True Value’s Re-Energized Strategy

Fusek’s True Value in down town Indianapolis shares a parking lot with Marsh Supermarkets, the highly respected privately held regional food retailer. When owner Steve Fusek did some comparison shopping recently, he noticed a sign that bode well for his co-op.

“We were the first ones in the area to have the new Clorax ‘green’ products,” he told Home Channel News. “So, finally, we’re getting ahead of even the Marshes of the world.”

Ahead of the merchandising game wasn’t always the place where True Value members found themselves. But today, several initiatives are in place that are designed to re-energize the Chicago-based co-op. Areas range from training to merchandising to logistics to a high-profile effort to remake the look and feel of True Value stores.

On the following pages, Home Channel News editors report on these and other corporate trends affecting the Chicago-based co-op. Among them is what the company describes as a shifting mindset—from wholesaler to retailer.

Long past are the days of the painful recovery from the TruServ merger and accounting issues of the late 1990s. CEO Lyle Heidemann believes the co-op has left its turnaround stage and has commenced its growth mode. That mode coincides with a housing market downturn, but its members are hoping their small-project focus will serve as economic insulation.

In the company’s fourth quarter ended Dec. 29, whole-sale revenues increased 4.5 percent to $497.2 million. Earnings (a term that recently replaced “net margin” in the company’s vocabulary) decreased 8.5 percent to $16.1 million.

For the full year, sales and earnings held steady (see chart), while corporate debt declined to the lowest year-end level since 1979—$127.4 million.

True Value

*Excluding 2006 one-time gains, earnings were up 20.1%
Q4 Revenue
$479.2 million
Up 4.5%
Q4 Earnings
$16.1 million
Down 8.5%*

For Fusek, a lot of the new ways of thinking can be traced to the merchandising initiatives led by Steve Mahurin, senior vp and chief merchandising officer. Under his direction, the co-op launched a line review process in 2004 that has reviewed 110 product categories, and implemented more that $54 million in cash and product cost reductions, according to the company.

“When he first came, everyone was asking, ‘Why are you doing this or that, or taking things away? ’” Fusek said. “Over time, it became clear that he was right.”

One of the merchandising decisions has been to slowly remove the True Value brand name from most lower-cost products—a move designed to protect the reputation of the True Value brand. “I love their name brand strategy,” said Fusek. “Who’s going to argue about 3M tape versus True Value tape?”

One area where Fusek sees room for improvement is in post-opening programs. “They have a great 20-week plan when you commit to the product and open the doors,” Fuseks aid. “There’s a need for an equally strong plan for the 20 weeks after the store opens.”

But he says his Indianapolis store—the only True Value in the city limits—is poised for growth today.

“The stuff Lyle is working on right now is going to pay off in the next three to five years,” Fusek predicted.