Painting a bull's-eye on pro customers - TruServ

Home Channel News, June 18, 2001

Partnership with Duron Paints helps dealer-members delve deeper into the professional sales market

Homeowners carrying out gallon cans of paint are a reliable stream of income

for hardware-store dealers. But changing lifestyles are shifting this popular DIY project to another realm -- one occupied by guys in white pants driving paint-splattered pick-up trucks. Ten years ago, 45 percent of all coatings sold nationwide was purchased by professionals, according to National Paint and Coatings Association research. Today, painting contractors and maintenance crews buy 60 percent.

Recognizing this change, TruServ is trying to persuade its dealer members to approach the paint category with a broader brush. In a partnership with Duron Paints, the industry's third-largest paint supplier, TruServ is offering a new commercial/industrial paint program. But only serious dealers need apply: the program requirements discourage mere flirting with the idea of pro-paint sales.

"There's quite a commitment on the members' part," said Dave Patrizi, assistant vp-True Value and paint marketing. Dealers become "certified" to carry Duron's professional lines, which means three days of training at TruServ's manufacturing facility in Cary, Ill. After learning all about the care and feeding of commercial customers, stores are expected to open early in the morning and devote two full-time staff positions (inside and outside sales) to their commercial paint departments, according to Patrizi.

Paint, as a category, generated $139.1 million in wholesale sales for TruServ in 2000, or 6 percent below sales in the previous year, according to the co-op's filing with the Securities and Exchange Commission. The company's paint plant in Cary, Ill., had been operating at only 60 percent capacity, according to Patrizi. So the Duron deal presented TruServ with a way to boost an important part of its business and improve the efficiency of one of its operating facilities.

The retailer program is part of a manufacturing agreement between TruServ and Duron, a Beltsville, Md.-based paint maker that distributes through a network of 265 company-owned stores and 200 independent dealers. Known primarily in the Eastern states, Duron was looking for a nationwide presence when it struck a deal with TruServ last summer. The buying group agreed to manufacture three lines of Duron's commercial paint at its Illinois factory. Although TruServ was looking to expand its production, the co-op also considered the issue of dealer confidence. "We'll get a much better buy-in [from dealers] if the paint comes from our facility," Patrizi explained.

More than 140 members have signed up so far, with two-thirds of them located east of the Mississippi. Duron personnel are assisting with TruServ's dealer training program; they are also accompanying members and their employees on initial sales calls. Before the program starts at any store, Duron studies market potential by counting the number of apartment units, factories, hospitals, schools and other commercial buildings in the immediate area.

Many TruServ dealers who have adopted the program already have a thriving pro/commercial business. J.R.'s True Value in Waupaca, Wis., was selling paint thinner, brushes and rollers to existing commercial accounts, which make up 60 per cent of its customer base. But when it came to paint, "we weren't able to compete with Sherwin-Williams or Mautz," said owner Gloria Coenen. (Mautz, a paint manufacturer since 1925, has retail locations in eight Midwestern states.) Pro customers wouldn't use TruServ's DIY paint because of its viscosity -- they need a thinner paint that goes on well with sprayer equipment.

J.R.'s installed a 12-foot-long display area for Duron products in its 7,500-square-foot store. Its out side salespeople began giving away sample gallons of Duron to existing customers. Although most of them had never heard of Duron, the product was well received, according to Coenen. "They really like the Genesis line," she added, referring to Duron's odorless, VOC-free paint especially formulated for nursing homes and hospitals.

Sunroc True Value in St. George, Utah, also found itself introducing a brand to the market. When he began testing the Duron program for TruServ last fall, owner Norm Watts was almost desperate for a paint line that his commercial customers would use. "The True Value commercial grade of paint was not accepted by the professionals in our area," he noted. (TruServ offers a "Professional Coatings" line, which it has no plans to discontinue.) With 75 percent of its customers in the pro/commercial channel, Sun roc was missing out on business.

Watts began his Duron program by concentrating on industrial ac counts like schools, restaurants and health care facilities. Painting con tractors, who frequently have ac counts with national suppliers like Sherwin Williams (which has over 2,500 stores nationwide), are a tougher market to crack, he noted. But building-trade customers are a good source of Duron sales, Watts said. "When we're selling lumber we can [bid] the paint," he said.