 Okay, two o'clock rock here. We are at think-tech and this is one of my favorite shows life after statehood and our regular Contributor to this show is Ray Tsuchiyama informed citizen today. We're talking about retail retail retail in Hawaii very important You know they used to say was what military? Agriculture, you know hospitality. Well retail you can say it's part of hospitality But I don't think so retail is like the fourth and since we lost some of the other three It's becomes very important A lot of the people from you know real estate sort of migrated into retail Well people you know from various places and things vice versa Retail is probably more diverse because you know we had people coming from far away to establishing retail We had nationals coming here for a long time for maybe a hundred and fifty years actually coming here to establish You know retail facilities so retail is a story that needs to be told We haven't really seen enough about it But Ray Tsuchiyama has looked at it and he remembers a lot of it And so we have him here at first to explain, you know how retail got started in the powerhouse. It is today well retail really started in the late 19th century as Germany regards best symbolized by the Hackfeld family that came in and opened up what we would say is a trading store You know and the plantations needed all kinds of machinery They needed all kinds of medicines foods all kinds of stuff for their daily Employees and for their the ruling lead of a plantation society at that time So the trading houses really emerged and of course the cooks and castles and so forth got into You know business after being missionaries in the late 19th century So they were also part of this boom in retail and there were small shops Of course that sold all kinds of daily necessities to the people at the plantation camps and that also was a retail kind of Kind of a vehicle or something like that And the whole thing was that you wanted stuff You didn't necessarily want to travel other places like the mainland to get stuff So there you know grew up a whole infrastructure of middlemen and warehousing and agents right retail agents They were wholesalers who you know built the infrastructure of retail and that changed a lot as we we will see But starting from zero we went a long way even what by the First World War That's right. And the First World War there was already the Hackfeld family Really sensitive to the German roots. So they changed the name of their company to American factors Yeah, and of course their Premier department store of that time was changed again to Liberty house So again that you can see that sea change within Hawaii was being more American. You had to really no longer depend on Europe for a lot of your merchandise it was from the West Coast or East Coast wherever it came. So there's a lot of like you say a lot of Shipping like the Mattsons The ships to come in from Los Angeles Seattle and San Francisco And far away from Boston probably were a lot of intricate complex kinds of what we call now the supply chain getting to Hawaii and and ultimately in the 20s and 30s as People began to have more money as a middle class began to grow and people began to come to live Outside the camps into Honolulu They didn't buy things that they began to grow stores and and all kinds of more more and more Largest stores that began to happen now in the post war period I can point out post World War one post two World War two period in the early 60s a Waikiki was still a very high-class high Tourism area and if you go there even today you can see the remnants of that in front of Waikiki Beach in front of the police station There are three little buildings and that used to be gumps Gumps from San Francisco And that was a Tony high-level shops for very wealthy You know people who lived in the Gold Coast or visitors from San Francisco Los Angeles to do their shopping And we forget that but that was a part of that ecosystem of restaurants like canless that had you know Kimono waitresses and very Nobody goes to very few local people go into Waikiki to do highs You know Like I love a dining anymore because it's difficult for parking, but for a time I remember or suit you had to go Michele's or or canless you had to wear a jacket Okay, yeah Easter's and the Christmases and so forth so retail when we see today and and going back to the late 50s and 60s had A thrust of the of the upper-scale upscale retail and dining in Waikiki That's where it stood out at that time before the whole onslaught of middle-class visitors Tourism in the 60s and 70s. Yeah, and that means after statehood That means just after statehood means after the the Boeing 707 came around all of a sudden we had middle class, but until that time was exclusive That's right. That's right a very very high up and then comes the whole sea change again in the 80s with Japanese Tourism and they began to spend far more than the visitors from Peoria or Idaho or the Seattle local $500 a day You know that thing and that's beyond their hotel and and dining they had money to spend suddenly It was a pen of demand for luxury goods and that's where the lines for the Leo Vuitton's and the Tiffany's and and all kinds of Italian and French and and British Brand names began to spring up in Waikiki and of course that also began to raise rents for Waikiki And you couldn't make money Having a burger shop in Waikiki. So you sold your lease to Louis Vuitton and that of course accelerated change and that's what we have to do now The gross was greater the landlords take and the landlords in those premises most of them are charging percent That's right. They're charging a per square foot plus a percentage of most Sales so you bring in a national international brand and the Japanese leather national international brand trophy shopping and So the gross was greater the rent was greater And all of a sudden it all spins up and it spins out of sight of the local buyer So there's in some somewhere along the line there Ray It took a different path from the local economy to the you know I think retail was a good example of that and and of course that Unique Waikiki Retail also began to employ a different set of people especially in the 80s people who are bilingual trying to yeah They had to speak Japanese then Korean and then Mandarin Chinese now you had to come in from It was a different kind of sale is a luxury sale So you had the size of a customer the customers also had thousands of dollars to spend and They were coming in from not only Japan Singapore Europe from New York from of course Tokyo. It was a different atmosphere and Retail well as a hustle because there was a lot of money on the tree shake the tree the money falls off and you did a Lot better if you were a salesperson working on a commission even not working on a commission the store did better If you were serving say Japanese clientele, so I remember many times, you know people complaining back in the 80s I don't think this happens anymore, but it used to happen on a regular basis So you're in a store local person you're in a store and you want to buy something And it's a Japanese buyer right next to you a tourist and I'll be always notice you you can see right away He's from Japan And you're there. He's there the clerk goes to him You you don't get first treatment you get second treatment and he's spending ten times as much as you are and happy about it and You can't get a bargain You're you're happy to get out of there with your skin on because it's so expensive But this is the root the prices right the retail prices went way up the quality the national brands went way up And I think people really couldn't show local people could not shop in those places They're not only because that you wouldn't get served first and they were irritated about that But because they couldn't afford it, but there was a slice of the society that used to travel to the mainland to San Francisco the Union Square for example and and and really shop at the Bloomingdale's or the Macy's of the Maybe two or three times a year especially before Christmas. So there was a group that went out that couldn't find the High-class department stores in Hawaii, but you're correct. That's a small sliver of the society and And and I think it changed the society that it used to be a much slower paced place That you weren't judged on the type of watch you had you weren't judged on the clothes you had It wasn't quite a egalitarian society when you think about it back in the 70s still that it was a place where you could Be at home anywhere in Hawaii. Sure. It was fine And suddenly there was a change that you were judged on the number of things you had in your house on the in a huge Plasma display TV the stereo's the cars the watches the clothes Everything began to change. I think In especially in the 90s in 2000 that part of that was in videos comparison. Don't you think I mean for example? People boy, they were surrounded with retail Retail, you know was feeding them anything and everything all kinds of things you could buy and That you know and the the ad men were trying to sell you all these things And so you would buy more than you could possibly use more they could possibly afford I think it took a dent in a lot of budgets to have all these things to buy and then people would have relatively small Apartments or homes and they jam up the home with all this stuff and then what happens is the storage business The storage business comes to town because people bought all this stuff They have no place for it and you have to keep on going like if I can have it Right have to keep on buying even though, you know, you don't need a lot of the stuff you buy Well, I think you have a very good point and also about the economy where People began to extend on credit. So so they had to work not only two jobs, maybe three jobs they begin to rely more on you know on all kinds of Things that they didn't do before but they had to go to Vegas. They had to go to Disneyland. They had to go this So there was a lot more loans taken out a lot more It was a economy that was even today I think the real economy is here, but how we're living is here for all The real economy is deadly deadly for an island That it reminds me of a Venezuela or you know Greece or many countries that that the government's really Borrowed in order to you know, it kind of give money or All to their government and state employees to keep them happy and after a while they can't borrow anymore and But going back to about retail itself if you look at the concept of retail, it's a Recent phenomenon that people have time to go to shop people have time to look at her things Because in a hundred years ago you spent your whole day farming or Doing things as an artisan or whatever to really do crafts and so forth Or to see that you have your food your potatoes or cane or views grow so leisure time began to Become more in abundance in the state after statehood and remember that people didn't Go to work in plantation the you know from six o'clock to six o'clock by there was the evening on nine They had until recently the the horn that blasts. Yeah, I tell you So so the at Hawaii I think they come to mainland because the mainland has some winters and so forth you're in You can go out every day And so I think and also I hate to say this there aren't that many things to do You can't go to museums you can't go to the symphonies Not a large number of people can actually go surf or do water sports on the beach. So what do you do? You go to Alamona Shop until you drop you go to Alamona so so and so the shopping centers became our town Greens or you know like on the mainland you meet your neighbors and and according to Costco's Have have really reflected. I see my neighbors more in Costco than I see them, you know in my car They're completely different We have to examine that right after this break. We have to examine the emergence the development of these big shopping centers huge big shopping centers and how they became more than just the conglomeration of stores had to became a kind of Community airsots community and then we have to see the transition from from those big shopping centers to Costco like big boxes This is very interesting and we are a perfect laboratory for all this to happen Wow Hawaii the land where you shop till you drop will be right back after this break Hello, this is Martin de Spain I want to get you get excited about my new show which is humane architecture for Hawaii and beyond We're going to broadcast on Tuesdays 5 p.m. Here on think tech Hawaii Aloha, I'm kawaii Lucas host of Hawaii is my mainland here on think tech Hawaii every Friday at 3 p.m We address issues of importance for those of us who live here on the most isolated land mass on the planet Please come join me Fridays at 3 p.m. Mahalo Aloha, my name is Richard Emory host of condo insider More than a third of Hawaii's population live in some form of association But our show is all about educating board members and owners about the responsibilities and obligations and providing solutions for a great Association you can watch me live on Thursdays 3 p.m. To 4 p.m. Each week Aloha finger. We're back here on think tech We're doing a life after statehood with Ray Tsuchiyama who is an informed citizen and a regular contributed to this program and others and today we're talking about You know shop till you drop the awesome reality of retail in Hawaii, so we have the shopping centers emerge and It was not a zero-sum game But they drew off a lot of business from the mom and pops and the mom and pops at the beginning of these big shopping centers They were in the shopping centers But as time went by the owners and manager of the shopping center weren't interested in our mom moms and pops They wanted national names because they could get better rents And so little by little the mom moms and pops went out of the shopping centers They had a fend for themselves in smaller centers and ultimately, you know We have very few of them left actually in the larger picture Can you talk about the emergence of these shop talk about Alamo wanna for example? Well, I'm on is a very unique case because In the United States it was kind of like a pioneer For a small state that just became a state in the 59 because you look back in the early 60s it was no little duck farms and marshland right next to Waikiki and It was built up with a very kind of utopian kind of Vision and plan that if you look way back It was supposed to have in the future and this is back in the early in the 60s into the 60s a whole City by itself more like a Mall of America kind of idea in a little little island with hotels and apartments and you know Probably a lot of amenities for people who go there not only to shop and so there's you know theme parks at other other shopping centers, but you're correct that what Happened with people and buying preferences and so forth was that as you know up till the 707 and and the And the maths and containers in the life 50s and 60s people may do with very little in Hawaii and When you go back in time people made their own clothes Sure You had to buy your own cloth and your mom or grandma or you know I go to every city in town and that's right And you made your own suit and you know you had one suit for Sundays and Christmas and and you but it was Taylor made and There was a lot of things that were you know, we think of our society as being sustainable It was a very sustainable society back in the up till Statehood and statehood exploded like this and I think it and and you know other thing that we forget always is cars since Did not evolve with mass transit back in the 50s or didn't continue to trolley It made a whole leap into cars immediately So the Alamada is not linked to any place by rail or mass transit of course by buses But by cars so people had to get cars in order to get there So it was really a central place to come and park and you see how much parking there is and people you know quibble buck parking but they have parking there and Demise a mom and pops is that you know to buy something even if it takes three minutes you take a car And you don't walk anymore to your neighborhood store and they're all gone. They're all gone Yeah, yeah, well Alamo on I was really fabulous and you when you think about it I want was an out an out an outspring of Statehood itself because if Alamo on a open it was 64. I think It had to be planned for a few years So what happened is that the people who were taking power who were getting involved in business right at statehood? It was an expression of an optimistic future for Hawaii in tourism and retail in the middle class So they designed and built Alamo on it was fabule Dillingham and and when you think about all the transactions that have happened and now we're Alamo on one of the biggest shopping centers in the world one of the most you know profitable shopping centers in the world There isn't any local ownership at all. It went through these hands at those hands We can talk about all the owners, but at the end of the day No local owners and and I was sad because Hawaii in terms of all these large projects including retail projects is owned by REITs On the mainland REITs who actually don't pay income tax here because it's a pass-through tax arrangement And so what we have is a retail is a very profitable because we are kind of a retail laboratory We are we are first adopters And and we don't have any control over people spend a lot more money than other other states And that they own a lot of more things. Yeah, but again going back to statehood You're absolutely right that the years leading up to Alamo on a people before Christmas Pour through the Sears and Roebuck a catalog that pennies catalog all the catalogs that used to be they they In the plantation days, that's what they wanted all these things and for the mainland that they couldn't there were no Stores to sell these so there were people who own things like radios and so but they were shipped in through catalogs yeah, and and that was a Lifestyle of many people until the stores began appearing and they were just seduced by brands By you know, they no longer says oh, I got this at Ross or I got this You know by the tailor down the street, you know, it's it's a brand name. It's a Sears product It's a pennies people are why you really got into that. It's a brand you had to buy the best brand It was another invidious comparison thing You know the other thing is that I talked before about the middleman. That's what came up You know what as around statehood time in order to have all the goods on the shelves We didn't have a lot of you know air cargo. We had it by ship. It took a couple of weeks So there was these whole a whole generation of middlemen of wholesalers and they lasted until probably The 80s and then they all went out of business because you could get better shipment You can do dropship and chip and you could you know ship on demand and of course we started out with the internet somewhere along as after that Which has changed everything and we'll change everything But you know when we when we did Alamo on them and we saw it all come together And we saw a first one level of stores and then a second level of store It's amazing and then a third level of and a fourth level I mean, it's incredible if you could do like time-lapse photography and how big that place got and As it got big the mom and pops when it went away the small regional, you know around the corner shopping centers Even though the ones that were not so small either They they all went away and we focused we all draw an elamo on and that as of what ten years ago Dominated everything in retail But there came the big boxes This had to change things to right. How did that happen? Well? interestingly, you know, I my neighbor in Tokyo was with the Costco and the headquarters is in Kirkland is in Seattle and he told me one day as We were talking he said we never thought that he would get this big and he was a Harvard MBA and He would they were doing Costco's in Japan and Taiwan never really entered in mainland China Although that's a long story and of course they went every place in all 50 states and territories and so forth And it evolved through a you know kind of a loop hole in the regulations where you know You could sell wholesale But you could be a business by you know becoming a member of this network of people who was going to Be a business and so forth. You know anybody who is not It's like in certain parts of the Country, they're dry cities, but you become a member at a club where you can get sure same thing So so and they grew exponentially, you know and and what of course Hawaii people just like anybody else in the world are driven by low prices If I see milk from the mainland at this price and and a local milk I'll choose look mainland milk because it's cheaper and it's you know And people talk about you know sustainability and about about supporting your local You know Brands or companies We're driven by low prices. Sure. We are and so that's why you know local Agriculture hasn't made that much progress because it's cheaper and people gonna buy the cheaper thing In fact, if you take that on a larger scale, what's happened is our self-reliance You spoke about before has been undermined by cheap prices from somewhere else, and it's really bad It's a drug. It's really it's a drug Addictive and and when I was a castle cook, there's an interesting Thought that somebody said they came on day In in containers and and so forth and shipping when a ton of carrots cost the same as a ton of fertilizer at that point We never why grow why? Why grow in work? Yeah, why not you know buy cheap cheaply so again that that was a drug that derailed Hawaii and and really the conversion of you know sugar or pineapple into agriculture or the sustaining of Dairy farms or you know in the up to the 40s into the 50s probably even in Maui or other places. There was a soft drink and milk bottling plant for every region of the island and there were milk Delivered in bottles to you every morning. What a sustainable society trying to find it there There's only two or three left and People around the dairy-resistant that's how I for example Pierre Omidyar But you know what what I get out of this is that is that the local people Looking for the best price because people will do that and people in Hawaii or Akamae about price They're gonna go to the big box stores because they get a significantly better price Then they would get in Palm Court in Alamo one or any big shopping center And so you have this for the tourists and the well-heeled and the ones who like to shop and can shop in Palm Court And the tourists yet that I send that and then you get you get the big boxes The big boxes is where the local people go because the prices are better So it's it's kind of gone in two directions and the local people of course There's a drive for more free space More you know space in your house and then it overflows you have to put it in storage You go look at it every week if you know and draw some things out Yeah, and then you draw more of your visa card to buy more things and then you take out a second mortgage I mean it is a Cycle that is it is not sustainable. Yeah, did you say rat race? No You can buy things and you can only use them for so long You have to buy more things you put them in storage You're spending much too much money and we live you know and that's recreation. That's recreation But yes, so this is not sustainable And this is so far away from the real Hawaii the Hawaii that you grew up in the way that I Enjoyed when I was here years ago when I first came And so we have lost something and I'm not sure the retail and what we've been talking about is the effect, you know, did it did it create this lack of and it's like economy by itself within the larger economy Yeah, and and no but no economists would point to retail as as as as part of the economy in a Real economy you make things and you and you sell them and you get money for them Yeah, you see here in Hawaii the brands of Hawaii and we're selling them Singapore Japan or The mainland or and then making money and money comes back and then people become, you know Richer because of the products that we make so let me let me offer this thought to close and that is you know We talk about six billion dollars going overseas out of Hawaii hard-earned money going out of Hawaii to buy fossil fuel Everybody gets excited about that. Let's stop doing that. Let's use renewables, right? Which are local and indigenous and you know clean and all that But you know what? We're sending out a lot more money for retail of things that are manufactured Elsewhere and that are delivered here to our door things that we could do ourselves We used to do ourselves, but we have given that up. We are just as dependent on offshore real You know Retail then that we are on fossil fuel. We have become a dependent society, Ray That's the bottom line of this discussion I agree. I agree totally and it's it's it and and we have to have another plan or vision to take us out of it Because it will overwhelm us in the end It will be we become a difference different society a harsher Meaner and a society that is living beyond its means the real economy is here and where we're living is here Right and we lose our heart. Yeah, Ray Tsuchiyama. He still has a big heart And he's a regular contributed informed citizen here on life after state and I so enjoy the show. Thank you, Ray. Thank you