The Home Is Their Castle

June 27, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

The alarms went off at Hechinger Co. three years ago.

Heralded rival Home Depot was approaching Hechinger's mid-Atlantic stronghold. Hechinger, which had had the lucrative home-center business in Baltimore and Washington to itself for years, did the retail equivalent of circling its wagons.

It cut prices. It rejiggered its merchandise. It remodeled old stores. It built new ones -- some as big as Home Depot's 100,000-square-foot caverns.

The changes worked -- to a large degree, so far.

Hechinger Co.'s Hechinger Stores division is no longer losing big chunks of market share in its primary markets of Baltimore, Washington and Philadelphia, according to figures supplied at the company's shareholders meeting this month.

The turnaround has been "very important" in the near-doubling of Hechinger's stock price in recent months, even though the company's Home Quarters Warehouse division is bigger and growing much more quickly, said Baltimore securities analyst R. Bentley Offutt.

But the competition is far from over. Indeed, it's getting more intense. Home Depot, which has 11 stores in Maryland and Virginia now, said it intends to operate 23 or 25 in those states by 1998.

Hechinger isn't standing still. Its newest location, opened in Laurel this month, is different in important ways from the Hechinger unit's other 71 stores and gives a good indication of future strategy.

The store, the first major project of new Hechinger Stores chief Kenneth J. Cort, is the same size as the chain's other biggest outlets -- about 100,000 square feet, not counting outside garden and lumber space. But it is lighter and more open than, say, Hechinger's big Columbia store, which was finished last year.

The floors are white instead of concrete-gray. The aisles are wider.

The Laurel store, at the intersection of routes 197 and 198, abandons the "racetrack" layout of other locations that forces shoppers to pass the light bulbs and batteries before getting to the good stuff. Instead, it has a center entrance and a broad center aisle.

Kitchen and bath remodeling, Hechinger's strengths, are at the front. Signs are bigger, easier to read and list the merchandise in each corridor, supermarket-style.

"This store doesn't have any bad locations," boasted Mr. Cort. "There are no dead spots."

Like other newer Hechinger outlets, the Laurel store organizes its products in do-it-yourself project categories: flooring, kitchen and so on. And it's trying to lure business from professionals with a separate counter and entrance for contractors.

Home Depot managers said they've seen the setup before -- in their own stores.

Hechinger is "great at stealing other people's ideas and concepts," said Dennis Kennedy, Home Depot's district manager for Maryland. "I think if we tied a rope to our ankles and jumped from the Key Bridge, they'd jump, too."

But originality doesn't count in retailing. Profits do.

Hechinger's Laurel location "is a very nice store," said Michael L. Mead, a retail analyst with Baltimore investment firm Legg Mason Wood Walker. "I don't see a lot of difference in terms of customer presentation between a Home Depot, a Lowe's and a Hechinger. All three players have very strong formats in the 100,000-square-foot box. I'm not sure who's copying who anymore."

The Laurel outlet is a long leap from the 60,000-square-foot Hechinger stores that bore "the world's most unusual lumber yards" sobriquet and earned millions in the 1980s. The old stores carried more housewares and did little business with professional contractors.

Hechinger opened its first "home project centers" in Glen Burnie in 1991. Home Depot, a Wall Street sweetheart with strengths in sales to contractors and hard-core do-it-yourselfers, arrived the same year in the same place.

Most Hechinger project centers were the same size as older stores but carried more do-it-yourself goods, catered to professionals and were organized into inside "mini-stores" according to what part of the home customers were remodeling.

A year later, the company slashed prices in all its Hechinger division stores and set up a $57.3 million fund to cover the markdowns and to convert additional stores. Managers decided that Home Quarters, which has stores across the East and Southeast, would be Hechinger Co.'s growth engine. Hechinger Stores would retreat, retrench and get tough.

Mr. Cort, a retail veteran who helped reorganize Ames Department Stores Inc. after a bankruptcy filing and once was chief executive of jeweler Zale Corp., was hired to run the Hechinger unit in late 1992.

The division now operates 30 project centers and 42 traditional stores. Prices are "dead-on" comparable to Home Depot, according Mr. Mead.

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