Star recently disclosed at a neighborhood board meeting that Kahala Mall's Mainland owner doesn't intend to renew Star's lease when it expires in March 2007 despite the supermarket's desire to renovate its store with a more upscale format.

Ron Yoda, mall general manager, said the center has talked with several local and Mainland retail food chains, including Texas-based Whole Foods Market, Trader Joe's and Star's larger local rival Foodland Super Market, but that no decisions have been made.

Yoda said the desire is to have a more upscale, full-service market with greater emphasis on premium-quality foods, wine and other specialty items or services.

"A lot is in the mix at this point," he said. "I wouldn't rule out anyone. Star has been a good tenant and good for the community, and we recognize that."

John Fujieki, chief executive officer of Star, said he has been working with consultants on a more upscale supermarket concept modeled after independent markets in San Francisco, and is hopeful Kahala Mall will like the plan and negotiate a new lease with Star.

Fujieki said the company, which has 10 stores statewide, expects to soon begin a $1.5 million to $2 million renovation at its Mo'ili'ili store that will serve as a prototype for upgrades at some other stores, though the Mo'ili'ili redo will be a little less upscale than the plan for Kahala to match demographics of each area.

Changes will involve store fixtures and services, but will concentrate on product variety, with more international and premium selections, Fujieki said.

"We need to study the demographics more and take a more focused approach on area customers," he said.

Some Kahala residents have expressed concern about losing the kama'aina supermarket that has been part of the community for about 40 years, though many also say they'd like a more upscale store.

"There's definitely a place for it in the community here," said Larry Rowland, a Hawai'i Pacific University instructor who has lived in Kahala for about 15 years. "Everybody's looking for good stuff."

Upscaling traditional supermarkets in more affluent neighborhoods is a strategy to increase profit margins and better compete against larger chains and big-box discounters with groceries such as Costco and Wal-Mart.

Charles Cerankosky, a food marketing analyst with investment banking group KeyBanc Capital Markets in Ohio, said the upscaling trend for supermarkets began about 20 years ago, but picked up in the '90s and continues.

"The best way to differentiate yourself against the price merchandisers is to have better-quality perishables," he said. "It does depend, however, on consumers willing to depart with discretionary income ... this means you also have to have the right location."

Safeway has rolled out a new concept in some California and East Coast markets featuring sections with hardwood flooring, mahogany shelving, recessed lighting and more upscale offerings such as specialty meats, a cheese bar, and sandwich shop with dining area.

Other examples include East Coast chain Wegmans Food Markets, which describes itself more like a European open-air market with "dazzling displays" of fresh foods, wide selections that include 400 specialty cheeses, services such as pharmacies, photo labs and children play areas, and cafes serving dine-in or take-out soups, sushi, pizza and coffee.

Cerankosky said the epitome of the upscale full-service supermarket is Whole Foods. "It is not only a great natural-foods merchant, but they also have a lot of better-quality perishables and in-store service departments," he said.

Whole Foods has considered entering the Hawai'i market for at least a few years, and at one time expressed formal interest to locate a store at Victoria Ward Centers.

Through a spokeswoman, the company declined to confirm its exploration of store sites in Hawai'i or talks with Kahala Mall.

Trader Joe's isn't interested in Hawai'i because it can more easily maintain its tight cost controls by expanding across the Mainland, according to local brokers who have courted the retailer.

Foodland for several years has operated gourmet food and wine departments at its Beretania and Kailua stores under the R. Field Wine Co. name, and has contemplated a broader upscale format, according to one person with knowledge of the effort and who did not want to be named to avoid spoiling a business relationship.

A Foodland spokeswoman declined to comment on talks with Kahala Mall or upscale store planning.

Star has been in Kahala for about 40 years. It acquired the Piggly Wiggly supermarket that was one of the original anchor tenants at the shopping center's predecessor, which opened in 1957.