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The homestore war has begun.

The $40 billion to $60 billion textiles and tabletop category is cashing in on the fact that the U.S. has become a nation of homebodies.

This trend of "nesting" has more people pondering the ambience of their homes, and homestores are giving them a reason to leave the house, if only for a while, to find items that will add some personality to their living spaces.

"The home has become the center of family life," said Kurt Barnard, publisher of Barnard's Retail Marketing Report, Berkeley Heights, N.J. "It's cheaper to stay in and entertain more because income has fallen way behind prices. People now spend proportionately more on home ambience and a lot less on fashion and apparel, which they don't need as much."

Two people can buy the same table, but their differing tastes will shine through in what they use to decorate the top of the table. That's where homestores come in.

The trademark of many homestores is stocking a wide assortment of room goods-like funky, 2-foot-high candle holders, plush towels, glassware and garlic peelers-at discount prices in a large space, from 20,000 square feet and up. Some homestores cater to just one room and others to several rooms-the kitchen and bedroom are popular. Some even sell furniture.

Brian Kardon, an analyst at Braxton Associates, Boston, estimates the category grew 4.5% last year.

Bed Bath & Beyond, a favorite of Wall Street analysts, manages to pile things for all rooms almost to its ceilings in stores of up to 60,000 square feet. With inventories that large, the stores can serve as their own distribution centers. The national chain currently has 61 stores, and 15 more are planned this year.

Competitors run the gamut from Linens N' Things, with 140 locations nationwide, to smaller specialty stores like Pottery Barn, Pier 1 Imports and the newest neighbor, HomePlace.

HomePlace is an aggressive new entry into the category, with recently opened stores in Las Vegas; Dallas; Minneapolis; Oklahoma City; Scottsdale, Ariz.; and Hartford, Conn.

"Over the years, department stores have abandoned this area, and we saw the opportunity to put together a new store," said Robert Hurwitz, chairman and co-CEO of Solon, Ohio-based HomePlace. As the co-founder of superstore OfficeMax, Mr. Hurwitz knows a thing or two about vigorous expansion.

Some markets are shaping up to become multifront battlegrounds for such retailers. Dallas already has two stores each from Linens N' Things and Bed Bath & Beyond; HomePlace has one and plans four more.

Calling to mind a military exercise, Mr. Hurwitz noted that HomePlace will "establish beachheads through '95, then go back and fill in with clusters." Ultimately, six are planned in Minneapolis (where Linens has two stores), three in Las Vegas and so on. Buffalo, N.Y., is the next market and the company, which already has all its leases signed for this year, plans to open 25 outlets by Dec. 1. An additional 31 stores are proposed for next year.

Advertising has generally been a low priority for these retailers. They make a splash when announcing a new store, but little comes afterward. That may change as the competitive battle toughens and the stores feel the need to differentiate themselves from the pack.

"Every one of these stores is not going to be able to just rely on circulars every week," said Ellis Verdi, president of DeVito/Verdi, New York, which created a holiday campaign late last year for Clifton, N.J.-based Linens N' Things, a division of Melville Corp. "You can buy the same products at different places .*.*. When it was only [Bed Bath & Beyond] vs. department stores, it was different. But in markets like Dallas and Atlanta, the degree of competition is tremendous."

Gordon Segal, president of upscale Crate & Barrel, thinks the market is getting too crowded.

"It's past its peak," he said. "Now, we're getting into a period of being overstored. Our business isn't going down, but it isn't going up like it was either."

Crate & Barrel just opened its largest store, at 54,000 square feet, in Manhattan; it's one of five that combines furniture and tabletop goods.

"We've been in the home business for 32 years, and we've seen more square footage [recently] than the market can bear," Mr. Segal said. "Everybody's doubled their size just to keep up."

However, Karen Keating, an analyst at Piper Jaffrey, Minneapolis, said "this industry is still highly fragmented." Only 5% of tabletop goods such as flatware and dishes are sold by the homestores, she said, and 10.5% of textiles but it's growing. Mass merchants, department stores and other specialty stores make up the rest.

Department stores are trying to catch up by putting a new focus on home goods. Some, such as Federated Department Stores' Rich's in Atlanta and Burdines in Miami, are even opening separate stores within malls they already occupy.

"The fact that there are specific retailer formats, we've responded to that trend just as they have," said Carol Sanger, director of marketing and corporate affairs at Federated. "Will it be hot five years from now? We'll have to wait and see."

In a bit of bravado, Ms. Sanger added: "It will be tough for the competition to survive. They don't have the ability we do to respond to changes in consumer demand. Department stores have been around 160 years-many of them-and have been able to keep up with the changes."

Home goods make up 27% of Federated's sales last year, up only from 20% to 25% five years ago.

Most agree that department stores, which hope to compete mostly through their established names and customer service, are more in a defensive position than a secure one, though.

"They don't want to give up this business," analyst Mr. Kardon said. "New families are just the customer they don't want to lose to homestores, but they are."

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