True Value 2011 Annual Report Download - page 5

Since age 16, Jeff Lohman wanted to own a hardware store. In pursuing his dream, he
invested ample time determining which co-op would best support the 5,291-square-
foot store he hoped to open in Palm Desert. As an industry newcomer, Lohman sought
out a strong retail partner to help maximize the small space. For Marketplace Hardware
to succeed, the store needed to incorporate effectively the right mix of merchandise to
attract residents from nearby retirement communities.
CASE STUDY 02
SMALL STORE, MADE TO ORDER
Bigger isn’t always better. True Value developed a small-store DTV format to address
store owners’ needs and help them win at retail. Regardless of square footage, the format
ensures stores carry a relevant and productive merchandise selection. And the right assort-
ments mean bigger baskets, satisfied customers and more profitable retailers.
True to scale, co-op retail experts used small-store point-of-sale data to modify existing
displays and planograms. At 5,200 square feet, the small-store format is less than half the
size of the original model. With nearly 13,000 SKUs, the new format still retains 68 percent
of the SKU count, with an inventory investment of just $40 per square foot.
What’s more, the nearly 80 new small-store assortments can be implemented in any
True Value retail location. Low ceiling? No problem. The format is especially adaptable for
stores with unusual structural features. Innovative sliding panels can add up to 40 percent
of additional lineal feet, making space for even more merchandise.
The highly flexible and customizable model has already set 47 True Value retail stores up
for success, including Palm Desert, Calif.-based Marketplace Hardware.
Lohman chose True Value because its retail expertise surpassed the competition.
Guided by retail consultant John Studer, Lohman developed realistic sales projections.
The duo used planograms designed for small DTV stores to customize Marketplace
Hardware’s product offering. Lohman and Studer still meet weekly to review the
store’s sales data, incorporate customer feedback and make necessary changes.
“We are judicious about what we carry. When pet department sales weren’t up to par,
we revamped that space for small appliances,” said Lohman.
Shoppers love the easy-to-navigate layout, and first-year sales exceeded projections
by 42 percent. “I’ve seen a steady sales increase since opening, and with a smaller
capital investment, the 5,200-square-foot store was a great way to break into the
industry,” said Lohman. He’s even convinced other retailers to look at the small-store
DTV format. “John’s support gave me the confidence I couldn’t find at the other
co-ops,” he said. “If I hadn’t chosen True Value, I doubt I’d be in business today.”
CHALLENGESTRATEGYRESULT
»More than 1,600 True Value retailers rely on Retailer Workbench, the co-op’s
proprietary tool for store-specific sales information. Paul Drews of Drews
True Value in Port Washington, Wis., considers it invaluable.
“It’s True Value’s most effective tool,” said Drews. “The information is updated
daily and based on actual point-of-sale data from True Value stores in my region.”
Designed to help retailers better manage sales, margins, inventory and
expenses, the return on investment-driving tool identified Drews’ unproductive
merchandise, allowing space for more profitable goods.
RETAILER WORKBENCH
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WITH NEARLY 13,000 SKUS, THE NEW FORMAT
STILL RETAINS 68 PERCENT OF THE SKU COUNT.
ANNUAL REPORT 2011 07
06 TRUE VALUE COMPANY