After two years in which it continued to lose ground rapidly to bigger and more aggressive competitors, the new Hechinger Co. has apparently concluded that it can't survive using its existing business plan.
With giant Home Depot Inc. and No. 2 Lowe's Cos. continually opening more stores and amassing bigger profits in the retail home-improvement business, a badly beaten and financially weakened Hechinger is considering several options, including filing for reorganization under the protection of federal bankruptcy law.
Under the circumstances, Hechinger really has few options available, none of which appears to be promising. In fact, there is no guarantee that the Landover-based company will last even if it files for bankruptcy reorganization.
The odds that it can remake itself into a serious competitor in a business so completely dominated by Home Depot and Lowe's simply aren't very good.
But if Hechinger is to have any chance of surviving, then it probably should try to do so as something other than just another run-of-the-mill, look-alike warehouse-type home-improvement chain.
That format clearly didn't work for the original Hechinger chain, ultimately forcing owners to sell the company two years ago to Leonard Green & Partners, a Los Angeles investment group that combined it with the ailing Builders Square home-improvement chain, formerly owned by Kmart Corp.
The warehouse format obviously hasn't worked for the Hechinger-Builders Square combination either. Losses continue to pile up. Some vendors have stopped delivery of merchandise, and Hechinger recently missed making a huge payment on its debt.
Thus its only hope, it seems, is reorganizing under Chapter 11 bankruptcy protection and carving out a new retail niche in the home-improvement business, using a dramatically different format.
Instead of recycling the warehouse look, Hechinger ought to consider, for example, operating a chain of specialty retail stores that would be more like home design centers, specializing in helping customers create custom interiors.
With the right floor layout and creative use of space, a new Hechinger could create the look of a group of upscale showrooms or galleries, where it might sell fixtures, carpeting and other furnishings and still carry the usual assortment of hardware items.
The idea, in short, is to create an exciting concept in the home-improvement business and a retail environment in which consumers will come to expect superior quality, expert help in design and decorating concepts, and reliable service.
Home Depot's success with the cluttered-warehouse look notwithstanding, not all consumers are comfortable shopping in that format. It can be intimidating for some and a hassle for others.
But it works for Home Depot because it took the concept and perfected it long before competitors thought of using it. Lowe's continues to hold its own using a variation on the same theme, but others, including Hechinger I and II, have faltered.
"We need to set our own course and do what our customers are telling us they want," former Hechinger chairman John Hechinger Jr. acknowledged in an interview two years ago. "It's important for us to give the customer a choice, particularly female customers."
To his credit, Hechinger finally realized that superimposing the warehouse format on the company's more traditional style of doing business was a mistake.
Things might have been different if company officials had embraced the warehouse-store format earlier. But it wasn't until the late 1980s that the original Hechinger chain acquired Virginia-based Home Quarters chain and expanded the concept. By then, though, Hechinger had begun to feel intense pressure from Home Depot and Lowe's.
Despite heavy losses and a shrinking customer base, it may have been possible for John Hechinger Jr. to turn the company around, using a new format. But that's mere speculation at this point.
To say that Leonard Green & Partners should have seen the handwriting on the wall before acquiring Hechinger is yet another exercise in second-guessing.
The only thing that really matters now is what Hechinger's current owners decide to do.
"It became clear to me within the first year of being president that if we didn't make significant changes in virtually everything we did that we would be put out of business in a matter of years," John Hechinger Jr. recalled two years ago.
Given the company's current problems, that's still a valid appraisal.