President and CEO
John Hartmann has 20 years of corporate experience, with 16 years spent in the hardware and home improvement sector. He joined True Value in 2013 after serving at New Zealand-based cooperative Mitre 10.
Hardware Retailing (HR): What are you most excited about as True Value continues the strategic plan laid out in 2014?
John Hartmann (JH): If you rewind back to 2014 when we rolled out the strategic plan, we went out and spoke with True Value retailers. Our plan is grounded in identifying through their eyes the areas of business that are important to them and focusing our resources on providing solutions.
In 2018, we had an unprecedented amount of contact with retailers. We covered nearly 30,000 miles visiting stores across the country, including hosting 15 town hall meetings in the U.S. over a four-week period in late March and early April. Our customers’ feedback continues to inform every action we take in the business. That’s the foundation of our strategy.
HR: How did the 2018 deal with ACON Investments affect this strategic plan?
JH: The only thing ACON has changed about our strategy is how fast we can grow and invest. The foremost reason ACON has invested in us is that they believe in the mission of independent retailers. Secondly, they have a strong belief True Value is on the right strategic path. The third reason they invested is that they believe True Value is a smart investment based on our execution of the strategic plan and the future of the company.
Here’s how things have already changed: We are moving forward with an investment of $100 million for supply chain advancements in the upcoming year. The investment will alleviate congestion in distribution centers and will ensure that True Value provides the highest fill rates. We know this very substantial investment, along with our commitment to continuing to lower our costs of doing business, can keep independent retailers profitable.
HR: What does 2019 look like for True Value? What about the next five years?
JH: With the ACON transaction and the transition of our business structure fully behind us, our focus is on the continued execution of our plan. It’s important for retailers to understand that the change in business structure is not a change in strategy. The investment ACON made in True Value is based on the very substantial opportunities they saw to help the company grow. The expectation our current retailers, customers and future customers should have for True Value is that the company will continue to be a leader in the industry.
Making smart and important investments has been the cornerstone of our strategic plan. Over the past four years, we’ve been investing in our infrastructure and technology, also in support of independent retailers through marketing programs and other a la carte retail services. Our members and customers should expect that funding and that focus on their growth and profitability to continue in the future.
The 2019 marketing program will be the most innovative and customizable approach to supporting retailers that exists in the industry. We’ve developed the capability to allow our members and customers to customize their print and digital advertising to the products and price points that are relevant for each of their markets. We will continue to provide retailers with the types of products that resonate with consumers, but no one has a finer view than the local retailer, so we’ve created the technical capability to customize their print and digital advertisements accordingly.
HR: What would you say are some of the biggest successes at True Value?
JH: True Value’s success in the last five years has been our unwavering shift toward the growth and profitability of the independent retailer. One example is the creation and implementation of our Customized True Blue (CTB) program, which allows retailers to bring in assortments tailored specifically to their local community in a clear, easily displayed format. Our focus is also seen in our a la carte approach that allows retailers to use what True Value offers in a way that is most appropriate for them.
Of course, the business transition that released nearly $230 million of our members’ trapped equity was a big win. As a result of the transaction, members received 70 percent of the invested capital, 100 percent of their promissory notes and their 2017 patronage dividends. And their remaining 30 percent ownership can appreciate in value over time, unlike co-operative equity. Also, we’ve seen over $50 million reinvested back into retailers’ businesses, including new roofs, updated parking lots, new signage and store remodels. They are also paying down debt.
Another part of this independence is that retailers are paying down their debt. What better way to be independent than to not have money tied up in the company? One of the biggest concerns independent retailers have, no matter what flag they fly, is how they will remain relevant to the next generation of consumers. Younger generations are now the driving consumer group and must be catered to. Having liquidity of their money allows them to make smart investments in their business.
HR: What are the biggest challenges for True Value right now? How are you addressing those challenges?
JH: Our focus as a wholesale partner is to help retailers grow and become more successful. Their relevance at retail is critical to their survival, especially with additional competition from the likes of Amazon. Having relevant product that is appropriately priced is key for success. Additionally, focusing on an e-commerce presence by participating in programs like True Value Rewards and the Ship-to-Store program helps our members and customers have a modern offering. These aspects help stores stay relevant and effectively compete in the marketplace.
HR: What do you want retailers to think of when they think of True Value?
JH: True Value is the most flexible partner in the industry. We have the culture and commitment from our deep and long heritage as a co-op, and we’ve simply shifted to a wholesaler partner that doesn’t require a fee or any equity invested to be a part of our family.
We’re the only distributor out there with a nationally and internationally known brand requiring no equity and a full slate of cutting-edge retail services, from our individualized marketing offerings to our CTB assortments, which drive sales growth at participating stores through deep discounts on relevant merchandise.
How does that relate to co-ops? We have a huge respect for the business model co-ops serve, but we don’t feel people need to have their money tied up in stock investments they can’t access.
True Value provides the best of both worlds—premier retail services without the required co-op buy-in.
For example, nobody in our channel has a focus on farm, ranch, auto and pet like we have. It’s a terrific example of how True Value is leading the way. True Value’s lawn and garden is another area with great national brands, as well as Green Thumb, our private-label brand that works exceptionally well alongside those national brands. Our continued commitment to manufacturing our own paint is also a stand out.
Those that joined us for our 2018 Fall Reunion saw firsthand how different we are from some of the others in the channel. Our associates did such an amazing job of sharing what makes True Value a truly special partner and the results speak for themselves.
What will change? We’ll be making more meaningful investments on an accelerated pace then we would have been able to previously. The good news is that it’s the same leaders here running the company with the existing strategy for business growth, driven by a differentiated offering to retailers.
Our customers benefit from a stronger company and the growth of the True Value family. The ambiguity is behind us; True Value is clearly here to stay and lead continued improvement in our industry.