"Mote spending on home imprcvement"

In an exclusive to Building products Digest, John Hechinger tikes a had look at today's home center industry.

home improvement can be considered a dollar saved.

"Competition in the retail home center industry will become even more fierce. Discounting will continue to pressure profitability and keep the spotlight on productivity. This may slorv projected expansion plans, though well capitalized companies should meet their annual targets in the tremendous push to lock up market share."

Hechinger's enthusiasm is based in part on his company's results in the difficult retailing environment of 1985. "Last year was one ofthe toughest I can recall. Sales were stubbornly sluggish much of the year and the competitive environment reached a new high, precipitating shakeouts in certain territories. We heated up the marketplace a bit ourselves by opening a record number of new stores. Initial saleswhere we took on

Story at a Glance

Fierce competition ... smatl dealerc face the thrcat of ,,deep pocket" giants ... warehousb proliferation healthy ... more companies will retrench ... industry must do a better job for the customer.

some very strong local and national oper_ atorswere especially satisfing.

"At the same time, in our established markets we were barraged with new competition, including several giant retailers with pockets deep enough to buy their way into our backyard without seeming to worry about having to make a profit. Nevertheless, we managed to build our business nicely, in existing stores as well as with new locations."

In commenting on other aspects of the vital home center industry, Hechinger underscored his confidence in its progress, citing the d-i-y warehouse phenomenon and new packaging developments as evidence.

"Improvements in packaging by suppliers have stimulated this business in recent years. We've already come a long way, but we can do more to better serve and educate the d-i-y consumer and also enhance our own best interests at the same time."

The proliferation ofwarehouse stores is "a healthy development to further industry growth. But companies that haven't done their homework and don,t have solidly based expansion plarrs will find it tougher going than ever. We'll see more retrenchment before the dust settles from the war on the warehouses."

Hechinger said his company will unveil a new version ofits super stores this year. Hechinger intends to accelerate its momentum by opening at least 13 more stores in 9 communities, "some in the snowbelt and some in the sunbelt." The company will add approximately 1.2 million square feet of selling and storage space (on top of its present 4.4 million square feet) to end the year with approximately 5.6 million square feet of selling and storage.