Ends, another begins

Home Channel News, Feb 21, 2000

Conversion leaves dealers smiling or flinching

Matt Higgins said his decision to convert his Coast to Coast store in Duvall, Wash., to the True Value banner was fairly simple. "In our area, we have no other True Value stores anywhere next to us," said Higgins, who owns and manages this outlet. "So it's painless to switch over."

Many Coast and ServiStar dealers who don't have True Value-bannered competitors are singing the same tune and falling in line with TruServ's initiative to focus all its marketing efforts on to the True Value brand name.

Bob Pomeroy, TruServ's director of retail development, said that of the 2,800 stores that flew ServiStar or Coast to Coast banners, an estimated 1,350 had either converted to True Value or were in the process. Pomeroy expected between 600 and 700 more of these stores to sign on to the banner unification effort.

The company initially estimated the average dealer would spend $3,000 to convert. That estimate has been reduced to $2,300, according to co-op president Don Hoye.

Around 100 stores had left the co-op rather than switch as of mid-January, though many of these had been low-volume outlets and their departure was expected by TruServ officials. Pomeroy added that there were another 700 or so stores -- mostly lumberyards and dealers specializing in rental and lawn and garden -- that will be allowed to keep their own names and stay in the co-op.

Coast to Coast and ServiStar dealers say they see the wisdom of TruServ's strategic move towards a single brand and want to benefit from the marketing that will support it. "From the day I opened until today, clearly the more recognizable name to the consumer is True Value," conceded Robert Wehner, owner of Point Hardware in Point Pleasant Beach, N.J., a nine-year-old ServiStar dealer.

Wehner's store is scheduled to become Point True Value Hardware & Gifts by the end of March. Wehner did compete with a True Value lumberyard across town, whose contractor customer base was substantially different from Point's. Consequently, Wehner concluded that it wouldn't pose a serious conflict for him to use the True Value name.

"Keeping both brands sounded like a good idea during the merger," he said. "But the reality of trying to support two brands nationally doesn't make sense anymore. True Value has a better market penetration and awareness, and I think I can only win by changing."

The chance to benefit from the co-op's stepped-up national advertising campaign -- scheduled to be $30 million in 2000, a fourfold increase from last year -- appealed to managers at the original Coast to Coast store, in Hutchinson, Minn.

"There's definitely some benefits," said co-owner David Kramer. "We'll have a more national advertising package. We'll be part of 8,000 stores with more buying power."

Kramer was faced with the hard reality that, by remaining as a Coast to Coast store, his 72-year-old business would have lost TruServ's advertising support. And making the name switch was less disruptive for this company, which is the last hardware store in a market where seven competitors once operated.

TruServ is smoothing the way for dealers to make the switch by picking up most of the costs for new signage, aprons, stationery and such, in the form of merchandise rebates of up to a maximum of 0.5 percent of a member's handled purchases in 1999. The co-op is also offering press releases and public relations assistance to help dealers publicize their stores' name changes. There was very little private-label Coast to Coast or ServiStar merchandise remaining, and sku numbers and ordering were standardized, so the change is largely cosmetic to consumers.

Kramer estimates he spent about $4,000 making the changeover last December, mostly for the large new sign over the front door. The challenge the store faced in switching to the True Value name will be encountered by dealers around the country -- convincing loyal customers that they should continue to rely on their store. To sell customers on the switch, Kramer explained the change in an ad he ran in the local paper, the Hutchinson Leader.

But Kramer isn't ready to completely jettison the past just yet. "We're leaving a couple Coast to Coast signs on the outside," he said. "I feel it's historic, being the first one."

On Bainbridge Island, Wash., Winslow Hardware owner Ken Schuricht has added a small neon True Value sign, and the True Value name will be visible on the four circulars a year he gets printed. "We've been here 50 years, and we're Winslow Hardware," he said.

TruServ's Pomeroy said the co-op is willing to be flexible in order to keep former Coast to Coast and ServiStar dealers in the fold. "We've made a conscious decision not to exclude anyone from the coop," he said. "But the marketing is towards the True Value brand."