Convenience Is As Simple As ABC Stores: An Interview with Paul Kosasa

 By Kent Coules, This Week Publisher

My first question to ABC Stores President and CEO Paul Kosasa is about “convenience” because that’s the best word I can come up with to describe an ABC Store, even though it feels so inadequate. “Well, it IS convenience, but not in the American vision,” says Kosasa, son of founders Sidney and Minnie Kosasa. “It’s more like a mini department store; very disciplined, clean, with products never out of place.” 

Yeah, that’s it. But…is it?

If I had a dollar for every time a visitor to the islands asked me something to the effect of, “What’s the deal with the ABC Stores?” I’d be a rich man. I want to know why ABC makes such an impression on people that they want to know about a convenience store instead of, say, the best snorkeling beach. To address this question, I think about my own experiences in ABC Stores and I start wondering about the people who work there. Why is it that ABC associates act like they own the store? 

“We’re very proud of our people,” says Kosasa. “We make them feel a part of it—it’s their store.”

That’s easier said than done, I say. “Yes,” agrees Kosasa. “Competitors ask, too. More than anything, it’s about modeling behavior. Our managers start as associates. As managers, they engage in the ABC way of doing business. That means looking at everything from the customer point of view. We try to embed that into our culture.”

The Kosasa family’s history in the retail business can be traced back to Japanese immigrants Morita and Mitsue Kosasa, who opened M. Kosasa Kaimuki on 10th Avenue in 1917. The family business first expanded from a grocery store to a pharmacy when Mitsue encouraged son Sidney to become a pharmacist because drugstores made more than grocery stores. Sidney’s ABC epiphany, however, came when he attended a drugstore chain meeting in Miami, Florida, and saw the parallels between Miami as a strong tourist destination and Hawai‘i as one that was developing. In 1964, Kosasa opened the first ABC Store on Kalākaua Avenue and Beachwalk. 

The rest, as they say, is history. And based on my conversation with Paul Kosasa, I can say with confidence that the ABC story has many chapters left to write. But how exactly does a business bred of humble beginnings grow into such a successful enterprise? 

Kosasa points out cleanliness and organization as key to the ABC experience. “Products are never out of place. Our stores are immaculate. It’s basic, but something we pride ourselves on.”

Orientation and training classes get new employees acclimated to the “ABC way,” but Kosasa’s philosophy goes beyond daily expectations. “We teach employees about retirement planning when they’re young. My parents drilled us on the importance of savings. We try to offer our long term employees a secure, independent retirement.” 

Management does more than just teach—they contribute. Every employee is included in the company’s profit sharing plans, and the monies earned go directly into their retirement plan. “We also hold regular company-wide meetings and let everyone know how we’re performing,” says Kosasa. “Sharing our financial performance is motivating.”

As a result of these efforts, management turnover is almost zero. “Low turnover breeds success and differentiates us from the competition. We also promote almost exclusively from within. Our senior management team knows the business at the store level intimately. For example, our Human Resources Director started as a part-time cashier.”

Over the years, ABC Stores has widened its footprint to include stores in Guam, Saipan and Las Vegas. But expansion is not limited to the ABC format alone. More recently, Kosasa has led diversification efforts that include upscale grocery stores and restaurants. Island Country, Island Gourmet, Duke’s Lane in Waikīkī, Basalt Restaurant (Waikīkī), and the forthcoming Lineage Restaurant on Maui are all part of the growing ABC family of businesses.

I want to know why the venture into new business models when it would seem so much easier to continue expanding the core brand? “We like to experiment,” says Kosasa. “Doing the same thing over and over again breeds complacency. You have to take risks. We know that eventually our clientele will change. By expanding our expertise we’ve learned things that we’ve brought into the ABC Stores—and vice-versa. For instance, we now operate a centralized kitchen.”

I’m surprised to learn that Kosasa’s team approaches these new enterprises as more art than science. How did they go about designing the Island Country stores, for example? “We looked at magazine photos mostly. We approached it from the perspective of what we would want to see in an upscale grocery store. One design feature of Island Country is that we don’t have all the checkout stands lined up in one place. We spread them throughout the store.” 

I conclude my talk with Kosasa by asking what he’d like to say directly to our guests to Hawai‘i. “You’re supporting a local company. The money stays here. We’re generous to our employees and to the community.”

Well said, Paul Kosasa. Well said.