Palama Supermarket is ending a 25-year run at the Kapalama Shopping Center in Kalihi and moving next month to a larger flagship location a block away as it seeks to diversify and expand its offerings beyond the Korean market.

The niche grocery chain is building a $5 million, 20,000-square-foot complex to house the largest of its three markets, according to Daniel Lim, company chief operating officer and son of founders Hyo Kyu and Hae Joo Lim.

The existing 14,000-square-foot store will close by mid-August and reopen at 1010 N. King St. Its 40 employees will transfer to the new location, Lim said.

The new store will carry a more diverse array of products to cater to Koreans as well as different ethnicities who live in the surrounding neighborhood.

"We typically have been ethnically Korean niched," he said. "It’s not going to be all Korean, which is 90 percent (of the products now)."

The building also will have a mix of tenants, including a hair salon and church group on a second level, and others that will help fill a "void in that area," he said.

"We try to provide like a one-stop shopping experience where you can get your hair done, buy your makeup, eat and shop," Lim said.

"So pretty much everything Korean you can get in one stop. We find that having it within the same building makes more sense."

The existing store offers fresh produce, a large inventory of appliances and furniture, household goods and a mini restaurant. The flagship complex will have space for 10 to 12 subtenants. The company has signed an agreement with Tae’s Teppanyaki to operate within the supermarket and is negotiating with a sushi vendor as well as a pharmacy to sublease space.

The building sits on two parcels, one owned by the supermarket, the other by Kamehameha Schools. The grocery chain, which also operates stores near Ala Moana Center and in Waimalu, bought the Kalihi property in 2009, but first had to demolish a partially developed building before construction could begin.

Palama Supermarket, owned by H&K Inc., began as a small Korean convenience store on the corner of Kalakaua Avenue and Philip Street in 1977. The company has grown into one of the largest Korean-owned businesses in Hawaii, specializing in Asian products, many of which are imported from Korea.

"I just come over here because I walk close by," said Maria Cantillo, a 70-year-old Kalihi resident who frequents the market at least twice a month. "I like the Korean (products). It’s a good price."