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Costco also will sell discount gasoline to its Kauai members, who pay among the highest gasoline prices in the state, which has the highest prices in the nation.
"What's impressive about Kauai is that it has a much larger population and a much larger tourism population that we thought," Brotman said.
The proposed Costco will be across the street from Grove Farm's Kukui Grove Shopping Center and next to big-box retailer Home Depot.
The new store will be Costco's sixth in Hawaii. Costco operates membership stores in Hawaii Kai, Iwilei, Waipio Gentry, Maui and Kona.
It will also compete head-on with larger retailers such as Wal-Mart, which has a store in Lihue, and Kmart, which has a location next to the Kukui Grove Shopping Center.
Marketing analysts believe that Costco's impact not only will be felt by Kauai grocery chains and smaller merchants but will also affect Kauai wholesalers and purveyors.
But eventually, many of those smaller merchants and wholesalers will adjust or become Costco suppliers and customers, said retail analyst Marty Plotnick, president of Creative Resources Inc.
"I think Costco will do exceptionally well for the Kauai community," said Plotnick.
Costco's land purchase comes as seller Grove Farm is shedding much of its retail properties in Kauai. Earlier this month, Grove Farm said it hired Los Angeles-based Eastdil Realty Co. to market the Kukui Grove Shopping Center.
Grove Farm also said it plans to sell the fee interest to a separate shopping center developed by local firm the MacNaughton Group. The MacNaughton Group said last week that it is marketing its leasehold interest in its Kauai retail complex, whose tenants include Kmart and Longs.
Grove Farm Chief Executive David Pratt could not be reached for comment.
But the company, which built the Kukui Grove center in 1982, has said that it was shifting its priorities toward residential development after America Online co-founder Steve Case purchased the former sugar grower in 2001.