Dealer profile: Thompson True Value
A fan of the co-op model, and critic of his company’s transformation.
David Thompson of Thompson True Value Hardware & Rental in Marshalltown, Iowa, remembers clearly the day he became a True Value member.
The year was 1972. He was 24.
“John Cotter shook my hand the day I bought my store,” he told HBSDealer. “In fact, he was the reason I bought my store. He gave me my backing. I’ll never forget the opportunity I was provided.”
Cotter wasn’t Thompson’s first brush with a home improvement legend. Growing up in Eau Claire, Wis., Thompson and his family would often share their dinner table with a young entrepreneur named John Menard.
As a retailer, Thompson takes community to heart. He’s a county supervisor (similar to a business manager) in Marshall County. The store is active in Little League and various fund-raising efforts. “We have huge community support, and we give it back,” he said.
Thompson’s retail background and his roots in the Midwest — where co-ops played instrumental roles in the dairy and farming industry — shaped a positive feeling toward the co-op business model.
He bled True Value red during his retailing career. In a True Value promotional picture with his son, Paul, the headline read “The Value of Being the Local Expert.”
Then came the new deal — ACON Investments’ purchase of 70% of the company. True Value said the deal was accepted by more than 80% of voting members. Thompson was not among them.
“I withheld my vote,” he said. “In effect, my vote was one of no confidence. The only reason I can imagine any store owner voted ‘yes’ was in fear of losing their investment. Getting 70% of your investment back was better than getting nothing.”
Will he use his windfall check to invest in the business? “I have invested in the business from day one and will continue to do so.”
Will he go to the True Value Reunion in Denver? “Yes. I will go to many other shows, too.”
What is his post-transaction strategy? “Wait and see.”
Critical of the handling of the transaction, Thompson called the 30-day window (it was extended by a week) an “absurd” amount of time for such a momentous decision. “This was a transaction of a member-owned organization that involved people’s life work and lifetime savings. It was unconscionable,” he said.
He also takes issue with the requirement to pay $150 per store per month for True Value branding and participation in ship-to-store. “A name that many of us had worked a lifetime to build and are now being charged $150 a month to use — it’s an insult.”
There are plenty of alternative opinions regarding the True Value deal. For instance, Dorn True Value of Madison, Wis., emailed the following: “There is change happening in all of retail, and old structures and ownerships need to change to survive. I think True Value is ready to grow again.”
As for Thompson, he expressed a feeling of good fortune that his family will carry on the business: “The greatest issue facing our industry today is succession planning,” he said. “I’m very fortunate that I have a son that has been through school and understands the opportunity. He has a solid future ahead of him.”
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Executive announcement at Ace
The co-op names a new VP of retail operations and new business.
Oak Brook, Ill.-based Ace Hardware Corp. appointed John Tovar to the position of VP of retail operations and new business. Tovar will report to John Surane, executive VP of merchandising, retail operations, business to business, and wholesale holdings.
Tovar joins Ace Hardware from GameStop where he served as VP of merchandising. His responsibilities included the strategic direction for the company’s Buy-Sell-Trade business model across all 4,000 locations, wholesale distribution channels and ecommerce site. Tovar brings more than 15 years of experience in the retail industry, including leadership roles with Home Depot and 24 Hour Fitness.
“We are pleased to welcome John to Ace in his role,” said Surane. “John’s years of experience within the retail industry will enhance and strengthen the already outstanding skills and experience of our current team.”
Tovar received an MBA from Georgia Tech and holds a Bachelor of Arts degree in Communications and Business Administration from UCLA.
Tovar takes over the role previously held by Dan Miller, who retired in April.
Ace points to record Q1 revenue
The co-op says strong e-commerce numbers and conversions lifted revenue.
Oak Brook, Ill.-based Ace Hardware Corp. reported record first quarter revenues of $1.31 billion, up 6.0% from the same quarter last year.
The co-op reported increases in same store sales, 2.2%; average transaction size, 3.3%; and retailer gross profit, 2.0%.
As expected due to investments in supply chain, the company’s net income declined to $11.9 million, down from $16.4 million in the first quarter of 2017.
Ace President and CEO John Venhuizen pointed to three areas of sales growth: a 34% increase from Acehardware.com, store growth from existing Ace retailers and “renewed interest from competitor conversions.”
“While first quarter profits are well below last year’s levels, most of this was expected” he said. “We invested heavily in the first quarter to get our new 1.1 million square foot Fredericksburg retail support center ready to open in June as well as to prepare for the insourcing and re-platforming of our new Acehardware.com website.”
[Click here for the co-op’s official news release.]
Ace added 28 new domestic stores in the first quarter of 2018 and cancelled 28 stores. Revenue gained from the new stores, however, was four times larger than the revenue lost from cancelled stores.
Retail revenues from Ace Retail Holdings – essentially Westlake Ace Hardware — were $57.0 million in the first quarter of 2018. This was an increase of $5.0 million, or 9.6%, from the first quarter of 2017. The increase was the result of new retail stores added since the first quarter of 2017. Retail revenues from Ace Ecommerce Holdings LLC, which was formed in the third quarter of 2017 for the acquisition of The Grommet, were $6.1 million in the first quarter of 2018.