Page 44 - Hardware July 2019

global eyes
Why True Value quit the co-op model
IN APRIL LAST year True Value Company and ACON Investments finalised a strategic partnership that allowed
True Value Company to change fundamentally how it operates as a business.
It enabled a shift away from the company’s historical co-op model to becoming a pure-play wholesaler.
From the True Value retailers’ perspective, ACON’s US$230 million investment meant they got back 70% of their invested capital and 100% of their promissory notes, on top of their 2017 Patronage Dividend.
The retailers also retained a 30% holding in the new True Value Company, which would continue to be run by the existing management team.
John Hartmann, President
and CEO of True Value Company (below), commented at the time that ACON’s investment would allow
True Value Company to “accelerate its transformation, while unlocking vast potential to partner with current and prospective retailers as a more flexible supplier and service provider.
“Providing access to the benefits of a national brand without any membership fee is truly a game-changer for this industry, and we are excited to be at the forefront of this important shift.
“We look forward to continuing to support independent retailers across the US and internationally as we begin this exciting new phase for True Value Company, together with our new partners at ACON.”
One year on, we asked John Hartmann to explain the motivations behind the move away from what he describes as the “antiquated” co-op model.
Describe True Value’s historical or legacy model?
“The history of True Value began with the co-op’s founder, John Cotter. Having started his career at a neighborhood hardware store at age 12, Cotter had a clear vision for small business owners.
“He knew that retailers could thrive given the best access to product and low pricing, while retaining their complete independence, and he took action to make that happen.
“In 1948, he founded Cotter & Company, a retailer-owned cooperative that included 25 independently owned and operated member stores. He also purchased the True Value trademark – a long-standing brand and presence since 1932.
“Today, True Value continues to
be driven by the very same goal. As
the only hardlines wholesaler with a nationally-recognized brand in the industry, we provide locally relevant product, competitive prices, an expansive warehouse network, and innovative marketing know-how.
“We help retailers all over the world achieve retail excellence in a way that works for them and for their local communities. We’re focused on helping our 4,500 independent stores to grow, realize profitability, and remain relevant with their communities for many decades to come.
“Our 13 regional distribution centers, and approximately 2,500 associates work tirelessly with stores across 60 different countries to support this goal.”
How has True Value’s model changed, in particular in the last year? And what took place to enable these changes?
“We know that with the ever-changing retail landscape, simply sticking with the status quo is not an option – we have to stay bold, ambitious and innovative in everything we do.
“In 2014, True Value laid out a multi- year plan that would lead to improved retailer growth and profitability. Over the last five years we have been on a journey, making strategic investments to ensure our retailers remain relevant for generations to come.
“In parallel with our investments in the
42 NZHJ | JULY 2019
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