One house with two nameplates on the door. Wolves outside. These definitely are interesting times at Do it Best now that it has acquired True Value.
The weeks since the official Nov. 22 acquisition of True Value have featured Do it Best's speedy attempts to stabilize the True Value supply chain while simultaneously seeking to burnish the True Value brand, solidify dealers' and vendors' relationships with Do it Best, and begin the process of making TV's operations more efficient. All this while other distributors continue their bid to convert True Value dealers to their operations.
One such attempt at stickiness came out last week regarding rebates that True Value dealers have been building up this year but have near zero chance of getting from the version of TV that entered Chapter 11 bankruptcy in October. (Dealers' 30% ownership in the old True Value also can be assumed to be gone.) As of Dec. 16, that True Value operation had nearly $2.5 billion worth of claims against it, including $1.9 billion in secured and $520 million in unsecured claims.
In response to rebate concerns, Do it Best told True Value dealers they'll have an opportunity to recover their 2024 rebate by maintaining 95% or more of their overall purchase volume through the True Value warehouses in 2025. Those 2025 purchases also would entitle them to rebates in 2026. Of course, getting both rebates requires them to stick with Do it Best rather than jump to another distributor.
'Stabilization Is My Mantra'
On signing day, Do it Best announced it was splitting the co-op into two divisions--one for Do it Best members and the other for TV members--with separate accounts and rebates. Do it Best also named that day a 14-member leadership team for the new True Value division, with Dent Johnson as president and only two leaders from the old TV team. It has been busy since.
"We saw the supply chain deteriorating very rapidly for True Value retailers after the close, so Job 1 for us is getting inventory moving, getting the supply chain opened back up and stabilizing the operation to the extent possible," Johnson said Dec. 6 during an online Town Hall. "... Stabilization is kind of my mantra here the last two weeks. It's getting systems back up and running, getting the supply chain back up and running, making sure that we're regaining and rebuilding trust and confidence at the retail level, but maybe more important in the short term at the vendor level."
The drop-ship program has returned, orders from True Value's fall reunion have been placed, and there's "an amazing amount of inventory on order," Johnson said. "... Probably about 20% of that is already on the road or arriving at the centers. Another 25% to 30% is on deck, and the rest we're waiting on response for exact delivery dates and/or it's in limbo because vendors are deciding whether they want to ship right away or not."
Do it Best officials have been surprised to learn there was less overlap between their SKUs and True Value's than they had assumed. On the other hand, this SKU and vendor diversity regarding private-label brands and other products "is going to provide an interesting way forward for both groups," Johnson said.
Promoting the True Value Brand
Contrary to the visual suggestion made in an earlier Webb Analytics story, Do it Best wants to rebuild the True Value brand, not throw it out.
"One of the shining stars of the acquisition is the True Value brand," Do it Best President and CEO Dan Starr said during the town hall. "And I've had a lot of different questions, [such as] 'Are you going to retire that?' I just can't say enough: No. We didn't look at that and say 'What a prize,' given how powerful it is, only to turn around and have it either retire or not invest in it. We believe that we're going to be able to invest in that in the right way and build it back to the strongest brand in retail hardware."
Added Johnson: "The True Value brand has amazing recognition across the country. ... We believe it has been somewhat neglected. We're excited about being able to invest in that brand, develop really strong programs, and build that brand back to what it should be because we think it's one of the strongest brands in our space."
Restoring Vendor Relationships
While acknowledging how the old True Value's problems did "some pretty severe damage" to vendor relations, Johnson noted that a number of vendors who hadn't worked with Do it Best before "are constantly coming in to pitch us programs."
"Literally hundreds and hundreds of calls are being made every day to try to get things freed back up," Johnson added. "But the vast majority we're having a lot of luck with." Starr said there's particular interest in making Milwaukee and Diablo products once again available to True Value dealers.
Looking Ahead
Even as Do it Best's new True Value division works to stabilize the TV supply chain, that chain is being examined for opportunities to make it more efficient. The distribution centers are a likely target.
With the acquisition, "We've moved from nine Do it Best distribution centers to 20 with the taking on of True Value. We don't need 20. In the short-term, they'll stay up and running. We're going to look at consolidation after we get things stabilized."
"We were doing $1.6 billion worth of business out of our nine warehouses, while True Value's were doing $1.2 billion," Starr said. "We're going to bring an efficient mentality to how we operate True Value warehouses."
Starr said Do it Best is ready to serve True Value dealers as members of the parent Do it Best co-op or as customers.Starr: "If you want to be treated as a customer, fine," Starr said. "If you want to be in the co-op, you can go down that path. We are at our heart a co-op. While we can deliver the same operational value to cusotmers, we tend to have a world view that's co-op centric."
Starr noted that Do it Best's board of directors consists entirely of co-op members. Thus, if a True Value dealer were to be considered for a board seat, it would have to be a co-op member first, Starr said. "Ultimately, we want the distribution company to be one combined operation," he said at another point.
Combining Forces in Orlando
Do it Best also has announced that its Spring Market event in Orlando March 21-23 will be for both True Value and Do it Best members, with a special event the evening of March 20 solely for TV dealers.
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