Hawaii retailers have been feeling the slump in tourism — with the average daily spending by Hawaii's biggest visitor market down about 17 percent from last year.

Visitors from the Western U.S., who make up about 40 percent of all tourists in the state, spent an average of $133 a day so far this year, down from $148 last year. Their spending on jewelry, watches, cosmetics and perfume plunged nearly 30 percent, according to state statistics.

The result has been the closure of some major stores such as Niketown and Banana Republic in Waikíkí, which occupied more than 77,000 square feet.

"That's a big hole. I've got to believe that's affecting that part of Waikíkí," said Barbara Campbell, vice president of retail leasing for Outrigger Enterprises Group.

She's seen some stores lay off employees or cut hours. "I think they're making do with less," Campbell said. "They're trimming hours where they can."

As a landlord, her company is being asked for rent reductions, which sometimes make long-term business sense — cut a cost now to help a tenant survive longer.

"We don't want empty spaces," Campbell said. "We've taken the philosophy that we're all in this together."

And while there are signs that business is picking up, most experts seem to believe that consumer confidence will take some time to rebuild.

Retailers survive by updating what they sell, offering promotions and reducing expenses, said Maui Divers Jewelry president and chief executive officer Bob Taylor.

"We have to work a lot harder to make sales that we made a couple of years ago," Taylor said. The jewelry company, for example, is now offering a $199 plumeria pendant in 14-karat gold that normally sells for $295.

Taylor estimates spending per transaction dropped about 20 percent since the economy declined. The company last year laid off 11 workers but hasn't had to cut further, he said.

GROWTH AT ABC

At the same time, the ABC Store chain has continued to grow with a wide array of bargain-priced T-shirts, towels, souvenirs and snacks.

"We have not laid off any employees or reduced any employee benefits, so far," said president Paul Kosasa. "We are doing OK."

Campbell said even visitors who feel they can afford to splurge are hanging back on some of their spending. She spoke to a gallery owner who has seen a number of couples recently agree to buy a $5,000 piece of art, then back out just before the purchase.

"They want it but they just don't think they should buy it," Campbell said.

At the Peter Lik Gallery, director Rama Smith said the fine art photography gallery started strong with an opening in March 2007 but felt the pullback in sales last year.

Most of the large framed photographic pieces range in price from $200 to $100,000.

Smith said in 2007, customers would spend $20,000 to $50,000 quite often, but "the large-ticket items have slowed" with the range hovering around $5,000 to $10,000 with an occasional $40,000.

"The typical customer has a lot of fear," Smith said, about making any luxury purchases. He said his company has kept staff and hours.

"I think it's taken more work to get the same business," Smith said.

Outrigger's Campbell said a discount store such as Ross Dress for Less "would hit a home run in Waikíkí."

BUY LOCAL

Another Waikíkí stalwart is DFS, a global retailer that runs about 40 stores in the state catering to visitors, particularly those from Japan.

While the company laid off 130 workers last year, it has seen stronger retail sales over the past three months, according to Sharon Weiner, vice president of worldwide communications for DFS.

She said Hawaii is getting help from lower fuel surcharges, reduced hotel room rates and the strength of the yen.

"The yen exchange rate was in the 120s to the dollar in 2001 when we opened our new DFS Galleria Waikíkí, and 10 points weaker last year. It's now hovering around 90," Weiner said. "That's substantially more buying power and Japanese customers know it."

And Weiner said younger Japanese customers are spending less — still buying from Coach or another favorite designer but putting down the $2,000 bag to buy a $500 wallet, she said.

"They still want the prestige and quality associated with the brand, but are looking for lower price points," Weiner said.

State tourism liaison Marsha Wienert said there's no question that the entire community feels the trickle-down effect of the $1.2 billion drop in visitor spending last year.

"When you take that kind of direct spending out of the economy, it affects everything," Wienert said.

"The best advice I could give to anyone would be to go shopping tomorrow and buy locally, not on the Internet," Wienert said.