Giants to Gain From Builders’ Closing : Retailing: Analysts say mom-and-pop stores will also benefit, as will consumers who shop going-out-of-business sales.

Large home-improvement centers should benefit most from Builders Emporium’s decision to close all of its retail outlets, but mom-and-pop hardware stores that offer more personalized service should also get a boost, analysts said Wednesday.

Consumers planning to fix up their houses should also benefit--at least over the next few months--as the Irvine-based chain slashes prices as part of its massive going-out-of-business sale. Competitors are likely to join the fray by launching big sales of their own.

“The big winners out of all this are the ‘big guys’ like Home Depot and Homebase,” said Terry McEvoy, an analyst who covers home-improvement stores for Janney Montgomery Scott Inc. in New York. “It won’t hurt small operators, because their customers are pretty loyal and their stores tend to be more convenient.”

But do-it-yourselfers will probably have to wait until next year to find out whether the fast-growing warehouse stores will keep their prices down after the last Builders is closed, or if they will let prices drift upward because one of their key competitors is gone.

And consumers who want to keep costs down might have to drive farther to do it. Since few urban sites are big enough to accommodate large warehouse stores, many of the big centers are in outlying areas that demand long commutes.

“As for shoppers--well, only time will tell whether they win or lose when Builders shuts its doors,” McEvoy said. “My guess is that there won’t be much change (in prices) from where they are today. Nobody wants to get into a long price war, like the airlines do.”

Consumers who take advantage of Builders’ fire-sale prices must also assume they’ll be happy with what they buy.

“What will you do if you buy a $50 drill that breaks, or $3,000 worth of cabinets that eventually warp?” said McEvoy. “Builders’ won’t be there, so you’ll have to deal directly with the manufacturer--and that can be a pain in the neck.”

Builders Emporium, which has been losing money for more than two years, said Tuesday that it would close all of its outlets in five states and lay off 4,300 employees.

Ironically, Builders pioneered the concept of today’s massive home-improvement centers more than 20 years ago, when it opened dozens of stores ranging in size from about 25,000 to 50,000 square feet--typically 10 or even 20 times the size of small hardware retailers. The company prospered by offering the same personalized service that customers could find at a tiny store, with cut-rate prices only a big operator could provide.

But even bigger stores, such as Home Depot, began to appear in the 1980s and offer even deeper discounts. Builders soon found itself stuck in an industry that was rapidly changing: It was too big to offer the convenience of a corner hardware store but too small to effectively compete with the newer centers that were often three times its size.

National Lumber & Supply Inc., another Southland home-improvement giant whose stores were about the same size as Builders’, filed for bankruptcy and liquidated in 1990. The closing of Builders leaves the industry split into two clearly defined segments: traditional retailers with stores of less than 20,000 square feet and the huge “warehouse” stores typically with 100,000 square feet or more.

“There’s really no in-between anymore,” said Neal Kaplan, an analyst with Scott & Stringfellow Investment Corp. in Richmond, Va.

Analysts Kaplan and McEvoy say Home Depot, Homebase and other warehouse stores that are considering expanding in California will probably divvy up the lion’s share of Builders’ $500 million in annual sales because their low prices and huge selection will attract Builders’ former customers.

But smaller hardware stores should continue to prosper, in part because they’re convenient for people who do odd jobs around the house.

“If you’re remodeling your kitchen and spending a few thousand bucks, you’re going to go to a warehouse store because it’ll save you a lot of money,” Kaplan said. “But if you need a 25-cent bolt or a $5 hammer, you’ll go to the hardware store down the street.

“The corner hardware store has become the 7-Eleven of the home-improvement business. You go there because it’s convenient, not because they offer the best prices in town.”

Even some small-hardware-store owners agree.

The warehouse stores “have good prices and merchandise, no question,” said Bill Griffin, owner of Griffin Ace Hardware in Santa Ana and president of the 17,000-member National Retail Hardware Assn. “But we have service, convenience and quality.

“I really don’t want to be known as the ‘low-priced’ place. I want to be known for my service and quality.”

Times staff writer Greg Johnson contributed to this report.

Hardware Rankings

Builder’s Emporium ranked 15th in 1992 annual domestic sales among the warehouse home centers. Top 10 home improvement chains ranked by 1992 sales (in millions of dollars): Home Depot: $7,148 Lowe’s Cos.: $3,846 Payless Cashways: $2,496 Builder’s Square: $2,419 Hechinger: $1,869 HomeBase: $1,571 Menard Inc.: $1,400 Eighty-Four Lumber: $898 Grossman’s: $833 Southerland Lumber: $825

Sources: Executive Media Corp.; Building Supply Home Centers Magazine

Researched by ADAM S. BAUMAN / Los Angeles Times