To survive against home improvement giants such as The Home Depot and Lowe's, True Value (formerly TruServ) is relying on the true value of service. Formed by the 1997 merger of Cotter & Company (which supplied the True Value chain) and ServiStar Coast to Coast, the retailer-owned hardware cooperative serves more than 5,000 retail outlets in some 54 countries. Stores offer home improvement and garden supplies, as well as appliances, housewares, sporting goods, and pet food. In addition to the flagship True Value banner, members operate under the names of Taylor Rental, Grand Rental Station, Home & Garden Showplace, and Induserve Supply, among others. True Value also manufactures its own brand of paints.
In addition to its main chain hardware stores, True Value operates several specialty franchise businesses. Grand Rental Station and Taylor Rental Centers rent tools, party and event supplies and equipment, and contractor equipment to amateurs and professional contractors. Home and Garden Showplace is a garden center cooperative offering products for homes, gardens and landscaping projects. Induserve Supply sells hand and power tools, paint, janitorial supplies and many more products to commercial and industrial customers. Party Central franchises rent supplies for weddings, backyard parties. Its customers include caterers and event planners.
True Value's revenue increased by more than 3% in 2011 vs. 2010, to nearly $1.9 billion. Same-store sales grew nearly 5%, and the international business reported double-digit sales growth. The modest improvement in sales followed an essentially flat previous annual comparison and nearly a 10% drop in sales in 2009 vs. the prior year. The company's net margins have narrowed over the past several years.
Essential to the company's growth strategy has been the rollout of its Destination True Value (DTV) retail format, which aims to simplify shopping in its hardware stores, particularly for its female clientele (who hold sway when it comes to tackling home improvement projects). The format features a "racetrack" layout for easy navigation as well as color-coded signs, brighter lighting, and an expanded array of decorative hardware and paint. Also, the format is relatively flexible and allows owners to customize their store layouts for their particular local markets. The DTV plan, unveiled in 2007, had been adopted by about 230 store owners by the end of 2011. True Value estimates that stores operating under the DTV format average about 9% higher sales than their non-DTV counterparts. Another 100 DTV conversions are planned for 2012.
In addition to the DTV plan, the company is working to woo younger do-it-yourselfers into its stores through the reach of digital marketing. Stores produce area-specific online circulars, and True Value's website offers a project library, product guides, and bargains of the month. The co-op is taking its marketing efforts forward with social media and the development of an e-commerce site.
While the organization is focused on expanding its retail presence, the weak housing market in the US has kept growth in check. Over the years, its smaller in-town locations have taken a beating at the hands of the big-box hardware chains. To combat declining sales, the company has implemented cost controls such staff reductions, debt refinancing, along with improving logistics and manufacturing infrastructures. – less
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