In Philadelphia, True Value CEO sees growth
Philadelphia — True Value Co. CEO Lyle Heidemann presented some positive numbers during the co-op’s Fall Market general session, as he encouraged members to remain visible to their customers.
Speaking here Friday morning at the Pennsylvania Convention Center, site of the company’s fall market, Heidemann pointed to positive recent sales gains across the co-op. Since the third week of May — a starting point selected because it was the beginning of this year’s delayed spring — retail sales are up 4.3% at True Value, with every department positive, he said.
He also addressed the four topics that are resonating across the country with dealers — the economy, gross margin, national advertising and sales growth.
• The economy: He pointed to macroeconomic forecasts — GDP to grow 1.9%, home improvement industry sales to grow 1.8% and hardware industry sales to grow 2.8%. "While these may not feel like great numbers, they are consistent with this year’s forecast and better than we’ve seen the past few years," Heidemann said.
• Gross margin: Pressures on gross margin continue, he said. The co-op said it planned to reduce the member cost on more than 500 items by an average of 9.1%.
• National advertising: Heidemann described several changes in the co-op’s national advertising strategy. True Value intends to increase its digital marketing in an effort to attract younger consumers. The co-op’s television ads will feature its retailers inviting consumers to shop True Value. In addition, the co-op’s paint advertisement reimbursement will increase to 75%, up from 50%.
• Sales growth: True Value has seen four consecutive quarters of sales increases and a 2.9% annual growth rate. Heidemann promoted the Destination True Value concept as a growth vehicle for the members and the co-op. "Not only are the DTV stores outperforming the non-DTV stores, they’re ‘way’ outperforming the industry and the economy," he said.
On the show floor in Philadelphia, the co-op unveiled a small-format DTV store measuring 5,270 sq. ft. — half the size of a medium DTV format, with about 75% of the SKUs.
"The purpose of this small store is to show you how the DTV principles can be adapted in a small store and to start you thinking about remodeling your current store," Heidemann said.
True Value expects to add more than 1.1 million DTV square footage in 2011, a 25% increase over last year.
"While the economy will probably still be a challenge in 2012, I believe we can control our destiny," Heidemann said.
True Value Co. members head to Philadelphia
Chicago-based True Value Co.’s September market kicks off bright and early Friday morning with a 7:30 a.m. general session in the City of Brotherly Love.
The Sept. 23 to 25 event at the Philadelphia Convention Center also includes a Retail Best Practices Conference today, Sept. 22.
One of the highlights of the event will be a display and demonstration of a small-format Destination True Value store, which will be open all hours of the market, with guided tours throughout the day.
Educational sessions are planned for Saturday, and the market concludes Sunday at 5 p.m.
August housing starts slip, again
The latest tally from the U.S. Department of Commerce showed housing starts in August at a seasonally adjusted annual rate of 571,000.
The disappointing August rate — analysts were expecting a pace of about 590,000 — was 5% below July’s downwardly revised figure, and 5.8% below the August 2010 rate of 606,000.
On an unadjusted basis, there were 53,000 housing starts in August, and 38,300 single-family starts. Both are down from last month and last year. In fact, the single-family figure is the lowest for August since the government began keeping track in 1959.
On the bright side, building permits in August were up 3.2% to a SAAR of 620,000. Compared with a year ago, building permits were up 7.8%.
Looking at the country’s four regions, the most negative region was the Midwest — down 29.1% in total starts compared with a month ago, and down 14.6% in single-family starts compared with a month ago.
The least disappointing from a building perspective was the West region. It suffered only a 2.2% decline in single-family starts compared with July, and was flat compared with August 2010.