True Value’s product pipeline strategy
A fundamental part of any retail strategy is putting the right product in the right place at the right time. And as True Value works to execute on its far-reaching strategic plan launched in 2014, the co-op’s new head of merchandising has a lot of ideas on getting the merchandise mix right — and taking advantage of the high-profile areas on the sales floor.
Heath Ashenfelter stepped into the role of VP and chief merchandise officer in March, with the departure of Ken Goodgame. In this role, he’s developed a strategy that emphasizes True Value’s “core” and “destination” merchandise to maximize the co-op’s biggest investments in marketing and brand.
“Our focus will be on our destination business and our core categories,” Ashenfelter said. “Not that we won’t put effort behind the other businesses, but we’re going to put increased horsepower behind destination and core.”
Ashenfelter has been working to leverage the co-op’s largest marketing and branding budget in recent memory — at least since the turn of the 21st century.
One of the ideas driving merchandise excitement is the “new-item endcap.” The idea, introduced at the co-op’s Spring Reunion in Houston, supplies stores with a monthly shipment of new items — not just new to the True Value store, but new to the hardware marketplace.
“The program first has been very well received by our retailers and our consumers,” Ashenfelter said. “Those that have executed the new-item program in their stores, and have given these new products dedicated space, have definitely seen good sell-through and good reaction from their customers. All the products that are in this program are new to the marketplace, not just new to True Value.”
Consider, for instance, the Teknor Apex Zero-G hose, an enhanced version of the common, flexible, pocket garden hose. The Zero-G is significantly stronger than others of its kind, and appeals to both DIY and pro customers, Ashenfelter said.
Another example of the kind of item that made a splash on the new-item endcap is the Wizz handheld spreader, a battery-powered spreader that appeals to customers with small lawns.
“We’ve seen a lot of great products come through the first few months of the program,” Ashenfelter said. “And I would say we’re pretty picky about what items are selected.”
The new-item-endcap program is part of a broader program called “Merchandising for Success.” Coming in the fall will be the debut of 150 new endcap ideas, Ashenfelter added. It’s an important program because, according to Ashenfelter, the co-op understands the importance of the “off shelf areas” — end caps, drive aisles or out on the sidewalk in front of the store. “These are prime areas within a retail environment to drive sales of new items, to drive project sales, impulse sales and more,” he said.
Also creating excitement on the selling floor is the co-op’s bargain-of-the-month program. This promotional initiative deals largely in “high-velocity” items, and has been in place for several years. The co-op provides dealers with information, including bargain-of-the-month items, endcap guidance and other promoted items.
Currently, the endcap program ties into the marketing efforts, as the co-op offers guidance to the store on how the endcap should appear, and those directions build on promoted items. As part of the “Merchandising for Success” program, the co-op intends to provide retailers with more support in making the most of prime real estate.
“We’re going to provide our retailers with a very specific point of view about what percentage of their endcaps should be dedicated to promotional merchandise, what percent should be focused on everyday and seasonal products, focused on projects and other activities, and what percent should be more permanent in nature, like LEDs and light bulbs,” Ashenfelter said. “So we’re excited about where this program continues to evolve.”
The evolution of the co-op’s merchandising strategy comes as True Value points to progress in its performance. In the company’s most recent fiscal year, total gross billings hit $2.03 billion, up 2% for the year. Comparable-store sales were up 3.1% across the co-op, with retailers participating in the Destination True Value program seeing comps up 4.7%.
The company said it intends to build on its merchandising and marketing efforts. “The overall effect on the business is a very nice increase in brand awareness, particularly among our young achiever, which is our target customer,” Ashenfelter said. “And along with that comes a nice increase in foot traffic.”
On the fall reunion in Denver:
“We have a lot of merchandising initiatives that are kicking off,” Ashenfelter said. “The first is a very large section on the reunion floor, about 35,000 sq. ft., that’s called Assortment City. Essential Alley [is] an area that highlights all of our retail assortments and all of our customized True Blue assortments, as well as market-only specials on some endcaps. It’s really a one-stop shop for our retailers to find not just individual products, but to see all of our largest planograms in one space. It illustrates our depth of product in certain categories and also our overall assortment across the business.”
On people:
“I believe that a dynamic, collaborative internal environment gives us a strong competitive edge,” Ashenfelter said. “And, ultimately, my goal is to lay the foundation by giving my team a clear and focused strategic plan to make sure they’re excited about the vision of the business, No. 1, and No. 2, ultimately finding good balance between aggressive strategy and high-level engagement.”
On the investment in marketing:
“The upside of the impact of the promotional activity, the overall effect on the business is a very nice increase in brand awareness, particularly among our young achiever, which is our target customer,” Ashenfelter said. “And along with that comes a nice increase in foot traffic into our retailers ... and sales for the co-op as a whole.”