Kauai Controls Market through Zoning

In Big Box Battle, a recent feature in the Hawaii Business magazine, the author contrasts one local business with large retailers. The local business sells “mouthwatering short ribs marinated in a top-secret teriyaki-style barbecue sauce,” while the large retailer sells “the alternatives — hot dogs and rotisserie chicken — [which] aren’t very Kauai at all.” This observation goes to the heart of Bill 2203: Zoning away competition to preserve one group’s idea of a way of life.

The “Big Box Battle”, according to the article, revolves around

City Council Bill 2203 (widely referred to as the Big-Box Bill), which limits the size of retail and wholesale operations to under 75,000 square feet, roughly twice the size of the average Safeway or Foodland. Introduced by council members JoAnn Yukimura and Kaipo Asing (with support from Mayor Bryan Baptiste), the bill seeks to “protect the citizens from net adverse impacts caused by large ‘superstores’” ... which “do not match the rural character that Kaua’i is striving to maintain.”

But why is zoning being used to regulate where Joe and Jane Kauai buy bread?

In a free market, it’s not only about price. A consumer will not buy food for a penny if it’s not what she wants to consume. Small stores, like the short rib store on Kauai, can compete because it can offer what the big stores cannot: unique items that a big box grocer will not offer so it can maintain its low price point. See Joseph Agnese, Supermarket Stocks Look Appetizing, Business Week, Feb. 1, 2006, with the tag line: As grocery chains focus on quality, selection and convenience -- not just pricing -- Wal-Mart may become less of a threat.

In a similar vein, Maui has a Wal-Mart grocery store, a Costco, several Foodland and Safeway stores, and yet local grocers thrive. Mana Foods started out with a small store in Paia, selling specialty items like kalamata olives, tahini sauce, various chesses, and local organic produce. Mana Foods is currently expanding its Paia store and is building a new store elsewhere on the island. Other local grocers that sell specialty items and/or local delights like Maui made Portuguese Sausage include Pukalani Superette, Ah Fooks, and Down to Earth.

In a free market unencumbered by overly restrictive zoning, creative entrepreneurs and savvy local consumers can both thrive. But when market controls in the guise of zoning artificially limit choices, people are stuck with high prices and a limited supply of goods.