Walgreens, the nation's biggest-selling drug store chain, has set its sights on Hawai'i in an expansion plan that would deliver more consumer shopping options and could threaten the dominance of what many kama'aina regard as a local sales institution, Longs Drug Stores.

Walgreens, a behemoth with more than 10 times as many stores as Longs, is negotiating with the owner of Pearl Kai Shopping Center to build a store with a drive-through pharmacy as part of an effort to establish at least two or three stores in Honolulu, the owner of Pearl Kai said.

"We're working with them, but we don't have a firm deal," said Norm La Caze, president of La Caze Development Co., a large California-based retail developer that owns Pearl Kai and is upgrading the 'Aiea center with renovations and new tenants.

La Caze said neither he nor Walgreens has made binding commitments, and much still needs to be agreed upon. He estimated the odds of concluding a deal, which would involve tearing down some Pearl Kai buildings to make way for Walgreens, at "better than 50-50."

Walgreens spokeswoman Tiffany Bruce said she couldn't confirm plans or negotiations for a store in Hawai'i.

Several local commercial real-estate brokers said Walgreens is scouting potential Hawai'i store locations through brokerage firm CB Richard Ellis Hawaii Inc.

Roger Lyons, vice president of retail services for CB Richard Ellis Hawaii, said he could not comment.

'SATURATED' MARKET

Because of Hawai'i's high cost and limited supply of prime commercial real estate, it sometimes can take years for major national retailers to break into the market. And there is no certainty that Walgreens will be successful in its quest.

But a Walgreens arrival would further shake up the local retail industry that has been dramatically reshaped over the past two decades by such general merchandise giants as Kmart, Wal-Mart, Costco and Sam's Club — all of which operate pharmacies.

Local resident Marc Matsumoto said he likes Walgreens when visiting Las Vegas because the store is a good place to buy convenience items like bottled water. But as the staff pharmacist at Daiei's Kaheka Street store, Ma-tsumoto believes Walgreens would squeeze small pharmacies.

"I feel the market is saturated," he said.

Matsumoto said Daiei pharmacy sales declined when Wal-Mart opened its Ke'eaumoku Street location nearby last year, though general merchandise sales improved, perhaps because of the additional customer traffic in the area created by Wal-Mart and its neighbor Sam's Club.

COMPETITOR FOR LONGS

Walgreens likely would pull sales from a variety of established retailers such as supermarkets, convenience stores and big-box outlets, but would most closely compete with Longs.

Longs and Walgreens both evolved from small neighborhood drugstores into large drugstore chains selling food, cosmetics, gifts, school supplies, photo processing and other general merchandise, from auto accessories to gardening materials.

Illinois-based Walgreens has nearly 5,000 stores in 45 states. California-based Longs has nearly 500 stores in six states, including 31 in Hawai'i.

Hawai'i is the second-largest and second-oldest market for Longs, which was founded in 1938 in California and opened its first Hawai'i store in 1954.

"We've grown up with Hawai'i," said Longs spokeswoman Phyllis Proffer. "We love it."

Proffer would not comment on potential competition with Walgreens in Hawai'i, but acknowledged that doing business head to head with the bigger rival is not new.

Over the past decade, Longs has aggressively opened and upgraded stores as Walgreens and other competitors made inroads to Longs strongholds in California and in other Western states.

In the past couple of years, Longs also has begun adding drive-through pharmacies, which Walgreens has at most of its stores, and launched a chain-wide store remodeling program. Proffer said the company has 19 drive-throughs and is adding them whenever possible.

Brooks Borror, managing director of local real estate company Grubb & Ellis/CBI Inc., said that despite Walgreens' overall size, it would be almost inconceivable that the company could dethrone Longs as Hawai'i's most popular pharmacy/general merchandise store.

"Longs has so many good locations, and people are used to going there," he said. "It's going to be hard to knock them out of their seat."

Brian Arzadon, a Hawai'i Air National Guardsman, said it would be impossible to persuade him to shop at Walgreens over Longs.

"I would stick with Longs no matter what," he said. "You don't think of them as a Mainland company. They been around for so many years, you get accustomed to them."

Reach Andrew Gomes at agomes@honoluluadvertiser.com.