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Marketing to the community

BY Lisa Girard

In 28 years in the hardware business, Linda Kuenning, who owns Western Ohio True Value with her husband and two sons, has initiated several successful advertising campaigns. She has also had her share of duds.

If there’s one thing you learn over the years, coming up with a marketing plan is not a science; it’s an art,” Kuenning said. “You try many things and learn what works and what doesn’t. It’s a continual learning experience.”

The store was open ed by Kuenning’s father-in-law, Stanley, in 1953 as a 3,000-square-foot business in down town New Bremen, Ohio—not far from the Indiana border. In 1987, after joining TruServ, Linda and Scott Kuenning moved the business to a 14,000-square-foot building in nearby Minster.

After two expansions—in 1997 and 2003—the store is now 40,000 square feet and offers a full range of core hardware departments, a greenhouse, rental department, outdoor power equipment area and an extensive lawn and garden department. In 2004, the family open ed a new 16,000-square-foot store about 20 miles away in St. Henry, which has seen double-digit increases in the last two years.

With two stores in two different markets, Kuenning has had to adapt her marketing strategies and become more flexible. As such, she was a prime candidate to use the True Value Marketing Planning Tool (MPT), introduced by the co-op two years ago to help stores develop an annual marketing plan.

When you schedule an appointment with a True Value retail consultant, it makes you set aside that time,” she said. “And you’re no longer working by the seat of your pants but “with a fact- based tool.

Looking at the previous year’s numbers by month and by department can help the retailer zero in on the times his customers are most likely to spend, as well as when they’re out of the notion. And even though the MPT measures by month, Kuenning likes to look at the seasonal numbers as well because so much of her business depends on the weather.

“Last year we had a better March than this year, and this year’s April is better than last,” she said. “It’s a plan, a plan that needs to be revisited and challenged. You have to ask yourself, ‘Has anything changed that should make me alter it?’”

Kuenning also said it’s important to make advertising mediums accountable, especially since the industry has become so fragmented. In addition to news papers, she has used TV, radio, billboards and direct marketing to her True Value Rewards customers

“I look at what I did and how much of a lift we got out of it during any given promotion,” she said. “And I tend to mix things up because if you do the same thing forever—even if it’s been successful for you—it won’t have the same kind of impact any more.

Western Ohio has four annual events that are always part of the marketing plan: a pansy- planting day for children the Saturday before Easter; a spring open house with refreshments and prizes; a kids’ pumpkin painting day in October; and an invitation only ladies night in early November for loyal customers who get the first peak at fresh Christmas merchandise.

“During these events, even if people aren’t making purchases, they may see that we have things they hadn’t noticed before,” Kuenning said. “It’s a goodwill type of thing, and we hope we’re building relationships.”

All told, Western True Value spends about $80,000 (not counting co-op dollars) on advertising each year, which represents about 2 percent of its total annual consumer sales. Kuenning is happy with that balance, but she also believes in constantly mixing things up to make those dollars work best for the stores. “When you’re a small business like us, you don’t have endless pits, so it’s important to continually evaluate what’s working and what’s not working,” she said.

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Home Depot to close 15 stores

BY HBSDEALER Staff

Home Depot will close 15 underperforming stores, the company has announced, and remove 50 future openings from the new store pipeline. The closings will include layoffs of about 1,300 employees.

The closings, at locations in the Midwest and Northeast, will generate approximately $547 million in pre-tax charges in the company’s first quarter. The company will release first-quarter results on May 20.

The stores to be closed are as follows:

• Store no. 2015 in East Fort Wayne, Ind.

• Store no. 2032 in Marion, Ind.

• Store no. 2310 in Frankfort, Ky.

• Store no. 379 Opelousas, La.

• Store no. 2819 Cottage Grove, Minn.

• Store no. 6901 East Brunswick, N.J.

• Store no. 6904 Saddle Brook, N.J.

• Store no. 6171 Rome, N.Y.

• Store no. 3702 Bismarck, N.D.

• Store no. 3874 Findlay, Ohio

• Store no. 3865 Lima, Ohio

• Store no. 4552 Brattleboro, Vt.

• Store no. 4932 Beaver Dam, Wis.

• Store no. 4933 Fond du Lac, Wis.

• Store no. 4913 Milwaukee, Wis.

Home Depot said in a statement it still intends to build 55 new stores this fiscal year, including 36 new stores in the United States.

As for other stores in the works, the company said it has “determined that it will no longer pursue the opening of approximately 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years. Accordingly, the company will record a charge of approximately $400 million related to capitalized development costs and ongoing obligations associated with those future store locations.”

“This is a continuation of our disciplined approach to capital allocation that we outlined last year,” said Frank Blake, Home Depot chairman and CEO, in a statement. “We will invest in our core retail business, in this case our existing stores, which drive our most profitable sales. Our capital efficiency model will also provide improved returns for our shareholders through dividends and share repurchase.”

Home Depot added that investments in existing retail stores will continue to include “maintenance, merchandising resets and other initiatives to improve all elements of the customer’s shopping experience.”

The company reiterated that its total capital spending for the current fiscal year is projected to be approximately $2.3 billion, down from $3.6 billion last year.

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Sherwin-Williams earnings fall in the first quarter

BY HBSDEALER Staff

Sherwin-Williams saw earnings fall in the first quarter of 2008, but the worldwide paint and coatings giant is still seeing strength in international sales.

Earnings fell 30.3 percent in the first quarter to $77.9 million from $111.8 million in the same period last year. Net sales grew just over 1 percent to $1.78 billion from $1.76 billion in the same period last year.

The stronger net sales were in large part due to strong Global Group sales, as was the case last quarter. Favorable currency rates and eight acquisitions since last year’s first quarter helped aid international sales, according to the paint company.

In the company’s retail Paint Stores Group, net sales were $1.031 billion in the quarter, 1.9 percent lower than in last year’s first quarter. Sales were weak due to “soft architectural paint sales and weak sales in non-paint categories partially offset by improved industrial maintenance product sales.”

Same-store sales decreased 6.5 percent compared with last year, and earnings decreased 31.9 percent. Earnings were weaker because of increased product and freight costs, the company noted.

The company’s Consumer Group, which includes paint products like Dutch Boy, saw sales decrease 4.8 percent in the quarter to $286.9 million. The sales decline was due primarily “to soft DIY demand at most of the segment’s retail customers.” Earnings in the Consumer Group were down 23.7 percent due to higher raw material costs, as well as a lower volume of movement at the company’s distribution centers.

The Global Group’s net sales increased 14.8 percent to $461.9 million due to market share gains, selling price increases, favorable currency translation and acquisitions. Earnings for the Global Group increased 21.7 percent to $7.7 million.

“Paint demand in the domestic new residential, residential repaint, DIY and commercial markets was weaker during the first quarter than we had anticipated at the start of the year,” said Christopher Connor, chairman and CEO of Sherwin-Williams. “We continue to be pleased with the strong sales improvements of the foreign business units in our Global Group and the continued growth they have been achieving in the architectural, industrial maintenance, OEM and automotive finishes product lines.”

Connor also noted that the Paint Stores Group opened 17 new stores in the first quarter and closed 23 “redundant stores.”

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