True Value Co. puts theory to work

Chicago-based hardware co-op True Value Co. has been immersed in the retail industry for decades. Now it’s trying its hand at the business side with a store of its own.

Here’s how True Value Co. chief executive Lyle Heidemann described its corporate-owned hardware store in Mount Prospect, Ill.:

“It is a live working store, and we are trying to replicate as close as possible how one of our retailers would run a store that size doing that amount of volume,” he said.

The idea behind the store began in 2007, when True Value first unveiled its Destination True Value program to help design new locations and redesign existing members’ stores.

At the time, the company created a model store in its paint warehouse in Cary, Ill., to serve as a test facility, as well as an example of what a DTV store should look like.

But it’s one thing to have a model, and another to have a real, working retail location.

“When we looked at the model store in Cary, every hook was always full, every endcap was always full, everything was picture-perfect,” he said. “We are now learning, as our retailers do, if we’re out of stock of something at our RDC that they can’t get, this store can’t get it either. It’s really the next step after creating what we think a model store, or typical store, should look like and then actually running it.”

While the store may be corporate-owned, it’s operated just like any member store would be. True Value hired a full-time manager, assistant manager, two department managers and a full-time cashier to run the day-to-day operations of the store. It also plans to staff the store with about 10 part-time employees, who will be supplemented by key staffers from the True Value corporate office. Heidemann said that these staffers will rotate through the store over the course of the year, and the position will account for about 40% of their total workweek, including weekends.

“This is not just going during the slow times, this is going in on Saturday and Sunday when the majority of retail sales are done,” he said.

Heidemann said that not all the corporate staff will work at the store, just those in the key positions relevant to understanding what their retail customers need in order to be more efficient.

“Part of what we want to learn is how long it takes to do this sort of work,” he said. “We can’t add efficiency unless we understand the complexity firsthand.”

Heidemann said that means that while the store will work as a laboratory of sorts, tests won’t be skewed by any special treatment.

“If we wanted to change a department in that store, we would not do it out of this building,” he said, referring to headquarters in Chicago. “We would ask that store to in fact go through the pain and agony of doing that so that we understand what we are asking our retailers to do.”

To date, True Value has opened 107 new Destination True Value stores since the launch of the format. One of the key focus points in DTV modeled stores is to appeal to female customers, and the Mount Prospect store is no different.

“The location of the product is geared more toward the female, the adjacencies of the departments are more geared toward the female, the colors that we use in the store, both from an overall store format to the accent flooring that we use, is again geared toward the female customer,” Heidemann said. “We want to have a store in the 21st century that appeals to the female customer.”

He said that half of all home improvement decisions are made by women, and half of True Value’s retail-based sales are to women.

The location of the corporate store was carefully analyzed, he said. First, it needed to be close to the company’s home office in order to be accessible to the employees who will be rotated through the store. It needed to be in an area with the right mix of home ownership versus apartment dwellers. And it needed established competition in the area. The Mount Prospect store met all of these needs, and it is within two miles of two Ace Hardware stores and four miles of both a Home Depot and Lowe’s.

Direct competition with other True Value stores was something to be avoided at all costs, he said.

“We were certainly sensitive of that issue,” he said. While most of the members he talked to felt it was a good idea that would benefit headquarters and—ultimately—members; not everyone shared enthusiasm for the project.

“Ten percent of them look at it and thought: ‘Are we now going to open up a bunch of corporate stores and in fact get into the retail business and start competing with them?’” he said. “But the answer to that is no.”

In addition to being profitable, the goal of the project is to learn and get better.

“We would have learned a lot of things that not only helped the store become efficient, but also helped our retailers become more efficient. That’s the real goal. And that the key associates in headquarters have a better understanding of the business that we’re in.”

It’s off to a good start, he said. While the store has only been open for a few weeks, Heidemann said it’s ahead of its sales goal for the month.