Hilo is experiencing a rapid decline in brick-and-mortar retail businesses.
According to data from the U.S. Census Bureau, the number of brick-and-mortar retailers per capita in the “Hilo metro area” declined 20.2% between 2011 and 2021, the last year for which census data is currently available.
That’s according to a just-released study by the travel credit card industry website Upgraded Points titled “Cities Where Brick-and-Mortar Retail is Declining the Fastest.”
The study compared data for more than 350 metro areas in all 50 states and pegged the per capita decrease in brick-and-mortar retail establishments nationally at -12.6% during that 10-year span, with a loss of about 60,000 retail stores.
The report also found Hilo’s brick-and-mortar retail nosedive was 7.6% faster than the national average.
As a result, there are just 2.9 brick-and-mortar retail stores for every 1,000 Hilo residents, according to the study.
Miles Yoshioka, executive officer of the Hawaii Island Chamber of Commerce, said Monday he’s “surprised that it’s that high.”
“I suspected that the number of brick-and-mortars would drop because of the e-commerce thing,” Yoshioka said. “It’s so common and prevalent now — grandma and grandpa shopping online instead of going downtown to the mom-and-pop store.
“But I am surprised at that huge a drop.”
Hilo ranked No. 16 in the study among “small metros” and 19th in “all metros,” with the number of retail stores plummeting from 657 in 2011 to 574 in 2021.
The top-four small metro areas undergoing decline in brick-and-mortars were all in Pacific Northwest and Great Plains states, with Mount Vernon-Anacortes, Wash., leading the downturn with a 25.3% drop per capita. The others are: Bozeman, Mont., at 25%, with No. 3 and No. 4 a tie at 23.3% between Manhattan, Kan., and Twin Falls, Idaho.
No. 5 is Burlington-South Burlington, Vt., at 23%.
The top 5 towns on the small metros list comprise five of the six top spots in “all metros.” San Jose-Sunnyvale-Santa Clara, Calif., a metro area of over a million population, topped the “large metros” list at 23.6%, which translated to No. 3 in the “all metros” category.
Daniel Kea, general manager of Prince Kuhio Plaza in Hilo, said it’s telling that the study’s final year, 2021, is the second year of the novel coronavirus pandemic.
“The census was taken right after the pandemic hit,” Kea said. “That was probably the lowest point for small businesses in general. Nobody wanted to open up something during COVID or just after COVID. I think we probably lost quite a few small businesses during the first year of the pandemic, itself. And you didn’t have a lot of folks opening new businesses right after, as everyone was coming back. I think that as a small businessperson, it would be scary to open something during that.
“We still had the corporate players when you’re talking about the mall. They were still doing the stuff they had planned. But we didn’t have smaller mom-and-pop guys coming in and opening up, during or initially after COVID.”
Kea said the mall is at 91% occupancy, noting that while the Hilo Sears store has shuttered, Sears is still paying rent on a 74,000-square-foot anchor space and using it for storage.
According to Kea, another factor causing the ebb of brick-and-mortars is the county’s notoriously slow building permit process “that the mayor is trying to address.”
“And the pandemic also increased construction costs, as well,” he said. “I think all of it compounded and put us a little bit father back, and I think we’re going to lag a little bit behind the mainland.”
Kea said that at this point, he’s receiving “a lot of inquiries” from small businesses.
Nationwide, among “large metros” of more than a million population, Honolulu ranks No. 11 with a 16.7% drop in brick-and-mortar businesses — from 2,763 to 2,473 — over the decade studied.
The study’s author, Alex Miller, founder and CEO of Upgraded Points, notes U.S. retailers are “in the middle of a bustling holiday season, expecting nearly $1 trillion in sales.”
“However, American retailers have not felt this overall spending strength equally,” Miller wrote. “The rise of e-commerce, catalyzed by pioneers like Amazon and eBay in the late 1990s, has created existential challenges for both small, local businesses and big-box stores across the country.
“E-commerce, which grew from 0.9% of total retail sales in 2000 to 10.6% in 2019, surged to 14.6% in 2020 due to COVID-19-related closures and sustained that level thereafter.”
Many Hawaii workers migrated to the mainland during the pandemic’s lockdown phase, and others declined to return to low-paying retail jobs, with lingering effects to the local economy.
“Our retailers, especially downtown, are all faced with slim workforce issues and trouble keeping employees,” Yoshioka said. “It’s not only facing retail establishments, but food service — and I even heard it from my dentist. They’re finding it hard to get and retain employees. I don’t know what the reason for that is.
“I’m looking for someone who knows the secret and can tell me.”
The report can be viewed at https://bit.ly/47U1RwU.
Email John Burnett at jburnett@hawaiitribune-herald.com.
