As 2026 begins, the Aloha State is facing a historic contraction. The complete departure of a luxury travel retail giant marks the end of an era for Waikiki, while the potential retreat of the State last remaining department store chain threatens to hollow out the "local" malls on the Neighbor Islands.
Here is the breakdown of the retail shakeup hitting Hawaii in 2026.
The "Duty Free" Departure: DFS Leaves Hawaii
The biggest retail story of 2026 is DFS Group's total exit.
- The Closures: After more than 60 years in the islands, the luxury retailer is packing its bags.
- Waikiki: The flagship T Galleria by DFS on Kalakaua Avenue will permanently close on January 28, 2026.
- Airports: Concessions at Daniel K. Inouye International (HNL) will shutter by March 31, 2026, followed by the Kahului Airport location in August.
- The Impact: This is a seismic shift for Hawaii's visitor industry. DFS was the engine of high-end spending for international tourists (especially from Japan). Its exit leaves a massive, multi-story vacancy in the heart of Waikiki and signals a worrying decline in the "luxury travel" market that once fueled the State tax base.
The Department Store Watch: Macy's
While Ala Moana Center remains a fortress, the "local" malls are bracing for impact as Macy's executes its plan to close 150 stores.
- The Watchlist: Industry analysts have flagged four specific locations as "at-risk" candidates for the 2026 closure wave:
- Hilo: Prince Kuhio Plaza (The primary anchor for East Hawaii).
- Honolulu: Kahala Mall (A key anchor for East Honolulu).
- Maui: Queen Kaahumanu Center (Already struggling with vacancies).
- Kona: Makalapua Center.
- The Fear: For the Neighbor Islands, Macy's is often the only department store. If the Hilo or Maui locations close, residents will lose their primary source for business attire, home goods, and cosmetics, forcing them to rely on shipping or expensive boutiques.
The Surf Shop "Wipeout": Volcom & Billabong
The corporate collapse of the surf industry has arrived on the shores where it all began.
- The Bankruptcy: Liberated Brands—the parent company of Volcom, Billabong, Quiksilver, and RVCA—has filed for Chapter 11 bankruptcy.
- The Local Threat: The filing leaves the future of the company's 9 Hawaii stores in limbo. From the high-traffic Volcom store in Waikiki to the iconic surf shops on the North Shore, these closures would strip the islands of the brands that are synonymous with Hawaii surf culture, replacing them with empty storefronts in prime tourist zones.
The "Ward" Transition: Longs Drugs
Even the most stable local staples are moving pieces on the board.
- The Closure: Longs Drugs (CVS) is continuing its transition in Kakaako. Following the closure of its Ward Village location in mid-2025, the ripple effects are being felt in 2026 as residents adjust to the loss of a walkable pharmacy in Honolulu's fastest-growing neighborhood.
- The Trend: This mirrors a national trend of pharmacies retreating from high-rent urban cores, forcing urban dwellers to drive to larger, suburban-style locations to fill prescriptions.
Good News: The Grocery Merger is Dead
One bullet has been dodged.
- The Status: The termination of the proposed Kroger (Fred Meyer) and Albertsons (Safeway) merger means the threat of divesting Hawaii stores is over.
- The Result: Safeway remains stable. Hawaii residents no longer have to worry about their local store being sold to a wholesale liquidator. For a state with the nation's highest food prices, maintaining grocery market stability is a critical win for 2026.
The exit of DFS is a blow to the State prestige as a global shopping destination. Meanwhile, the uncertainty surrounding Macy's and the surf brands threatens residents' day-to-day shopping habits. The islands are becoming a place of extremes: ultra-luxury at Ala Moana for the rich, and Walmart/Costco for everyone else, with very little left in the middle.
Longs Drugs in Ward Village closes in June