Drugstore giant Walgreen Co., in the midst of an aggressive nationwide expansion, plans to go head-to-head with Longs Drug Stores Corp. in Hawai'i, eventually opening as many as 40 stores in the state and locating them next to Longs whenever possible.

"We think there's a lot of room here," said Robert Roscoe, Walgreens director of asset development, at an International Council of Shopping Centers conference yesterday in Waikiki.

Hawai'i is the last of the biggest 100 U.S. markets with only one major drugstore chain, according to Roscoe, who said Longs has a 73 percent share of the business in the Islands.

"That's unheard of," he said. "That's why we're coming here."

Walgreens has said it plans to open its initial four stores on O'ahu by early next year.

At least two of the initial Walgreens stores — one at the former Star Market in Kane'ohe and one at the former Kam Bowl in Kalihi — will be Longs neighbors.

The nation's largest drugstore chain intends to bring a lot more vehement close-quarters competition to Hawai'i's retail pharmacy and general merchandise business.

"We do plan to compete head-to-head with Longs," Roscoe said, adding that Walgreens will try to open as many stores as possible next to an existing Longs.

Roscoe said Hawai'i can probably accommodate 40 Walgreens stores, and that the company will press to establish a critical mass of 15 initial stores on O'ahu. Roscoe anticipated that 10 stores can be opened in the next 18 to 24 months.

Roscoe noted that limited available commercial real estate in the Islands that meets Walgreens needs will influence where and how fast the company can open stores, which average 14,500 square feet.

DRIVE-THROUGH SERVICE

The first Walgreens is slated to open at the former Tower Records site on Ke'eaumoku Street near Ala Moana Center in November. That store will be 13,000 square feet but will not have drive-through pharmacy service.

The Kane'ohe and Kalihi stores are slated to open early next year and represent the company's prototypical store with drive-through pharmacy windows. The location of the fourth O'ahu Walgreens has not been disclosed because a deal has yet to be finalized, but is expected to open early next year.

Walgreens likely will pull pharmacy sales mainly from Longs, but also will draw sales of pharmacy and nonpharmacy sales from supermarkets, big-box outlets and convenience stores.

Roscoe said the retail pharmacy industry in Hawai'i is a $643 million business, some of which Walgreens plans to capture from Longs in stiff competition. "We don't expect them to roll over," he said.

LONGS HERE SINCE 1954

Longs Drugs, through company spokeswoman Farra Levin, declined to comment on Walgreens' plans.

Walnut Creek, Calif.-based Longs has done business in Hawai'i since 1954 and has built a loyal following of generations of kama'aina, many of whom regard the company with 36 stores here as a familiar local institution.

The company reported $5.1 billion in revenue for its most recent fiscal year ended in January, but with about 500 stores in six states is roughly one-tenth the size of Walgreens.

Longs recently announced plans to cease business this year in Washington, Oregon and Colorado where it operates 23 stores. But in Hawai'i, the company has added five small pharmacy stores since December.

Deerfield, Ill.-based Walgreens has about 5,700 stores on the Mainland and Puerto Rico. The company reported $47.4 billion in revenue for its most recent fiscal year ended last August, and expects to open about 500 stores this year.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.