DATE: Wednesday, May 7, 1997                TAG: 9705070502

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 

DATELINE: CHESAPEAKE                        LENGTH:   74 lines

HECHINGER TO TEST STORE FOR BUSINESSES COMPANY LOOKS FOR NEW WAYS TO REVIVE SALES

Looking for new ways to attract sales, Hechinger Co., owner of HQ-Home Quarters Warehouse, plans to test a store that focuses on commercial businesses rather than typical home-improvement customers.

The first ``HQ Commercial Business Center'' will open in Chesapeake's Greenbrier community next month. It will target companies that currently must make dozens of trips or calls to find paint, commercial lighting, sanitary products and other items.

``This will be a one-stop shopping place for businesses,'' said Steve Guaraldo, vice president of commercial business for Landover, Md.-based Hechinger. ``We believe this is the way to go.''

Hechinger, which has been battered by mammoth home-improvement chains such as Home Depot and Lowe's, has been searching for new ways to revive its sales and improve its image on the stock market.

The 117-store chain has lost money over the past three years, and its share price has fallen dramatically over the past decade. Its stock price soared to $26.25 a share in 1987. On Tuesday, it was $1.63 per share.

In addition, Home Depot Inc., the titan of the home-improvement industry, continues to expand on Hechinger's turf. It's no secret that Home Depot is hungry to open stores in Hampton Roads, where HQ was born.

``I'm aware that they're looking at the Tidewater market aggressively,'' said Clark McClelland, Hechinger's executive vice president and chief financial officer. ``We will see them here sometime in the future.''

Neal Kaplan, an analyst with Scott & Stringfellow in Richmond, said Hechinger knows it has made mistakes. It failed to upgrade stores and open bigger warehouses. And he wonders whether executives made the right decision by merging HQ's operations into Hechinger in 1995.

``I always thought HQ was run better than Hechinger,'' Kaplan said. ``I was surprised that they made the Hechinger side in charge rather than HQ people.''

Now, he said, it may be too late in the game for Hechinger to compete directly with the big chains.

``I think it's obvious that they can't continue the way they're going,'' Kaplan said. ``I guess that's why they're probably trying to avoid going head-to-head with Home Depot and trying something different.''

Hechinger executives appear to agree. For now, it's too early to tell whether company officials plan to abandon the home-improvement warehouse format. But they want to see whether the company can grow by focusing on niche areas of the industry.

For example, in Albany, N.Y., Hechinger is testing a home decor superstore called Better Spaces, which targets people who want to spruce up their homes rather than make big renovations.

Hechinger opened Better Spaces in a warehouse once occupied by HQ. If this concept works, customers may find other HQ stores converting to Better Spaces outlets.

The retailer also is developing a hardware store that, at 60,000 square feet, will be much larger than the average neighborhood hardware store but smaller and more convenient for customers than the mammoth home-improvement outlets, McClelland said.

HQ stores run about 102,000 square feet.

Company executives say the first of the new hardware stores should open in the Washington area by year's end.

As for the HQ commercial center, it will open in June along Smith Avenue, which is off South Military Highway.

The store, about 20,000 square feet, will target all types of businesses, from small motels to nursing homes. It will carry everything from pipe valves to paint, delivering to businesses if necessary.

If the concept works, it also will be expanded, said Hechinger vice president Steve Guaraldo.

``There's a huge group of customers here,'' Guaraldo said. ``This is something we should go after.'' ILLUSTRATION: Graphic

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