True Value and the Endless Aisle

Rosalee Hermens and her team at the hardware retail co-op turn to tech to stay ahead of the competition.

Three years ago, storied hardware co-op True Value unveiled a strategic plan that focused on engagement, growth, and efficiency. The plan consisted of thirty separate initiatives, twenty-six of which were fueled by technology. Needless to say, it was quite a burden for the company’s chief information officer, Rosalee Hermens.

The endeavor was a far cry from tradition, seeing as the company had not invested in technology for many years. They needed to get up to speed to relate to tech-savvy consumers. Senior leaders were also looking toward technology as a way to grow the business, engage more efficiently with customers, and bring the fight to big-box stores. “We had a mandate to scale virtually instantly,” Hermens recalls. “The way I chose to ramp up was to go through the process of picking partners to help us with the work and also make our internal IT organization into the group of people with the skills to operate in this new environment.”

Hermens and her team quickly selected three partners to outsource to, and let them know the urgency in needing to scale. One of the key elements of the contracts was a service level agreement that mandated how many days the partner had to make good on any request the company made of them, as well as the right to reject staff if they didn’t meet standards.

Internally, Hermens decided to keep program managers, business analysts, and tech leadership in-house. As for outsourcing, the mandate was to get it done fast. “Everyone needed a place to sit, computing equipment, to know what the projects were, and what their role was. We assigned staff to do nothing but manage bringing these people on board over the course of 2015,” Hermens says. “It took a tremendous amount of organizational work to make that transition.”

This tech movement has now made an impact on nearly every aspect of the business. For example, the company switched from manual to automated processes to manage the increase it has seen in international sales. In warehouses, they implemented voice picking, which freed up operators’ eyes and hands, leading to greater efficiency without the need to add more staff. Conversions (bringing unaffiliated stores on board) were streamlined through automation that trimmed up to five weeks off the process, which had previously been done manually.

Hermens says that the tech initiatives were as much about scaling as they were about efficiency. “One of the reasons I’m so excited about this is that if I look back ten years, IT was all about efficiency. And although we are focusing on efficiency still, it’s not to be cheaper. It’s to enable us to scale,” she explains. “Ten years ago, if I [were focused on] efficiency, I would do it to cut the head count 10 percent. This is not for that. We are using tech that allows the salespeople to drive revenue and deliver quantum growth for the company.”

True Value is also using technology to draw younger consumers away from big-box stores. Hermens and the company’s senior leadership recognized that millennials have a desire to shop locally. If the company can provide service equal to or better than big-box stores, the belief is that it will become the choice for younger consumers. “It matters to all of us who are in the retail space that we relate to young people and cultivate them as customers,” Hermens says. “They are moving into the phase where they are renting apartments, buying houses, and starting to be do-it-yourselfers and fix things up. This is the moment we want to engage with them so they become loyal customers of True Value.”

While True Value stores are independently run and can vary greatly in size and product offerings, it’s safe to say that the average store doesn’t have anywhere near the inventory of a big-box store. To address the disparity, the company has provided its retailers with a mobile app that creates what they call an “endless aisle.” If a customer walks in and asks for something that isn’t in stock, the store manager can use the app to instantly determine if the item is available in the distribution center, and tell the customer when the item can be delivered.

Coinciding with the company’s tech initiatives, the idea is not to change True Value’s identity, but rather to leverage the technology in order to enhance it. “Even though our retailers are small business people, we can make them look like a big business person with that app,” she says. “A young person who wants to shop locally can support this small businessperson, who can then support the customer in the same way—even better than they get supported in a big-box store. We have retailers who have fantastic businesses and are thriving because they’re thinking forward and evolving. We see our job as helping them to do that.”