The other shoe fell at Hechinger Co. last week, effectively marking the end of an era in Washington retailing.
One by one, starting with three major drugstore chains in the 1980s, all but a few once-prominent names in local retailing have fallen victim to stiffer competition or management's seeming inability to respond to rapid changes in the industry and consumer preferences.
Home-grown companies whose names had become household words to several generations of Washingtonians -- Peoples Drug Stores, DrugFair, W. Bell & Co., Garfinckel's, Raleighs, Woodward & Lothrop and now Hechinger -- have become little more than footnotes.
Sixty-three years after Giant Food opened its first store in the District, it continues to be the leading supermarket chain in the area. But not even Giant, though still operating under the same trade name, is the company that it was two years ago, having been sold last year to a Dutch conglomerate.
Hechinger truly was the last local retail icon to achieve prominence under the guidance of its founding family. And even though the Hechinger family sold the home-improvement chain two years ago, last week's announcement that the new owner plans to liquidate the company surely must be a painful blow to the descendants of founder Sydney Hechinger.
The fall of the house of Hechinger is in many ways a tragedy. But it is more a sign of the times than the consequence of the greed, arrogance or internal feuding that eventually toppled some local companies.
Although once the trendsetter among home improvement chains, Hechinger eventually lost sight of a trend: Smaller retail chains are being swept aside by industry giants with deep pockets and voracious appetites for expansion.
The Hechinger family withdrew from the fray, albeit reluctantly, by selling the chain in 1997. Management at least avoided the trauma of having to liquidate what had been a family treasure for more than 85 years.
In truth, few knowledgeable industry observers shared the enthusiasm of the new owner, Leonard Green & Partners, a California investment group. Green nevertheless bet heavily on the impossible, combining a financially weak Hechinger with another struggling chain, Builders Square.
Just three months after filing a petition in June to reorganize under Chapter 11 bankruptcy protection, the new but unimproved Hechinger threw in the towel, announcing it will liquidate its assets and pay off creditors.
Realistically, the die was cast in May when Hechinger disclosed that it was considering a bankruptcy reorganization filing. By then the company's chances of surviving were very much in doubt.
Hechinger's demise actually began at least four years ago, when back-breaking competition forced management to close several stores and retreat from North and South Carolina.
Same-store sales, a key measure of a retailer's performance, were either negative or essentially flat throughout 1995. Hechinger clearly was beginning to feel the heat of competition from its two biggest rivals, Home Depot Inc. and Lowe's Cos. Even competing in its own back yard became a struggle for Hechinger.
"We've gone from having zero competition in 1992 in our markets to having 8.5 million square feet of space in Home Depot stores in our markets," John Hechinger Jr., then chairman and chief executive, lamented in an interview two years ago.
Despite being forced into a defensive posture by Home Depot and Lowe's, Hechinger ironically was still relatively strong financially before management decided to sell the company.
"Last year, we generated over $72 million in cash flow from our operations," Hechinger Jr. said in early 1997. "We have over $30 million in the bank, over $200 million in lines of credit and $200 million in stores that we own outright. We also have nonoperating assets that we can turn into cash. The fact is we have huge financial resources and we will use our assets very wisely."
Brave words and cash obviously weren't enough to stem the tide.
As it turns out, Hechinger's former management made at least four major mistakes from which the company never recovered. First, management badly misread the market when it ventured outside the Washington region. Then it failed to adapt soon enough to merchandising strategies that were being employed successfully by its chief competitors. It erred again when it merged the underperforming Home Quarters chain into Hechinger Co. Finally, Hechinger lost sight of what had made it a strong regional chain: quality service, strong inventory and innovation.
But in the final analysis, Hechinger wasted too much time and resources trying to be too much like the ubiquitous warehouse retailers instead of reinforcing its own niche by being Hechinger the innovator and trendsetter.