TruServ urges dealers to order more and stock less - Brief Article

Home Channel News, May 21, 2001 by Brae Canlen

Co-op presents itself as refocused at four-day market in Atlanta

ATLANTA -- An undercurrent of uncertainty met with a measure of guarded optimism here at the annual spring gathering of TruServ members. Dealers from around the country and beyond debated the future of the nation's largest hardware co-op, which presented itself as a refocused organization with new programs, greater attention to details and a determination to raft through its current financial rapids.

The four-day buying market, held at the Georgia World Congress Center, opened on May 4 with a plea from the co-op's president and CEO Don Hoye. "Don't let yesterday take up too much of today," he said, borrowing a quote from humorist Will Rogers. Hoye and other TruServ executives promised further cost-cutting measures but urged members to help the co-op return to profitability by consolidating their purchases and fine-tuning their merchandise assortments.

Dealers were presented with several strategies to achieve these goals. Connect4Profit, an initiative that pre-empts drop-ship orders with warehouse purchases, received the biggest push. More than 50 suppliers have agreed to participate in the program, which allows retailers to buy smaller quantities of non-seasonal items as part of their regular weekly shipments. (Discounts, special dating and cash spiffs still applied to market orders, though it created a paperwork headache for many of the vendors.) TruServ hopes that the increased warehouse purchases will boost the co-op's revenues and help members reduce their investments in inventory.

In fact, Rob Liebgott, the coop's senior vp-merchandising, sales, advertising and marketing, urged members to increase their orders by 45 lines per invoice, which he stated was the equivalent of "only" $1,000 per order but would have a dramatic cumulative impact on TruServ's revenue and cash flow.

In the same vein, dealer-members were asked to focus on inventory turns and weed out non-productive skus. TruServ has developed a program called Advanced Inventory Management (AIM) that recommends core assortments based on point-of-sales data from 1,600 successful dealers. The resulting planograms for housewares, hardware and appliances were featured at this spring's market. Tacked onto that program is a new pricing program, based on point-of-sale input from more than 600 dealers, which is benchmarked against the prices charged for similar products by Home Depot, Lowe's and WalMart, and is scheduled to be rolled out more than 42,000 skus by year's end. The co-op's attempts to get all of' its members onto a single computer network it's calling Unity is expected to contribute to its ability to collect and mine store sales data.

Mare localized marketing

TruServ served up a flurry of new programs in Atlanta, including a "True Blue Rewards" customer-loyalty program already tested by 20 TruServ retailers in Ohio and Colorado. It is offering a life insurance and 401(k) program for dealers' employees. A signage program called Store offered fresh graphics for endcaps, departments, "how to" instructions and directional signs. This November, the program will enable retailers to create and print pricing and product signs through the co-op's "membersonline" Internet network.

In the merchandising category, TruServ unveiled "Winter Wonderland," a power department of holiday items displayed under a portable night-sky canopy. Despite some dazzling ornaments from Egypt and Germany, Christmas was upstaged at the show by Magnetic Creations, a specialty-coating kit that turns ordinary walls into magnet holders, freeing families from the tyranny of overcrowded refrigerator doors. TruServ has an exclusive on the product, which appeared to have a magnetic effect on many of the kids attending the market. Available in June, Magnetic Creations will be supported by nationwide TV advertising.

Several announcements at the market signaled a sea change in TruServ's advertising strategy. Liebgott spoke of a new emphasis on product and price, a switch from TruServ's "Help is Just Around the Corner" branding and lifestyle ads, which were dropped as of April 15. Products featured in future circulars will be reinforced by regional and local radio and TV ads, with a special focus on True Value paint, Liebgott said.

Liebgott was. one of several TruServ officials who addressed more than 60 potential members on the second day of the event. (A total of 157 new prospects attended the market, according to the co-op.) Some dealers were farm and fleet operators while others belonged to one of the smaller hardware buying groups. Judging from the questions asked, many prospects had just bought a hardware store or were considering doing so.

Russell Crenwelge his brother Cole Crenwelge and partner Tommy Conner were contemplating the purchase of a long-closed Foxworth-Galbraith lumberyard near Lubbock, Texas. The three men currently operate a trucking Company but high diesel prices and the cost of equipment have hemmed their expansion plans. After talking to Ace Hardware (whose price was too high, they said) the three former classmates were leaning in TruServ's direction. "In our area, the True Value name is all you see," said Cole Crenwelge.