Home stores to close by Jan. 1

8 BGE

120 workers affected by move ending sales of appliances, electronics

October 01, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Citing increased competition from national chains, BGE Home Products and Services said yesterday that it would close its eight stores in the Baltimore metropolitan area by the end of the year and stop selling appliances and home electronics.

Instead, the Constellation Energy Group Inc. subsidiary will focus more on selling and servicing heating and air conditioning equipment, plumbing, and electrical systems.

BGE Home will also continue to sell windows, doors, siding and water heaters, and service contracts for appliances. The products will be sold through BGE Home's servicing arm.

"Our service business has been a high financial performer and ... had extremely high customer satisfaction," said William H. Munn, BGE Home's president and chief executive officer. "We feel that it's a platform that we can continue to grow."

The closings of the BGE Home stores are to affect about 120 of the company's 625 workers. BGE Home said it would try to place workers in other areas within the company or at other Constellation companies.

BGE's appliance retailing roots go back to 1904. That's when Consolidated Gas, Electric, Light & Power Co. of Baltimore, which became Baltimore Gas and Electric Co. in the mid-1950s, began selling home appliances in downtown Baltimore.

BGE Home closed its downtown store at BGE's headquarters on Lexington Street at the end of last year, said spokesman Charles B. Welsh.

The stores that will close are in Eastpoint Mall in Baltimore County, Governor Plaza in Glen Burnie, Parole Plaza in Annapolis, Security Square Mall in Woodlawn, Timonium Fairgrounds Plaza, the Avenue at White Marsh, Dobbin Center in Columbia and the Festival at Bel Air.

BGE Home's withdrawal from appliance and home electronics sales underscores the effect of large national chains and discounters on the retail marketplace in recent years.

While Sears, Roebuck & Co. dominates appliance sales, Lowe's Cos. Inc., Home Depot Inc. and Best Buy Co. Inc. have gained significant ground.

But the competition has led to casualties on the national and local levels.

Montgomery Ward, once a significant appliance retailer, closed last year. Circuit City Stores Inc. stopped selling appliances to focus more on home office products and electronics. And Luskin's Inc., a longtime Baltimore appliance and electronics retailer, went bankrupt in 1997.

Munn declined to release sales figures for the stores or discuss profitability. Sales were steady, he said, but the company faced increasing pressure from other "big box" stores.

"Discounting created lower margins, [and] expenses were increasing," Munn said. "We were getting squeezed on margins even though our customers were faithful."

BGE Home will continue to honor warranties and service contracts related to all products purchased at its stores, the company said.

Welsh, the BGE Home spokesman, said Constellation would report one-time charges related to employee severance at the end of October when it releases third quarter results.

Baltimore Gas and Electric formed BGE Home Products & Services in 1994 to run its existing gas-furnace repairs and appliance stores, which numbered 11 at the time, and bought a large Columbia contractor to boost its services business.

At that time, Munn said, the retail stores made sense.

"The national chains hadn't entered into the warehouse format business ... but times have changed," he said. "I would say the `big-box' evolution has been most detrimental to the local appliance dealer business."

Brian S. Postol, a retail analyst with A.G. Edwards & Sons in St. Louis, said that competitors such as Lowe's and Home Depot also have thin margins on appliance sales, but their sales volumes are far greater.

Such large retailers consider appliance sales as "add-on" purchases by customers remodeling a kitchen and looking to buy a refrigerator or dishwasher, he said.

But BGE Home's future now lies mainly in servicing and installation, Munn said. The company added plumbing services a few years ago and electrical services two years ago.

The company's windows, doors and siding business has also grown, and there are opportunities to expand BGE Home's business beyond the Baltimore area, he said.

But BGE Home, which is based in Columbia, continues to draw the ire of local contractors, who blame the utility for creating a juggernaut that they can't compete against.

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