Luskin's closes 8 D.C. outlets Heated competition stymies electronics, appliance company

September 11, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

Luskin's Inc. has found it hard to be "The Cheapest Guy in Town" when the town is Washington.

Fierce competition from other Washington-area retailers has taken away the consumer electronics and appliance chain's price advantage, forcing the Baltimore-based company to shut eight of its 11 outlets in the region.

The closings mean Luskin's stores will be concentrated in the Baltimore area, where the company was founded nearly 50 years ago.

Cary Luskin, president and son of the company's founder, Jack Luskin, said the closings are not part of any corporate-wide restructuring that will affect its Baltimore operation.

"Baltimore will remain intact," Cary Luskin said yesterday of the eight stores in the region, which include stores as far away as Frederick and Westminster.

Luskin said that three stores in the Virginia Tidewater area and two outlets in Richmond, Va., also would remain open.

Referring to the closings, he said: "It is just a matter of getting rid of stores that were unprofitable."

According to Luskin, stores in Rockville, Hagerstown, Falls Church, Va., Fredericksburg, Va., Fairfax, Va., and Springfield, Va., have already closed. Outlets in Alexandria, Va., and Manassas, Va., he said, will close in the near future.

Stores in Hyattsville and Marlow Heights will stay open, Luskin said. "The two stores in Prince George's County are doing very well," he said.

"The competition is very tough in the Washington area," said Luskin. He said the chain found it hard to compete with large rivals such as Circuit City Stores Inc. and Best Buy Co.

But there were other reasons for Luskin's pulling the plug.

"Some of the stores we closed were old stores," Luskin said. "They needed a lot of money put into them in terms of renovations, and we just weren't willing to do that and the landlord was not willing to do that."

Luskin said that some of the properties have more potential for profit as real estate.

"It is easier to run some of them as real estate businesses rather than as retail businesses," he said. "One of the things we looked at was whether it is more profitable to run them as retail stores or lease them as real estate."

Luskin's belt-tightening is not a big surprise, said Mark A. Millman, president of Millman Search Group Inc., a Lutherville-based national retail consulting firm.

"There are too many retailers in the Washington area for Luskin's to compete," Millman said.

"It is a very smart move of their part to go back to their roots, which is the Baltimore area," said Millman. "This is where they started more than 40 years ago. This is their home turf, and they know the market well. The people know their name and they are still a dominant player in the consumer electronics markets."

Millman said the consolidation brings Luskin's closer to where it was 40 years ago "before the big guns came in" and Luskin's was able to promote itself as "The Cheapest Guy in Town."

"Unless you want to put out a tremendous amount of money -- which Luskin's probably doesn't have -- into advertising and promotion, you simply cannot compete with the margins and the pricing and all the other things that go along with billion-dollar retailers," said Millman.

"They made a wise decision. They were probably taking loses for the last couple of years on these stores and tried to turn them around the best they could. They are not going to put good money in after bad money."

Millman said that retail consolidations are occurring across the country. Luskin's, he said, "simply doesn't have the deep pockets the other retailers have, and that's the bottom line in the business today. It's all about market share."

Pub Date: 9/11/96

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