of La Mancha in you.”

Kaya began socializing and then working with modern Democratic Party founding fathers such as Daniel Inouye, Spark Matsunaga and Matsuo Takabuki. As the “gofer” to these emerging political stars, Kaya realized that economic and sociological acceptance would only come after educational equality and political power were achieved. But, in reality, the young firebrand’s path would be quite different.

He got his first retailing job through a political connection after Takabuki, an attorney, asked Kaya, who had a degree in economics, to help turn around Fuji Furniture Store, a struggling family business. After doing that in three years, Kaya met an executive from a brand-new Mainland discount retailer named GEM. The executive, a fellow University of Michigan alumnus, was looking for a furniture concessionaire for his store. It quickly became apparent that Fuji Furniture didn’t have the capital to work with GEM, but the executive liked Kaya’s credentials.

Kaya joined GEM as an assistant manager in 1957 and helped open the chain’s first store, located on Dillingham Boulevard. In its first year, the store grossed $5 million, a princely sum at the time. After only a year and a half with the company, Kaya was named general manager of the Dillingham store and was put in charge of opening a second location on Ward Avenue.

Kaya wasted no time in his quest to offer Hawaii consumers rock-bottom prices, changing local business practices as well as a few company policies. Since local appliance distributors wouldn’t sell to him, Kaya went directly to the Mainland manufacturers and eventually sold the goods at 15 percent to 20 percent less than the mandated price. After a year of booming sales and continual calls from Kaya, the distributors finally relented and started to sell him appliances.

He busted liquor and pharmaceutical prices the same way—a move that would send one of his employees to jail. “I told my vice president, Howard Rushton, that we were going to test this law and bust the price. I said he’d probably be going to jail, but I’d have an attorney waiting for him,” says Kaya. “Howard was a Mormon. He said he was OK with being arrested, but he wasn’t so sure about his mother.”

Kaya eventually opened five GEM stores, which grossed sales of more than $100 million. In 1968, he moved to San Francisco, where he managed Hawaii’s five stores as well as five more throughout the West. Eight years later, he was offered GEM’s top spot, but, because it would necessitate a move to Kansas City, Kaya declined and moved back to Honolulu.

The ever-changing retailing world would catch up with the once-upstart discount chain. GEM, which relied on its suppliers to control its inventory, was no match for mega-retailers such as WalMart, Target and Costco. GEM declared bankruptcy in 1974. Meanwhile, Kaya had become a director and eventually the head of McInerny’s, the upscale kamaaina department store that was his one-time nemesis. Because GEM’s Hawaii stores were still doing booming business, Kaya was able to persuade McInerny’s new owners, the Japanese retailing giant, Seibu Department Stores, to purchase GEM, too. Kaya ran both retail chains, one high-end and the other a discount house, from 1979 to 1993, when Seibu decided to close down its retail operations in Hawaii.

Today, Kaya owns and manages three shopping centers, two on Oahu and one on Guam, with a couple of different partners. At 79 years young, he has no plans on retiring. His office, just across the City Square Shopping Center, is a stone’s throw away from the site of his first GEM store.

Kaya still has some strong opinions about retailing, but he has no desire to jump back into the fray. “Retailing is a thriving business, but the department store is dead. They can’t control costs,” says Kaya. “Too many retailers forget that low pricing is your image. It has always been about price. It will always be about price.”

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