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The Honolulu Advertiser

Posted on: Monday, May 31, 2004

ABC taps what tourists need

By Jaymes Song
Associated Press

Shopping bags from ABC Stores are nearly as ubiquitous in Waikiki as the stores themselves — 37 of them within a 1-mile radius.

Associated Press

Most tourists in Hawai'i want to see Kilauea volcano's spectacular flowing lava, the USS Arizona Memorial at Pearl Harbor and the miles of unspoiled beaches.

They also end up seeing plenty of ABC Stores.

With 37 convenience stores sprinkled within a 1-mile radius of Waikiki among the beachside hotels and Gucci and Prada stores, ABC Stores are tourist havens filled with everything from souvenirs to sunscreen.

"You can go in there and get sunblock, your breakfast, your Gatorade, whatever you want," said Joshua Caron of Rochester, N.Y. "I think it's cheaper than places in the hotel. Those places are crazy expensive."

There seems to be an ABC Store on every block in Hawai'i's famed tourist district. Four are visible from the corner of Kalakaua and Seaside avenues.

"It seems like there's one every hundred feet," said Todd Campbell of Ventura, Calif., who bought sushi rolls, papaya and water for a day at the beach with his children. "I've been here four days and I probably have been in here 10 times."

Despite the saturation of stores, including several on the same block, every location has a steady stream of customers. There are ABCs on the Neighbor Islands and in tourist destinations as far away as Guam and Las Vegas.

"We sell convenience and value," said Paul Kosasa, ABC's president and chief executive, who runs the 40-year-old chain owned by his parents, Sidney and Minnie. "It doesn't seem very logical (to have so many stores), but the fact that we have products that customers want and actually need, we've become a very needed service in Waikiki."

There are only two 7-Elevens in Waikiki.

"I never think we own the market, because we don't," Kosasa said. "When you see the amount of stores we have, it's easy to think that, but there is a tremendous variety of retail and entertainment and restaurants for the visitor."

Tourists can't seem to get enough of ABC's beach mats, bodyboards, chocolates, hats, books, post cards, T-shirts, macadamia nuts, beer, Kona coffee and kitschy Hawaiian souvenirs and trinkets such as coconut bras and $5 dashboard hula dolls.

"Their tastes are wide and varied," Kosasa said.

ABC also sells more macadamia nuts, sun-care products and souvenirs than any other company in the state, according to its Web site.

Since the first ABC Store opened in Waikiki in 1964, the company has grown to 67 stores spread across the Pacific Rim. The chain has sales of more than $150 million per year from its 55 stores in Hawai'i, seven in Guam, three in Las Vegas and two in Saipan.

ABC plans to add about 12 more locations in Las Vegas and possibly expand to Florida. But the company isn't in a rush, though it has the business plan and capital to expand.

"We can only open stores when we have the right people to staff it," Kosasa said. "Customer service is extremely important for us. We won't open them up just to pop them up. We pride ourselves on creating a great experience to our customers, so that limitation is really a human resource limitation."

About 80 percent to 90 percent of the roughly 900 ABC employees are full-time, which is rare in the convenience store industry. Full-time ABC employees get everything from medical benefits and a 401(k) plan to profit-sharing and bonuses.

"It's a higher cost, but it reflects the company's philosophy of taking care of employees," Kosasa said. "We have never laid off employees in the history of the company."

ABC is careful to select the right workers and not grow too fast.

"That's the quickest way to ruin a reputation," Kosasa said. "It takes so long to build a reputation, but it's so short to ruin it. Like Enron."

Sidney Kosasa, 83, operated seven Thrifty drugstores around Honolulu before coming up with the ABC concept on a trip to Miami Beach. He noticed that tourists preferred shopping at local convenience stores to high-priced hotel shops.

The first thing he did was create a name that everyone could remember.

He eventually closed his Thrifty drugstores because of increased competition from larger chains. Meanwhile, the ABC chain flourished as Waikiki kept attracting more tourists.

ABC has found a successful formula for drawing people into its stores. Everything is carefully orchestrated, including the lighting, product placement and gentle Hawaiian music playing in the background.

"It's always a challenge to capture a customer's desire. We continually work on that," Kosasa said. "How a store is decorated, the placement of products, the right lighting, the music, how the cashier smiles — you need all those elements working together to make it work."

While ABC sells different products in its various cities, some Hawaiian-themed products are sold in all the stores, including tropical aloha shirts, macadamia nuts and hula dolls, which may seem out of place in Las Vegas.

"People save all their lives to travel to Hawai'i because it's exotic and a desirable place," Kosasa said. "Maybe they can't make it to Hawai'i, so the closest thing is oddly enough a retail store called ABC Store. They can take some of that experience with them, even though they're not in Hawai'i."