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The Honolulu Advertiser
Posted on: Sunday, November 11, 2001

Uncertainty colors local holiday retail outlook

By Andrew Gomes
Advertiser Staff Writer

This week Terry Wong will get into the holiday spirit, as he has for more than a decade, by opening several Hickory Farms gift outlets inside Hawai'i Sears stores.

The holiday Santa is up and greeting shoppers at Ala Moana Center, but most Hawai'i retailers aren't expecting to have a very merry season for themselves.

Bruce Asato • The Honolulu Advertiser

But this year Wong, like many local retailers, knows that business is going to be anything but traditional.

National consumer-spending surveys and industry analysts predict that consumers will spend less this holiday season, although total retail spending still should grow slightly.

Luxury retailers and those relying on tourists for business will be hit hardest, while discount retailers are expected to do well. But everyone selling holiday gifts will be affected by fallen consumer confidence, rising unemployment and concern about terrorism and anthrax.

Hawai'i has been rubbed especially hard by the fallout of the Sept. 11 attacks, with the shock wave from a sharp decline in tourism causing more than 25,000 people to file for unemployment benefits in the last two months.

But the outlook for shopping in Hawai'i this holiday season — which begins next Friday and can make or break the year for some retailers — is not all doom and gloom.

Expected to help sales is what retailers believe should be an increased sentimentalism among consumers, stronger promotions by shopping centers and more residents staying on the islands for the holidays.

"I'm not predicting a bad Christmas, but relative to some recent years, it probably is not going to be as good as it otherwise might be," said Leroy Laney, a local economist with Hawaii Pacific University. "It's a pretty uncertain time."

Seasonal profits

Paul Brown Salon has a Christmas display in its shop window to attract the attention of Ward Centre browsers. Analysts are uncertain how deeply consumers will dig into their wallets and purses this year.

Deborah Booker • The Honolulu Advertiser

For many retailers, the holiday season is a critical time, accounting for as much as 20 percent to 25 percent of annual income for some. Statewide retail spending last December totaled around $1.7 billion, according to state Tax Department data.

According to a recent survey by the Consumer Federation of America and a credit union trade group, 28 percent of 1,000 respondents said they plan to spend less for the holidays, while 13 percent plan to spend more.

Mainland market research firms expect retail sales nationwide will eke out 1.5 to 2 percent growth in the fourth quarter, dominated by Christmas shopping — but well off the 3 to 8 percent growth for the quarter over the last nine years.

Laney's best guess is that Hawai'i holiday retail sales may be flat compared to last year. Local retailers expect sales to be up or down by as much as 10 percent. Some say that maintaining sales in line with last year, which overall wasn't so hot, would be a positive accomplishment.

Resort retailers are bracing for the biggest hits, as fewer tourists arriving since Sept. 11 translate to fewer sales. But even shopping centers catering mostly to residents have mixed outlooks.

Hilo's Prince Kuhio Plaza, the Big Island's largest shopping mall, is forecasting a 2 to 3 percent increase for sales this holiday season.

Maui's largest mall, Queen Ka'ahumanu Center in Kahului, is forecasting a "slight decrease" in holiday sales.

"I think given the recent events there's got to be some impact on sales, but we're hoping it won't be too much," said Scott Crockford, real property vice president for the center's general partner Maui Land & Pineapple Co.

Crockford added that seasonal retailers, including a temporary store by Hilo Hattie, have taken about as much space at the mall as they did last year — a positive indicator.

The Macy's factor

Co-owner Joe DePaolis decorates his Honolulu Chocolate Co. shop at Ward Centre. Many merchants say they think consumers' holiday mood needs more pumping up than it does most years.

Deborah Booker • The Honolulu Advertiser

Several shopping centers, including Ala Moana Center, Kahala Mall and Victoria Ward Centers, are punching up entertainment and promotions to help bring their merchants more customers.

Some mall managers said they hope excitement about Liberty House becoming Macy's on the day after Thanksgiving, the traditional start of the holiday shopping season, will help drive traffic to their malls.

Deena Nichols, Macy's vice president for Hawai'i, said the department store chain is doing better than anticipated even with the effects on sales since Sept. 11.

The company expects a good holiday season, though Nichols said it would be unfair to forecast Macy's holiday sales in contrast with past Liberty House sales, which totaled about $50 million during each of the last two Decembers.

Wong, operator of the Hickory Farms outlets, said he expects sales will be down 5 to 10 percent, compared to a 5 percent increase he was anticipating up until terrorists flew fuel-laden jetliners into the World Trade Center and the Pentagon.

Reaching out with presents

Other local retailers, however, believe the terrible attacks have led people to be more appreciative of loved ones, which will inspire more giving during the holidays.

"Everybody feels this Christmas is going to be special because of all of the emotions," said Allan Ikawa, president of Big Island Candies, a Hilo manufacturer and seller of sweets.

Ikawa said he's mailing out more catalogs in anticipation that people will be sending gifts to rela-tives they haven't seen in a long time. "I'm hoping for plus-10 (per-cent increase in sales)," he said.

Michael Cummins, co-owner of Honolulu Chocolate Co. at Ward Centre, agrees with Ikawa that the "appreciation factor" should help sales this holiday season.

"I know for myself I've done a lot more contacting old friends," he said. "I see a positiveness about people. I think people are needing to have something to look forward to."

Cummins said it seems like consumers, who often complain about the early commercial rollout of Christmas, are welcoming the change this year.

"I'm looking quite positively at it," he said, adding that in his view a positive achievement would be to equal sales of last year.

Carol Pregill, executive director of the local trade association Retail Merchants of Hawaii, has the same outlook. "I hope it will be flat with last year," she said. "That would be a really good bonus for the retail industry."

But she added: "It's almost anybody's guess. Last year we were cautiously optimistic. This year we're just cautious."

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.