True Value aims high for low prices

Chicago -- The phrase "We've cut prices" will soon highlight a True Value merchandising program designed to build a low-price reputation for the co-op's stores. 

The EDLP (every day low price) program addresses what Senior VP of Merchandising Ken Goodgame describes as the "negative price perception on highly visible items in your stores." Knowing that customers remember prices for products they buy most often, the initiative involves 283 items that are considered "highly visible." 

The announcement of the program was one of the merchandising highlights of the True Value Reunion general session held here Sept. 18. 

Goodgame shared the results of a 90-store test in which the co-op promoted right-priced items with a "We've-cut-prices" message. These test stores saw 10% higher sales of EDLP items, compared to control stores. Overall transactions were up 7.5%.

More importantly, according to Goodgame, the perception needle moved significantly. Surveys of customers before and after the EDLP tests showed improved scores for "competitive prices" (increase from 80% to 85%); "value for the price" (increase from 80% to 86%) and every day low price (increase from 75% to 78%).

The True Value executive heading up the initiative is Heath Ashenfelter, divisional VP of merchandising.

"The consumer test results exceeded our expectations," said Ashenfelter, in an interview with HBSDealer. He added: "You can't change price perception overnight. It's going to take some time, and taking our stores to execute the lower prices."

 The co-op took it's time getting the program right. It began in May of 2014 when merchants began selecting the EDLP items considered to be highly visible, and the tests were launched in August last year at stores selected to represent a variety of True Value dealers -- including urban, rural and suburban markets. 

In February, the first 90 items will roll out with the EDLP pricing, followed by another 193 in August. 

"We'll learn from it," said Ashenfelter. "It will be a process." 

One of the key rallying messages throughout the general session was "we're better together," and the True Value execs are confident that that concept will help the cause in the long running challenge of price perception in home improvement retailing. Plus, there's no cost to the retailer to participate in the EDLP program.

"We know this works," Goodgame told the dealers. "The bottom line is we've made it easy for you to turn around the way your customers think of your store and increase unit sales all at the same time."