By Shaina Marie Santos
From the island’s high-end retailers at Tumon Sands Plaza to mid-range vendors at Guam Premier Outlets and Micronesia Mall, all agree that diversified options and continued expansion within the retail market are on the horizon.
“There are still opportunities for new retail growth on island because Guam has not yet reached the point of oversaturation,” says Phillip M. Schrage, senior vice president of group operations and leasing at Goodwind Development Corp., which does business as Micronesia Mall. “There are brands in Hawaii that have not yet decided to make the jump to Guam; however, the word is spreading that Guam is business-friendly with the potential to become a retailer’s most productive market. More regional and national brands, more franchised stores and definitely more restaurants are coming to Guam.”
Among them is a new Lacoste boutique, which will commence construction at Micronesia Mall in the third quarter of this year, Schrage says. ABC Store and Bench will also complete their storewide renovation and relocation, respectively, in the third quarter, as Vision Express commences its storewide renovation. Schrage also says Macy’s 45,000-square-foot expansion will be completed by late next summer, bringing the store’s total floor space to 200,000 square feet.
“Guam’s largest department [store] has seen the future of retailing on Guam and has made a huge commitment to serve the area for generations to come,” he says.
Charles T. McJohn, marketing manager of Agana Shopping Center, says there are numerous ways for Guam’s retail market to grow, especially with the opening of Forever 21 at Guam Premier Outlets.
“I think there’s going to be a big boom of inexpensive fashionable retailers,” he says. “I think there’s always been a gap between expensive fashion wear and inexpensive casual wear on Guam. Forever 21 set the trend for that.”
Monte D.M. Mesa, general manager of GPO and acting manager of Tumon Sands Plaza, agrees.
“What Guam needs from a retail perspective is to fulfill the [the needs of] new shoppers, the millennial shoppers that are more [fashion forward],” he says. “Our local shoppers still are looking for retailers who offer the best value for their products. Our strategy at GPO is to continue to evolve in bringing in national stores that are true outlet stores. We see that that will grow. At Tumon Sands Plaza, we see that luxury businesses will still be around, but it won’t be as strong as it used to be. It has to be complemented with other U.S. concepts that are mid-priced.”
McJohn also points out numerous holes in Guam’s retail market and suggests expansion through additional brands selling technology and housewares.
“There’s definitely opportunity,” he says. “Technology wise, we do have smaller companies, but we’ve never really had big-time technology companies come in and try to do retail here. Housewares, like a Pier 1 [Imports], a Bed, Bath & Beyond, a Linens ‘n Things — we don’t even have a company here that emulates that. Things like that, I think, could really take off because we still do have the market.”
Schrage, McJohn and Mesa all plan to attend RECon, The Global Retail Real Estate Convention, next May, which is hosted by the International Council of Shopping Centers annually in Las Vegas. According to Schrage, the event draws nearly 35,000 representatives including major retailers, franchisors, shopping center owners, developers, industry suppliers, financing companies, leasing managers, brokers and more.
“It’s a big way to pitch [to] people why companies should try to make it to Guam or why they should try to franchise,” McJohn says. “It’s a real way to expose the market that we have here.”
Mesa says during the convention, representatives from Guam educate other attendees about Guam’s market, its target consumers and its outlook.
“When we show them the statistics of all the arrivals from our visitor markets, it’s impressive,” he says. “They don’t see those kinds of numbers in other markets that they are serving; they’re primarily targeting domestic markets. When we show them what our national stores are doing here, all these stores are setting records that they’ve never experienced, and Guam becomes highlighted.”
With present national brands expanding and new brands adding a greater variety of shopping options to the island, Guam’s retailers have recognized the need to appeal to a more diverse market, especially to families, both local and visiting.
“Tumon Sands has always been geared for luxury, for adults, but nowadays we see a lot of [visitors] coming with their families,” Mesa says. “When they come [to Tumon Sands Plaza], there’s nothing here for the kids, really. We’re repositioning Tumon Sands to be more of a family-friendly and one-stop [destination], where not only the parents [can] get their luxury goods, but they [or the grandparents] can find something for the kids, because that’s the kind of customers we’re getting.”
Tumon Sands Plaza has already begun this transition. Vendor space that was formerly occupied by Juicy Couture now offers merchandise aimed toward children. Twinkles, which has one location in GPO, will open a second location at Tumon Sands Plaza. The additional Twinkles location will provide toys and goods for children that local customers have come to expect from the store and that are appropriate for the travel market, Mesa says.
“We’re successful at GPO because we have that mix,” Mesa says. “We have the tenant mix with kids stores, and we’re still bringing in [more of them] so that we can take advantage of our visitor market.”
McJohn points out that there are only a few attractions for families. He says though there are movie theaters, a Chuck E. Cheese and the Tagada Amusement Park in Tumon, the door is open for additional recreational opportunities that can appeal to Guam’s retail market.
“Family recreation is completely ignored,” he says. “I think there are absolutely fantastic recreational vehicles for tourists, locals, kids [and] teenagers. That’s definitely a huge niche market that can be taken advantage of.”
With the construction of the Guam Museum underway, Agana Shopping Center is anticipating additional revenue as a result of the facility, which will serve not only as a historic center for local residents, but a recreational activity for tourists.
“We know that when the museum opens, there’s going to be a big shift in transportation and tours in this part of the island,” McJohn says. “We’re negotiating with a lot more tour agents and busing companies. If they’re bringing all these people to Agana to go to the museum, we want to provide an outlet for shopping and dining and entertainment that they can’t get anywhere else.”
Another trend that is making waves in retail centers is an overall gravitation toward food offerings.
“Last year, we saw a bigger spike in retail,” McJohn says. “This year, we’re seeing a bigger trend toward food. I think that the foodie scene on Guam [and] people’s palates are evolving. People [are] eating healthier, going out to eat more with their families. Lunchtime sales have really taken an uptick.”
McJohn reports that over the last year, Agana Shopping Center has seen a 10% increase in food and beverage spending and a 4% decrease in retail spending.
“You see restaurants going into retail space, and you see that going on all over the island,” says Gregory A. Hartkopf, general manager of Oceanic Resources Inc., which does business on Guam as Pacific Place and Macheche Plaza. He suggests the change could be a mirror of changes in people’s lifestyles. “Both parents working and working later, you have a lot of restaurants that are catering to that.”
Significant waves have already been made with the openings of numerous restaurants around Guam’s retail centers to include a series of openings of Panda Express locations at the Agana Shopping Center, GPO and Micronesia Mall that began in December 2013, Applebee’s next door to GPO in July 2014 and the highly anticipated IHOP location, also next door to GPO, which opened in late July. Arirang also opened its new food court location in Micronesia Mall in late July, and Guam’s only Hibachi-San restaurant, which is owned by Panda Express, will be opening at the mall later this year.
Diversifying customer options could also help in the midst of a weakening [Japanese] yen, which has affected the economy’s tourism revenue. According to Mesa, the average exchange rate is ¥124 to the dollar.
“It used to be [that] Japanese spending per person was higher than any of our visitors,” Mesa says. “However, spending for Koreans and Chinese is up against last year. Japanese spending is the lowest it’s ever been versus what is being spent by Koreans today, Taiwan customers, Hong Kong customers and the mainland Chinese.”
Hartkopf says the two driving factors in the market are the number of tourists coming to Guam and the currency exchange rate.
“In the last couple of years, the exchange rate with the [Japanese] yen has made it more difficult for them to spend,” he says. “They spend the same amount of [Japanese] yen, but it’s less [in] dollars, so you see a decline in spending.”
Though the Japanese market remains the largest of tourist shoppers on Guam, steady growth in Korean arrivals is helping to offset decreases in Japanese spending. Mesa says the growth in a different Asian tourist market is encouraging.
“We see it helping Guam’s economy for the next few years until the Japanese market recovers and their currency stabilizes consistently to the U.S. dollar,” he says. “Tumon Sands Plaza is working to bolster its Korean market with a customer service counter on the second floor of the building that opened in the beginning of June as well as an information booth at the entrance that will begin catering specifically to Korean visitors by early August.
Letitia C. Law-Byerly, marketing and promotions specialist of Lotte Duty Free Guam, mirrors Mesa’s sentiment. “The opportunity [in Guam’s retail market] lies in greater diversification of Guam’s tourist markets,” she says. Lotte Duty Free, which began occupying 24,000 square feet of retail space in the A.B. Won Pat International Airport, Guam, in 2013, offers more than 300 international brands to customers transiting through the airport, mainly from Japan, Korea, Taiwan and China.
To appeal to a wider range of markets, shopping centers are finding social media might be the key. Koreans are much more attuned to using social media while traveling, Mesa says.
“They’re carrying their own phones and [logging onto] the WiFi and taking pictures of everything that they do, and there [are] bloggers out there,” he says. “That’s how we’re reaching more Koreans.”
McJohn says using social media is an important element in marketing today.
“Social media is huge, and we knew it would get here,” McJohn says. “It’s [all about] can you get on people’s cell phones? Can you get on their Instagram feeds, Facebook feeds? Are they tweeting about you? What [do] your Yelp reviews look like? What do you look like on TripAdvisor? It’s very important to be trending, to stay current, to post constantly.”
Agana Shopping Center leads the pack with 16,000 likes on its Facebook page, more than any other shopping center on Guam, McJohn says.
zMcJohn says retail tenants that seem to struggle are those that have not embraced the rise of social media marketing.
“They’re relying on foot traffic and traditional mediums,” he says. “In this day and age, that’s not good enough.” nForever 21 opened on March 13 at Guam Premier Outlets to a long line of customers. The inexpensive fashion retailer claims to be the fifth largest specialty retailer in the United States. Guam’s store was one of 600 the brand plans to open in the next three years.
Photo by Justin Green
Tumon Sands Plaza started its “Christmas in July” event on July 11, a two-month summer promotion with Christmas décor, a gingerbread house building fundraiser and a “magic snow” show for children. The shopping center is working to reposition itself as more of a family-friendly destination for tourists and locals alike.
Photo courtesy of Tumon Sands Plaza