ALOHA – MARKET OBSERVATIONS FROM HAWAII

ALOHA – MARKET OBSERVATIONS FROM HAWAII

As soon as you leave the Maui airport the first place you drive by is Costco.  Estimated at over $5 million per week, #5 world wide, services three islands, services ships in the harbor, mainland pricing, and gas 40 cents a gallon cheaper than its competitors.

Right away you see the long lines at the multiple gas islands.  When the store opens it’s like when the gates open for a sporting event.  Long lines at the outside concession stand for the $1.50 hot dog and drink.  This where the homeless can afford to eat.

My view from the hotel room across the street I can see it takes 45 minutes to get all the customers out after closing.  Costco totally disrupts the grocery market in Hawaii.

On Oahu, the #1 Costco in the USA, estimated at over $400 million a year with nearly $50 million in fuel.  There are four Costcos on Oahu, one on the Big Island and one on Kauai.

Hawaii is very unique.  Almost everything except pineapples and macadamia nut must be shipped in.  Freshness is a challenge.  The most important employee in any store is the Poke-man.  Poke is a raw fish salad that can often have similar sales distributions as the meat or product departments, all sold out of an 8 or 12 foot case. It’s quite popular among ethic Hawaiians.  Another product which gets a lot of shelf space is Spam.  Its been very popular since introduced in World War II.

Pricing in the supermarkets would shock most mainlanders.  Milk at nearly $12 a gallon.  Amazon Prime has come to the rescue of many isolated residents in places like Molokai and Lanai.  Disruptions such as a dock strike in California can quickly lead to empty shelves in the supermarkets.

Although Sam’s Club does quite well, Walmart operates only antiquated Division One stores with no fresh meat, no supercenters. Target has been well received.

The Asian influence is huge.  Don Quijote operates Asian supercenters.  Other stores specifically will cater to native Hawaiians, Japanese, Koreans, and Filipinos.

Then there is the military influence.  There are four high volume commissaries on Oahu.  Word is the military wants to get out of the commissary business.

Tourism is year around and some tourist resorts now have their own full line supermarket, usually 16,500 to 20,000 square feet.  As you can imagine, liquor sales can be quite high at these stores.