Megamerchants Still Mugging Small Stores

'SUPERstore'': a huge warehouse-type structure filled with merchandise. ''Power Center'': a collection of superstores.

The terms may not sound familiar, but the definitions should be. American shoppers' preferences for megamerchants have made smaller, locally owned businesses almost an endangered species. Some analysts project that by 2000, many Main Streets and malls will largely give way to national chains selling goods at a discount.

At least one chain of superstores operates in every area of the retail market. For children's stuff, Toys 'R Us dominates; for athletic gear, Sports Authority; for car products, the Pep Boys. Superstores also exist for eyeglasses and even pet supplies.

What's happening in the nation's capital typifies the experience of Detroit, Los Angeles, and other major urban areas in the United States. In Washington, free-standing downtown and suburban stores struggle to survive. While many have been snapped up by larger national firms, a growing number have been erased from the market.

In the 1980s, the greater Washington area became a mall mecca. Dozens of multistory complexes - some housing more than 100 stores each - dotted the commercial landscape. By the 1990s, an explosion of outlet shopping opportunities began offering name brands at very low prices.

Customers now face automated doors and oversized carts. Salespeople may be hard to find, but choices are greater and prices lower.

Looking to the future, analysts see essentially two kinds of shoppers: Those who prefer the personalized service of a locally owned establishment, and many more who would skip the frills for a broader range of goods at the best possible prices. Retail investors are banking on this prediction.

Take Atlanta-based Home Depot, which sells in today's hottest market: home improvement.

According to Tucker Anthony, a Boston-based investment house monitoring the company's stock, Home Depot's 300 stores have won 10 percent of a $125 billion industry expanding at a rate of almost 9 percent a year, or roughly three times the overall economy's growth.

Corner hardware stores face a tough fight. Home Depot's marketing strategy includes expanding its domestic-store base by 25 percent per year until 2000.

Local merchants have no choice but to give way, says Margaret Whitfield, vice president of Hancock Institutional Equity Services in New York. A specialist in ''category killers,'' she says the average family piles into the minivan for ''destination shopping. They're driving to power centers and learning where they can find just about everything they need in just one or two stops down the highway.''

Many people are trying to beat the odds for smaller businesses, and some are succeeding. Steven Teppler, the owner-operator of Pet Pantry in Washington, is one. When the former investment banker opened the doors of his independent pet-supply store three years ago, he was enthusiastic: No ''megastores'' existed in the area, and pet owners were ''underserved by what was here,'' he recalls. But six months later, Petco, a national chain of 200-plus stores roughly 10,000 square feet each, opened across the street.

''I lost a lot of sleep at first,'' Mr. Teppler says. ''But then I decided I'd fight it out.'' Sales flattened after Petco's arrival, but he has managed to eke out some growth in the past year, he reports.

Compared with Petco's brightly lit space, wide aisles, and enormous selection of goods, the Pet Pantry is a small boutique with limited stock. While huge floor displays greet Petco customers, Teppler or an employee posted behind the register welcomes Pet Pantry visitors.

''We niched out, looked for special stuff they wouldn't carry, and offered delivery service,'' he says. With two employees and a seven-day workweek himself, Teppler says he is building a loyal customer base.

But not every independent store is so adaptable. ''Most aren't open when you need them [after normal work hours when dual-income families have time to shop], nor do they have the variety that superstores do,'' says Tom Black, who tracks commercial real estate trends for the Urban Land Institute in Washington.

Their success may be measured as much by volume as by real estate moves. ''After filling up the low-cost industrial fringe areas outside major cities,'' Mr. Black says, ''superstores are moving to locations near you.''

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