Hardware Retailing

JAN 2019

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

Issue link: http://www.hardwareretailingarchive.com/i/1065332

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Page 41 of 86

EXECUTIVE Q&A DISTRIBUTOR PROFILE SERIES HARDWARE RETAILING 37 Hardware Retailing (HR): What are you most excited about as True Value continues the strategic plan laid out in 2014? John Hartmann (JH): If you rewind back to 2014 when we rolled out the strategic plan, we went out and spoke with True Value retailers. Our plan is grounded in identifying through their eyes the areas of business that are important to them and focusing our resources on providing solutions. In 2018, we had an unprecedented amount of contact with retailers. We covered nearly 30,000 miles visiting stores across the country, including hosting 15 town hall meetings in the U.S. over a four-week period in late March and early April. Our customers' feedback continues to inform every action we take in the business. That's the foundation of our strategy. HR: How did the 2018 deal with ACON Investments affect this strategic plan? JH: The only thing ACON has changed about our strategy is how fast we can grow and invest. Here's how things have already changed: We are moving forward with an investment of $100 million for supply chain advancements in the upcoming year. The investment will alleviate congestion in distribution centers and will ensure that True Value provides the highest fill rates. We know this very substantial investment, along with our commitment to continuing to lower our costs of doing business, can keep independent retailers profitable. HR: What does 2019 look like for True Value? What about the next five years? JH: Our focus is on the continued execution of our plan. It's important for retailers to understand that the change in business structure is not a change in strategy. The investment ACON made in True Value is based on the very substantial opportunities they saw to help the company grow. The expectation our current retailers, customers and future customers should have for True Value is that the company will continue to be a leader in the industry. Making smart and important investments has been the cornerstone of our strategic plan. Over the past four years, we've been investing in our infrastructure and technology, also in support of independent retailers through marketing programs and other a la carte retail services. Our members and customers should expect that funding and that focus on their growth and profitability to continue in the future. HR: What would you say are some of the biggest successes at True Value? JH: True Value's success in the last five years has been our unwavering shift toward the growth and profitability of the independent retailer. One example is the creation and implementation of our Customized True Blue (CTB) program, which allows retailers to bring in assortments tailored specifically to their local community in a clear, easily displayed format. Our focus is also seen in our a la carte approach that allows retailers to use what True Value offers in a way that is most appropriate for them. Of course, the business transition that released nearly $230 million of our members' trapped equity was a big win. As a result of the transaction, members received 70 percent of the invested capital, 100 percent of their promissory notes and their 2017 patronage dividends. And their remaining 30 percent ownership can appreciate in value over time, unlike co-operative equity. Also, we've seen over $50 million reinvested back into retailers' businesses, including new roofs, updated parking lots, new signage and store remodels. They are also paying down debt. HR: What do you want retailers to think of when they think of True Value? JH: True Value is the most flexible partner in the industry. We have the culture and commitment from our deep and long heritage as a co-op, and we've simply shifted to a wholesaler partner that doesn't require a fee or any equity invested to be a part of our family. True Value provides the best of both worlds—premier retail services without the required co-op buy-in. Our customers benefit from a stronger company and the growth of the True Value family. The ambiguity is behind us; True Value is clearly here to stay and lead continued improvement in our industry. True Value CEO Discusses Strategic Plan, Future A Clear Message John Hartmann President and CEO Hartmann has 20 years of corporate experience, with 16 years spent in the hardware and home improvement sector. He joined True Value in 2013 after serving at New Zealand-based cooperative Mitre 10.

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