True Value takes aim at customers
Chicago – Television commercials are out. Digital marketing to a targeted audience – or even a specific person — is in. That’s one way to look at the major new advertising strategy taking place at True Value Company.
The Chicago-based co-op revealed its new-approach to marketing here during the General Session of its Fall Reunion. Senior VP of Marketing David Elliott is leading the charge, and he’s armed with some statistics that point to the need to adjust to dramatic societal changes.
For instance: there are tens of millions of people in the U.S. that have never had a relationship with a cable company. Plus, there are another 22 million people this year who cut their cord for cable or pay TV.
At the same time, people are spending an average of three hours a day on their mobile devices. And consumers of all generations have their purchase decisions influenced by at least one digital touch point.
It’s no wonder that Elliott, a New Zealander who worked with True Value CEO John Hartmann at Kiwi hardware co-op Mitre 10, believes that television is becoming increasingly less effective as a marketing medium. And it’s no wonder he’s a big believer in the power of digital tools.
“We’re shifting our marketing spend to a more localized and a more digital approach,” he told True Value dealers during the co-op’s General Session here. “It will now be possible to customize promotions to greatly relevant products and components.”
He added: “Digital means we can reach an individual, rather than segments of markets by geography or age or income,” he said. “That’s exciting, and that’s a big change.”
Another big change, and one that generated spontaneous applause at the General Session, was the announcement that the co-op plans to eliminate its national ad fees, which amounted to about 1.4% of each retailer’s warehouse purchases.
The co-op is describing its 2018 marketing plan as “Tools for Transformation.” It’s also described as a “hyper local, digital driven tools will put the pieces in place for you to reach more customers with exactly what they’re looking for.”
Among those local channels of getting the message out are broadsheets, paid search, social media, e-mail, online advertising, point-of-purchase displays, direct mail and mobile push.
To effectively market to consumers, the co-op will need to identify customers across their various digital devices, not by name but by behavior. A key to that effort is the co-op’s True Value Rewards card, he said.
The new strategy will kick off in April. “I think it’s an ongoing evolution of marketing to be more responsive to customers,” Elliott said. “It’s a far more relevant approach that is customizable and responsive.”
Chairman’s message on ‘speculation’
In his presentation to members during the General Session, True Value’s Brent Burger, chairman of the board of directors and owner of five Campbell True Value stores in Maine, wasted no time to downplay recent reports of a possible sale of the co-op.
“You can rest assured that if there is an opportunity for something beyond our current state, it will be your decision as shareholders, not that of management or the board whether to pursue it,” Burger said.
Here are his remarks on the topic:
"As a director and fellow retailer, I seek and receive your direct feedback. And that feedback provides guidance regarding your needs and successes and what the board needs to address. One of the foremost responsibilities of the board, is to manage the risks and opportunities faced by the company. As you’ll recall in 2014, after an in-depth and lengthy process, we launched a strategy for the company.
"That strategy included examining opportunities that could accelerate our performance, as well as safeguarding and enhancing our shareholder investments.
"To that end, management with the board’s direction and input, explores a variety of options until they are dismissed for not providing or improving shareholder value, or are not worth putting forth for your consideration.
"So simply put, we are doing exactly what you would expect us to do. Today’s business climate, your feedback, and our focus on supporting you to be truly independent hardware retailers continues to drive each of our decisions.
"And as for recent speculation that we’ve all heard, they are a direct result of us fulfilling our obligations to you. You can rest assured that if there is an opportunity for something beyond our current state, it will be your decision as shareholders, not that of management or the board whether to pursue it. Bottom line is, we will continue to be focused on ensuring a bright and independent future."
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True Value’s Chicago Reunion
Chicago — True Value Company welcomed dealers to its Fall Reunion here with a host of new programs, new products and new plans for growth.
Among the topics covered during a fast-paced General Session on Monday evening were a new-and-improved marketing strategy, a colorful “Inspiration Realized” paint center program, and the value of remodeling.
And as parts of Texas, Florida and Puerto Rico – where the co-op recently added 15 new stores — continue to suffer from hurricane damage, True Value executives pointed to the team’s efforts for working together in tough times. Chairman Brent Burger described the distribution of 20,000 5-gallon gas cans and 30,000 cases of bottled water. More than 3,000 generators moved out of the company’s Corsicana and Atlanta DCs, and the transportation team made more than 300 emergency deliveries.
“We are True Value Strong,” Burger said, introducing a video highlighting how Spring (Texas) True Value Hardware and McCoy’s Building Supply weathered the storms.
The General Session also addressed and dismissed what executives referred to as "chatter" and “recent speculation” over reports of the co-op seeking strategic options that include a sale.
“We’ve all heard the chatter in the industry, and while some of our competitors are focused on that, first and foremost we are focused on our strategy,” said True Value CEO John Hartmann. He added the company has a plan “to help you thrive as independent retailers right now and for decades to come. We have a plan that’s working and we won’t let anything distract us.”
(See Burger's comments here.)
The general session featured brief presentations from Tim Mills, senior VP of growth, Heath Ashenfelter, VP of merchandising; Abhinav Shukla, senior VP and COO; and for the first time — senior VP of marketing David Elliott, who described a big change in the marketing arena and a shift to a more digital and more local approach.
The purpose of marketing, Elliott explained, is to create a profitable customer. And toward that end, and after a review of customer profiles, the co-op intends to broaden its marketing efforts to target not only millenials, but all generations — an announcement that generated applause from the audience of dealers. More applause came when Elliott announced the co-op was ending its National Ad Fee — which is currently about 1.4% of warehouse purchases. The new program, kicking off in April, is described as more relevant, customizable and responsive than previous efforts.
The company's "Inspiration Realized" color center, one of the highlights on the show floor, is described as a modular program that fits large and small stores. It features a "paint bar" consulting and mixing area, 1,200 colors and an inspiration area ( see photo above). The co-op is promoting the roll out of the program with a subsidy of about 70% of the cost.
The program was cited as an example of ways the co-op makes life easy for the retailer. "Any discussion about an easy way to improve the performance and profitability of your stores has to include paint," said COO Shukla.
Tim Mills hammered on the value of remodeling. He rolled out examples of stores that saw double-digit growth after a renovation: Town and Country True Value of Morris, Minn.; True Value on 17th in Washington, D.C.; and Mayville (Wisc.) True Value Home & Hardware among them.
Around McCormick Place numerous banners proclaimed "The Value of Now" — the general theme of the Fall Reunion. The event runs through Wednesday, Sept. 27.
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