In Philadelphia, True Value CEO sees growth

Philadelphia -- True Value Co. CEO Lyle Heidemann presented some positive numbers during the co-op's Fall Market general session, as he encouraged members to remain visible to their customers.

Speaking here Friday morning at the Pennsylvania Convention Center, site of the company's fall market, Heidemann pointed to positive recent sales gains across the co-op. Since the third week of May -- a starting point selected because it was the beginning of this year's delayed spring -- retail sales are up 4.3% at True Value, with every department positive, he said.

He also addressed the four topics that are resonating across the country with dealers -- the economy, gross margin, national advertising and sales growth.

• The economy: He pointed to macroeconomic forecasts -- GDP to grow 1.9%, home improvement industry sales to grow 1.8% and hardware industry sales to grow 2.8%. "While these may not feel like great numbers, they are consistent with this year's forecast and better than we've seen the past few years," Heidemann said.

• Gross margin: Pressures on gross margin continue, he said. The co-op said it planned to reduce the member cost on more than 500 items by an average of 9.1%. 

• National advertising: Heidemann described several changes in the co-op's national advertising strategy. True Value intends to increase its digital marketing in an effort to attract younger consumers. The co-op's television ads will feature its retailers inviting consumers to shop True Value. In addition, the co-op's paint advertisement reimbursement will increase to 75%, up from 50%.

• Sales growth: True Value has seen four consecutive quarters of sales increases and a 2.9% annual growth rate. Heidemann promoted the Destination True Value concept as a growth vehicle for the members and the co-op. "Not only are the DTV stores outperforming the non-DTV stores, they're 'way' outperforming the industry and the economy," he said.

On the show floor in Philadelphia, the co-op unveiled a small-format DTV store measuring 5,270 sq. ft. -- half the size of a medium DTV format, with about 75% of the SKUs. 

"The purpose of this small store is to show you how the DTV principles can be adapted in a small store and to start you thinking about remodeling your current store," Heidemann said. 

True Value expects to add more than 1.1 million DTV square footage in 2011, a 25% increase over last year. 

"While the economy will probably still be a challenge in 2012, I believe we can control our destiny," Heidemann said.