20-Year Retail Retrospective: Big Box Development

Prior to 1990, the largest retailers on Oahu principally fell into three categories: grocery, pharmacy/convenience and hardware stores. These retailers range from 15,000 to 45,000 square feet in size and typically serve as an anchor to a neighborhood center or a standalone store. City Mill, a local multi-chain hardware store, was the only retailer to occupy spaces larger than 35,000 square feet. In the early 1990s, the proliferation of Big Box “category killer” retailers began posing huge competition for those retailers that were not able to compete on price or variety of merchandise.

The first “Big Box” to enter the Hawaii market was Costco, which built its discount warehouse store in the Bougainville area of Honolulu in 1988. Comprised of more than 120,000 square feet of sales space, Costco successfully competed against much smaller grocery, electronics, furniture, pharmacy and discount apparel stores. Outrage over the loss of “mom and pop” stores gave way to Honolulu’s value conscious consumers who quickly adapted to the new shopping paradigm. Hawaii’s multi-generational households were prime to benefit from buying in bulk and securing large discounts.

Costco’s lower price, bulk strategy generated huge sales. A typical mainland U.S. Costco store generates $80 million in annual sales. The first Honolulu store produced a record $250 million in sales during its first year in operation. This performance placed the location as the number one store in the country for Costco and spurred a boom in big box development in Hawaii that would continue for the next two decades.

Between 1991 and 2011, the total square footage of big box stores increased eightfold. The widespread development included a laundry list of popular discount chains such as Wal-Mart, Kmart, Sam’s Club, Sports Authority, Target, Office Depot, Lowe’s and many more. Many of these stores were built as standalone facilities that would draw customers from throughout the island. It was commonplace for shoppers to make a trip from the Windward side or the North Shore of Oahu to visit urban Honolulu big box stores.