European furnishings retailer Scan Design Furniture Inc. said rising costs and softer sales will force the company to close its Hawai'i store after 29 years in business.

The company recently notified some 16,000 customers of its plan to liquidate inventory at discounted prices in a special sale for repeat customers starting today at the store at 788 S. King St. near the main Honolulu police station.

A sale for the general public will begin next Wednesday.

"It's unfortunate," said Ray Mahan, president of the Lynnwood, Wash.-based company. "It's just that the store has become a burden. I can't allow this store to risk the health of the organization as a whole."

Scan Design operates three stores in Washington and four in Oregon that will remain open. The company was established by the late Jens Christensen Bruun, who immigrated from Denmark and in 1964 opened his first store selling Danish furniture in Bellevue, Wash.

Mahan said Bruun was too busy expanding and running his business to take vacations, so at the urging of his wife, Inger, he opened a Scandinavian furniture store in Hawai'i largely as a vacation excuse.

The Hawai'i store, initially on Beretania Street, did well, especially during the late 1980s, when it arranged direct shipping of furniture to Japan during the huge influx of Japanese visitors and real estate investors that inflated the local economy.

In 1992, Scan Design was consolidated with sister company Scan Line Office Interiors into the present 36,000-square-foot store.

But in recent years, furniture sales have weakened as home sales slowed. Meanwhile commercial real estate rents and transportation costs have risen dramatically.

Mahan said rent for the company's Sand Island warehouse has doubled, and that it costs twice as much to deliver a container of furniture to Hawai'i than to the Pacific Northwest. The weak dollar also has made furniture imports more expensive.

Consumers can't be expected to absorb significantly higher furniture prices needed to make the store economically feasible, Mahan said.

"It's kind of the perfect storm," he said. "That really is killing us. We've got to stop the bleeding."

The store will be regularly closed on Mondays and Tuesdays to restock merchandise from the warehouse.

Mahan anticipates that it will take a month or two to sell out and shut down. About 16 employees will be affected by the closure.

"It's going to be sad," said Mike Lukela, who recalled furnishing a new home nearly 30 years ago with Scan Design furniture. Lukela, a Kane'ohe resident, was at the store yesterday looking to get a good deal on a chair and ottoman for a new home theater.

Alexander Kufel, a local artist and longtime Scan Design customer living in Nu'uanu, said he always appreciated the modern design and "sense of adventure" of Scandinavian furniture. "I hate to see them go," he said.