WWD.com/fashion-news/fashion-features/kalakaua-sees-hawaiian-feast-741906/
View Slideshow

LOS ANGELES — A little more than a week after fireworks and top luxury execs kicked off the grand opening of 2100 Kalakaua Avenue, the much-awaited $140 million retail project on the Hawaiian island of Oahu, observers are carefully watching how the center is faring in the real world.

This story first appeared in the December 18, 2002 issue of WWD.  Subscribe Today.

As reported, the 110,000-square-foot project comprises Chanel, Gucci, Yves Saint Laurent, Boucheron, Tiffany & Co. and Tod’s. At sizes ranging from 5,000 to 20,000 square feet and inhabiting three-story town houses, the units are, in many cases, among the largest in their fleets.

The Waikiki destination pulled in $2 million in sales during its first week, according to sources, based on the conservative end of the center’s yearly sales outlook of between $900 and $1,200 a square foot. But observers warn that a firm number is hard to gauge, given the now-spotty nature of shopper traffic.

Equally problematic is the possibility that even one of these stores on an exceptional run could sell half that much in one day, they said.

Among their concerns: a lagging luxury sector and how much further damage a war with Iraq could do to tourism in the region.

Dana Telsey, an analyst at Bear Stearns, chose the conservative route. “Since we believe that travel and tourism will remain depressed given both macroeconomic and geopolitical instability, it is likely that first-year sales for the new shopping complex could be at the low end of the estimated range,” she said.

Two 10,890-square-foot spaces were still vacant as of press time.

Yet, despite concerns about the Hawaiian economy — among the worst hit by the post-9/11 drop-off in tourism — luxury brands have stayed the course, and many executives believe the move is a strategic geographic position for long-term growth opportunities.

Firms would not confirm how much was invested in the project. But according to Mona Abadir, chief operating officer of the project’s owner, Honu Group Inc., businesses collectively spent close to $60 million, many using the island’s indigenous materials, like lava rock, in their construction.

One by one, they staggered their soft openings in November, culminating with the Dec. 6 fund-raising bash that drew 2,000 guests for a concert with soul crooner Al Green.

Tod’s brought in Italian artisans to its three-level, 5,000-square-foot unit to show its 600 guests how the brand’s bags and shoes are constructed.

“It’s like I anticipated,” said Tod’s USA president Claudio Castiglioni. “It’s definitely a Japanese market but there are a good percentage of local customers, too.” He noted that 90 percent of Tod’s 14-member store staff are Japanese-Americans fluent in both languages.

During the week, Tod’s sold 33 units of the Ferrari collection driving shoes in black leather with red topstitching at $425 a pair; about 12 units of the “easy bag” in black nylon, in small and medium versions, at $750 each, and several oval leather bucket bags with two silver circles on either side, at $850 each.

Paloma Picasso was a draw at the 11,200-square-foot Tiffany & Co., displaying the 129-carat tanzanite and pearl necklace marking her 20th anniversary as an exclusive designer to the jeweler.

Tiffany’s and Boucheron declined to reveal what items sold best during the first week.

Yves Saint Laurent held a simple, theme-free cocktail party at its opening event, attracting guests who returned later in the week to buy the season’s must-haves: the Mombasa bag, a leather hobo style with a horn handle at $695 for the small model and $795 for the large; the Tresse, a woven shaped bag with a horn handle at $895 and $1,095, and lace-up satin cruise wedges in black and fuchsia at $475.

About 1,000 visitors coursed through Gucci on opening night to view a DVD installation on the second floor by contemporary artist and Hawaiian native Paul Pfeiffer entitled “Study of Morning After the Deluge.” In the days after, Gucci’s accessories were hits.

Top sellers included an 18-karat white-gold necklace with cross pendant in pavé diamonds at $1,695; a handle bag in matte bull leather with wood handles at $940, and a rounded bezel stainless steel watch at $750.

The 12,500-square-foot Chanel boutique managed to accommodate its 1,500 revelers, offering makeovers on the first floor, a DJ on the second floor and a cruise fashion show on the third.

The week’s top sellers there included the $2,500 J12 ceramic watch; the $3,100 white-gold matelassé quilted ring with pavé diamonds; the $1,010 black leather tote with white camellia; $320 black patent mules with wooden heels, and a $2,110 black wool jacket with ruffle trim.

“We had pretty good business,” reported Susan Clatworthy, senior vice president of Chanel retail. “A few of our clients did fly over from Japan.”

Indeed, it’s the Japanese customer that retailers are courting. Wali Osman, Bank of Hawaii’s senior fellow for the Pacific Economies, estimates 6.2 million international tourists visited the island in 2002, a significant drop from a high of 6.9 million in 2000, and down from last year’s 6.3 million.

American tourists account for 60 percent of that number. Yet, the Japanese — who make up 24 percent of total visitorship — spend up to 40 percent more, and primarily on luxury goods. In Japan, high import costs, the cost of living and the yen combine to drive up the price of the same goods, making Hawaiian luxury shops a buy worth the trip.

“Most of the luxury goods companies are counting on the Japanese,” said Osman. “They are critical to the Hawaiian economy.” About 1.25 million residents live on the islands.

Yet, as tourism makes a slow comeback, even as the Japanese economy continues to struggle, there is a new fear gripping them. “[The Japanese] still fear for their safety because of the possible war between the U.S. and Iraq,” noted Dr. Eugene Tian, an economist at the state department of Business Economic Development and Tourism, noting the Japanese tourism is still 12 percent below pre-9/11 levels.

In fact, U.S. visitors have bounced back more quickly and have made up for some of the sales lost to the lack of Japanese travelers, said economists.

Several observers believe there’s enough appetite to support both 2100 Kalakaua Avenue and the other luxury behemoth only a mile away, Ala Moana Shopping Center. That center is also home to Chanel, Gucci and Tiffany, as well as Christian Dior, Valentino and Burberry, among others.

If 2100 Kalakaua Avenue succeeds in its first-year sales estimates, or what Ala Moana notches each year — about $900 to $1,200 a square foot, or anywhere from $99 million to $132 million in annual sales — it would be among the most successful malls in the U.S.

The Forum Shops at Caesars Palace in Las Vegas claims the highest sales in the U.S., with about $1,200 a square foot. Estimates at South Coast Plaza in Costa Mesa, Calif., and Rodeo Drive in Beverly Hills run between $700 and $800 a foot.

By opening flagships in Hawaii, these luxury brands have given a much-needed vote of confidence to the local economy.

There’s an almost “gleeful” exuberance in the business community, said Stephany Sofos, president of S.L. Sofos & Co. Ltd., a real estate and consulting firm that studies the market, heightened by the recent election of Republican Governor Linda Lingle, whose platform is to promote Hawaiian businesses abroad.

Arie Kopelman, Chanel Inc.’s U.S. president and chief operating officer, said in an interview last June that he “made the right decision” to open the Kalakaua Avenue unit. It’s a sentiment echoed by Gucci Group’s chairman and chief executive officer, Domenico De Sole, who at that time said: “Even when times are difficult, Gucci still has very high volumes” there. (At press time, both executives were traveling and could not be reached for comment.)

Osman predicts that even if the Japanese economy stays frozen, the U.S. could emerge from the slowdown in about a year or so.

“That’s not such a long period of time,” continued Osman. “It’s very worthwhile to have your infrastructure in by the time you think that the economy should be back on track.”

View Slideshow