Black Book Competitor Assessment

CONFIDENTIAL | For internal use only. Do not distribute.



This Confidentiality Agreement (this “Agreement”) is made effective between:
Do it Best Corp.
(the “Employer”)
AND

(the “Employee” - print name)

(the “Employee” - signature)

The Employer has requested that the Employee protect the confidential material and information which may be disclosed
between the Employer and the Employee. The information in this document should never be shared with a third party
including a member, prospect, competitor, vendor, or any other outside person or entity (“third-party” or “third-parties”).
Therefore, the parties agree as follows:
No Copying or Modifying. The content in this material is all considered confidential. The Employee will not copy, photograph,
distribute, or modify any Confidential Information without the prior written consent of the Employer.
Unauthorized Disclosure of Information. The Employee will not disclose any information in this book to any third-parties.
Return of Confidential Information. The Employee agrees that upon request of the Employer or in the event that the
Employee ceases to require use of the Confidential Information, or upon expiration or termination of this Agreement, or the
expiration or termination of the Employment, the Employee will turn over to the Employer all documents or other material in
the possession or control of the Employee that:

may contain or be derived from ideas, concepts, creations, or trade secrets and other proprietary and
Confidential Information as defined in this Agreement; or
is connected with or derived from the Employee’s services to the Employer.
Confidential Information means all data and information relating to the business and management of the Employer.
The Employee agrees to keep the Confidential Information outlined in this book confidential, and it remains the exclusive
property of the Employer and will only be used by the Employee for the Permitted Purpose. The Employee will not use the
Confidential Information for any purpose that might be directly or indirectly detrimental to the Employer or any associated
affiliates or subsidiaries.
If the Employee loses or fails to maintain the confidentiality of any of the Confidential Information in breach of this Agreement,
the Employee may be subject to disciplinary actions up to and including termination. The Employee must immediately notify
the Employer and take all reasonable steps necessary to retrieve the lost or improperly disclosed Confidential Information.
This Agreement sets forth the entire understanding of the parties regarding confidentiality. The obligations of confidentiality
shall survive from the date of disclosure of the Confidential Information.

Revised 03/20

Index

30 SECOND PITCH | 5
VALUE PROPOSITION | 6
QUICK FACTS | 7
BUSINESS MODEL | 8
PURPOSE | 10
GROWTH STRATEGY | 14
OPERATIONAL EFFICIENCY | 16
LUMBER AND BUILDING MATERIALS | 18
PRODUCT ASSORTMENT | 20
PAINT | 22
MARKETING | 26
LOYALTY PROGRAM | 28
ECOMMERCE | 30
BRAND IDENTITY | 32
STORE DESIGN | 34
LOGISTICS | 36
PROFIT DRAIN | 38
TOOLS TO MANAGE MARGIN | 42
MEMBER HEALTH INSURANCE | 44
MEMBER EDUCATION | 46
NEW STORE INCENTIVES | 48
COMPARISON CHARTS | 50

Philosophy | Serving others as we would like to be served
Mission | Making the best even better®
Goal | Helping our members grow and achieve their dreams™

30 Second Pitch

At Do it Best, we are a co-op that partners with our members so that they can compete and win in the independent home
improvement channel—whether they are a hardware store, home center or lumber yard. Our partnership goes beyond
simply offering access to product and vendors at competitive prices and with high fill rates. We have developed programs
to help their success in every aspect of their business. Just because they are independent, doesn’t mean they have
to figure it all out themselves. We are here for them and because we know their business is unique, we customize our
solutions to meet their needs. All while providing industry leading return on their investment.

Revised 03/20 CONFIDENTIAL | 5

Value Proposition

Do it Best is the only Total Solution in the independent home improvement industry. Our members receive the broadest
selection of warehouse-backed product at the most competitive cost with an industry leading fill rate of 97%. Our LBM
program includes a dedicated staff ready to assist our members in sourcing lumber and building materials at the right cost.
This includes 12 reload centers to best serve our members across the continental United States. We also offer the widest
assortment of retail programs and services that drive customer traffic, average ticket sales, and profitability.

Our Member-Focused culture separates us from the competition. Our number one goal is to help our members grow and
achieve their dreams. Finding new ways to help them grow sales and profits is an endeavor we strive toward daily. Our
members’ growth and success creates our sustainability.

Finally, we’re a good steward of our members’ investment in the co-op. We consistently have the lowest cost of operations
and have the Best Return of Investment for our members— illustrated by our industry leading rebates.

This is what makes us the First Choice and Best Choice.

6 | CONFIDENTIAL Revised 03/20

Quick Facts

Making the best To be the best Help Our True Value brings
even better provider of Customers Be people together to
products, services Successful share advice and
and operating inspiration to tackle
MISSION methods for projects.
STATEMENT convenience
hardware retailers
around the globe.

# OF EMPLOYEES 1,500 6,000 2,300 2,800*

TOTAL REVENUE $3.5 billion $5.3 billion $2.5 billion $2 billion*
$2.333 million $883,333 $1,086,957 $732,143*
PROFIT PER
EMPLOYEE $114 million $142 million N/A N/A

REBATE

Revised 03/20 *From 2017 financial statement

CONFIDENTIAL | 7

Business Model

Our Do it Best member-owners are part of an exclusive group of independent
entrepreneurs that prioritize running their business their way.

Annual Rebate
We return our annual profits back to our members through rebates for them to reinvest
in their businesses.

We have no outside shareholders. This means that for every purchase our members
make, a portion goes back into their pockets at the end of the year.

Once their stock obligations are met, our members receive their entire rebate in cash.
This is vastly different from our co-op competitors, such as Ace Hardware, who only
receives a portion of their rebate in cash.

Board of Directors
As a co-op, our members own the company and elect a diverse group of member-
owners to the board of directors to speak on their behalf. Do it Best is the only co-op
of the four major competitors whose board of directors is made up solely of member-
owners.

Member-Focused
At all levels of the company, our staff is accessible and willing to talk with members
about questions, concerns, or suggestions.

An exclusive group of independent entrepreneurs
that prioritize running their business their way.

8 | CONFIDENTIAL Revised 03/20

Revised 03/20 Ace has a complicated business model, with many different ways they go to market.
Domestically, they are both a co-op and run a separate online business, The Grommet.

Additionally, they also have:
• Corporately-owned retail locations: WestLake Ace Hardware and Great Lakes Ace
Hardware locations
• Ace Wholesale Holding (Emery-Jensen Distribution)
• Ace International

They operate their business with influences of a franchise. Whereas Do it Best wholly
believes the member knows their business and market best, Ace consistently places
mandates onto their members in the form of national advertising, and stipulations when
a business-owner signs as a member.

Annual Rebate
As a co-op, Ace also issues an annual rebate, although they only pay 40% of their rebate
in cash. Even when a member’s stock obligations are met, the remaining 60% is paid in
5 year interest-bearing notes.

Board of Directors
The board of directors is made up of a mix of member-owners and third-party,
non-member owners that push initiatives that may not benefit members of the co-op.

Orgill is a privately-held buying group. This means that all profits remain within the
business, or are distributed between the company founders or their families and heirs.

No Annual Rebate
The company does not offer equity interests or a rebate to independent businesses
purchasing from them. They simply upcharge warehouse invoices by 4.5%, and return a
portion of this upcharge at year’s end, depending on purchase volume and if the customer
paid within terms.

As of 2018, True Value no longer operates as a co-op after selling the majority stake of the
business to international private equity firm, ACON Investments (ACON).

No Annual Rebate
ACON purchased a 70 percent stake in the business, with the remaining 30 percent still
being owned by their retailers. Along with promissory notes and dividends, approximately
$229 million was returned to those retailers as a one-time gain.

ACON’s goal as a private equity firm is to return as much of an investment as possible to
ACON with no regard for the return to their customers.

Board of Directors
The board of directors is made up of a mix of customers and third-parties that push
initiatives to ensure the company can continue to operate.

CONFIDENTIAL | 9

Purpose

At Do it Best, our entire purpose is to be the first and best choice in the industry by
helping our members be the first and best choice in their markets. We work with our
members every day to help them increase sales and profits in their stores. We believe
a healthy and growing member base produces a stronger co-op, not the other way
around. We exist for one reason only: our members.

We partner with our members offering customizable programs and services developed
to increase the relevancy of our members in their markets.

Field Staff - Each of our members has a territory sales manager who is dedicated to
helping them improve and develop all areas of their business, including merchandise
assortments, profitability, market penetration, and succession planning.

We are committed to working with our members to drive brand and identity in their
specific markets, driving results today and every day while increasing profitability.

Other Ventures - With no other solely owned business ventures, Do it Best is focused
on providing our members the total solution — the broadest selection of warehouse-
backed and drop ship product, industry expertise sourcing lumber and building
materials, and the widest assortment of retail programs and services to drive sales.

Do it Best is the First and Best Choice.

10 | CONFIDENTIAL Revised 03/20

What’s good for Ace corporately is good for members. A stronger co-op will produce
stronger members, a “trickle down” approach. This is reflected in the thought process that
Ace members are successful because Ace corporate is successful.

Field Staff

Someone other than a territory manager, called a territory representative, calls on

members who don’t use the Ace brand (IBR or independently branded retailer), implying a

lesser value to the company. Although these

members don’t pay the 2% brand Pinnacle Members
assessment, they are also not permitted to
display the Ace logo anywhere inside or Implement the most Higher Ground initiatives

outside their business, with the exception of Platinum Members
private-label product.
Implement some, but not all
Higher Ground initiatives

Additionally, members who don’t actively Visionary Members
implement Higher Ground initiatives (Ace retail
recommendations) are simply known as “Visionary” Doesn’t participate in Higher Ground,
but is Ace branded

and also treated as 2nd class citizens. Platinum IBR Members
& Pinnacle members do actively implement Higher
Ground initiatives, and enjoy a better standing with the Doesn’t participate in
co-op. As an example, Platinum & Pinnacle members get Higher Ground
and is not Ace
branded

additional product specials at their bi-annual shows.

Their new members are required to sign a “right of first refusal” which gives Ace Corporate
the first opportunity to buy the business through Westlake Ace of Great Lakes Ace should
the member decide to sell.

Revised 03/20 Other Ventures
Ace owns Westlake Ace Hardware and Great Lakes Ace Hardware, which accounts for
almost 200 stores across the United States. These stores buy from Ace at wholesale cost,
which means that they are being subsidized by the members of the co-op.

CONFIDENTIAL | 11

Purpose (continued)

12 | CONFIDENTIAL Revised 03/20

As a wholesaler, Orgill’s philosophy is simple: sell more product. Orgill’s singular objective
is to increase a members’ purchases through Orgill, with no regard to what’s in the
customer’s best interest.

Orgill will sell product to multiple customers within a single market as a primary or
secondary supplier without considering the overall market potential.

Field Team
The Orgill field team is commission-based, and tasked with writing orders. Little business
analysis or consulting is done by their sales team, such as discussion of gross margin,
expense control, overall profitability, shopping environment, training, or succession
planning.

Other Ventures
Orgill founded Central Network Retail Group, LLC (CNRG) in 2011. This spin-off division
acquires corporate-owned stores. It is currently operating 90 hardware stores, home
centers, and lumberyards throughout 11 states.

Selling product is now True Value’s only singular objective. They’ll sell to anyone and
everyone in the market, regardless of store size, type of store, or demographic. It’s not out
of the ordinary for them to be supplying an entire store, and selling specific categories to
multiple competitors within the market.

Field Team
Their field team is directed to sell to any potential customer that can get basic credit
approval. They are visiting many stores everyday selling small categories. Their ability to
provide valuable feedback on areas like cash-flow, gross margin, or succession planning
is limited. They are strictly salesmen.

Revised 03/20 CONFIDENTIAL | 13

Growth Strategy

14 | CONFIDENTIAL Our territory sales managers work with each of our members on an individual basis to
develop a customized growth plan based on practices members should do to drive
profitability in their business. These plans are tailored to each business because
every store is unique. This plan is based on market demographics, store type, and
each member’s needs. We provide an exceptional rewards programs (Best Rewards),
consultation and recommendations for effective advertising and marketing, training
for store employees, programs to help members enhance the customer experience
through comprehensive store design, and expert advice to drive growth.

Work with our members to create a
customized growth strategy

Revised 03/20

Ace operations resemble a franchise. 20/20 Vision (Higher Ground) is Ace Hardware’s
long-term retail growth strategy, built behind specific focus areas. The territory manager
builds a growth plan for each of their members based only on these focus areas:

• Ace Rewards scan rate
• Industrial commercial growth/employee training
• Product variety
• Store remodel
• Minimum order points/in-stock percentage
• Impulse/end caps
• Advertising/marketing

Applications for membership force adherence to these requirements.

Revised 03/20 Orgill offers their customers some basic programs and services, such as print advertising,
website development assistance, and simple interior décor, but their territory managers do
not work with their customers on developing any sort of growth plans.
Orgill’s growth strategy isn’t about helping their customers grow through business analysis.
It’s about selling as much product to as many customers as possible. This is accomplished
by becoming a primary or secondary supplier to all potential customers within any given
market, and continually increasing their footprint over time in each of these stores through
targeted promotions. In 1999, they signed 84 Lumber* as a customer, and has since sold
to them at all locations, regardless of proximity to existing customers.

*Based in Eighty Four, PA, they have 250 locations in 30 states.

True Value’s growth strategy is confusing as they continue to try to find the approach that
they believe could work. Even though they still offer the same menu of retail programs they
did as a co-op—including True Value Rewards, consumer marketing, and InduServe—
their primary growth strategy as a wholesaler is now tied to selling product to as many
customers as possible. As a wholesaler, they no longer consider market potential when
soliciting new customers, and are willing to sell as much product as possible to anyone
and everyone willing to buy within any given market. In late 2018, they signed Carter
Lumber* as a new customer, and will be selling to them at all locations, regardless of
proximity to existing customers.

*Based in Akron, Ohio, they have 146 locations in 12 states.

CONFIDENTIAL | 15

Operational Efficiency

16 | CONFIDENTIAL Business is about getting a solid return. At Do it Best, we are committed to continuing
to provide the best return to our members. This is done through exceptional efficiencies
of operations as well as not making unnecessary and risky investments with members’
money.

We have a proven retail system that is three-pronged:
• Members purchase from Do it Best at fantastic acquisition costs both through our
warehouses and drop ship programs. For drop ship we pass along vendor terms
and discounts to our members. We conduct price shops and invoice comparisons
constantly throughout the year to demonstrate that we are almost always better on
everyday pricing on a basket of SKUs.
• At the end of the fiscal year our members receive a patronage dividend, or rebate.
Due in large part to the operating efficiencies of our 1,500 employees, Do it Best
members receive an industry leading rebate. By investing our members’ capital in
smart, strategic investments we’ve been able to return over $1 billion distributed to
members in just the last decade.
• The non-cash portion of the patronage dividend is provided in preference shares
which are redeemable upon a change of ownership (18-24 months if the store
remains with Do it Best or 60 months if the store is converted to competitor co-op
or wholesaler).

Employees: 1,500*
Total Revenue: $3.5 billion*
Revenue per employee: $2.333 million*
Rebate: $114 million* (between 5–10% depending on vision or classic pricing)
Return on Investment: Our members receive $0.55 on every dollar of gross profit
earned by Do it Best.

*Data is from fiscal 2019.

Our members receive 55¢ on every dollar
of gross profit earned by Do it Best.

Revised 03/20

Revised 03/20 Ace performs well as a co-op distributor; however, they also have a long history of putting
member capital at risk without providing a rebate. The risk rests on the shoulders of
the membership and the benefits go to Ace Hardware Corporation. Examples include:
Ourhouse.com, The Grommet, Emery-Jensen Distribution, and Handyman Matters (a home
improvement, maintenance, and repair services franchise).

Employees: over 6,000*
Total Revenue: $5.3 billion*
Revenue per employee: $883,333*
Rebate: $142 million (2.7%)*
Rebate

Members only receive $0.21 on every dollar of gross profit earned by Ace Hardware.

*Data is from fiscal 2019.

Orgill doesn’t share their financial statements as they’re a privately held wholesaler.
Profits go to the Orgill Family, not to their customers.

Employees: over 2,300*
Total Revenue: $2.5 billion*
Revenue per employee: $1,086,957*
Rebate: $0*
They simply upcharge statements by 4.5%, and refund this at year’s end if purchases are
over $200k, and statements were paid in term.

*Data is from fiscal 2019.

True Value’s operational efficiency and return on investment to their customers has been
poor for decades. Starting with their ill-fated merger with ServiStar in the late 1990s, their
sales, store-count, profits, and rebates have decreased for many years. Once the largest
player in retail hardware, they now fight for relevance, and even survival. As a desperate
attempt, they sold 70% of their company to a private equity firm in 2018, converting from a
co-op to a wholesaler. They now sell product to anyone and everyone willing to purchase
from them in any and every market.

Employees: over 2,800*
Total Revenue: $2.05 billion*
Revenue per employee: $732,143
Rebate: $23.6 million (1.2%)*
Customers receive just $0.12 on every dollar of gross profit earned by True Value.
All estimates would indicate the return will be even less now.

*From 2017 financial statement. True Value no longer releases their financial statements publicly or to their retailers.

CONFIDENTIAL | 17

Lumber & Building Materials

18 | CONFIDENTIAL Do it Best is the total solution.

Our total solution approach ensures that our independent member-owners, have the
competitive programs and products to drive growth and profitability in today’s volatile
market, complemented by extensive training opportunities and high margin categories
like rental and pro/tradesman planograms.

Over 10 Reload Centers
• Provides quick access to inventory, tailored to precise member needs,
while removing risk in a volatile market
• Just-in-time delivery improves cash flow
• Offers competitive advantages to every member, from single yards to large
multi-location, high-volume members

Reserved Inventory
• Provides flexible dating with small finance charge
• Highly advantageous for members involved in servicing multifamily housing
and truss/wall panel manufacturers
• Allows for flexibility to leverage favorable market conditions and free up cash flow
• Exclusive offering from Do it Best; our competitors do not have a program like this
• Special buys on LBM available 5 times a year, including both markets.

Revised 03/20

Revised 03/20 No solution.

Offers an exclusive partnership with Lumbermens Merchandising Corporation (LMC).
LMC is a Forest Products and Building Materials Buying Group owned by independent
lumber and building material dealers across the country (1,300 locations). They specialize
in building materials, commodities, lumber, millwork, OSB, and specialty woods.
For their customers not looking to buy entire truck loads of product, Orgill has a small
lumber division, but they have no dedicated reload centers, and limited options for their
customers LBM needs.
Tip: Check the LMC website to confirm if a retailer is purchasing from Orgill.

True Value has a small lumber division, but they have no dedicated reload centers, and
very limited options for their customers who need a full solution partner for LBM needs.

CONFIDENTIAL | 19

Product Assortment

Master
Touch®

We offer a product assortment of over 69,000 SKUs in our eight warehouses.
Additionally, we have the ability to access third-party warehouses through expeditors
as needed. We also have strong relationships with the best, most recognizable brands
in the industry, complemented by many exclusive brands.

Exclusive and Private Label Brands

These exclusive and private label brands include:

• Best Comfort Fan • Best Comfort Heating • Best Garden
• Color Solutions
• Best Look • CHANNELLOCK Products • Home Impressions
• Outdoor Expressions
• Do it • Do it Best • Steel Pro

• Integrity • Master Touch

• Project Pro • Smart Savers

Our exclusive partnership with CHANNELLOCK encompasses a broad range of
product categories, see the playbook for details.

• CHANNELLOCK is the strongest consumer rated brand in the hand tool aisle
that has been built with exceptional quality.

• Private label margin with a nationally known and recognized brand
• Completely exclusive to Do it Best members.

Programs
Our territory sales managers partner with our members to ensure they have the optimal
assortment of products through programs such as Category Solutions, Merchandising
Essentials, Retail Performance, and Core Solutions.

Do it Best offers the right SKUs in order quantities at a landed cost that enables
the member to build better profit margin. See the cost comparison section for
additional information.

20 | CONFIDENTIAL Revised 03/20

Ace Hardware offers over 90,000 SKUs across their 17 warehouses. Many of these SKUs are
Grommet merchandise and duplicate brands they must stock for Emery-Jensen customers.
In other words, Ace is forced to bloat their inventory and SKU count. The breadth of their
assortment is absolutely no better than what is stocked in our warehouses.

Exclusive and Private Label Brands • Clark + Kensington • Grill Mark
Ace private label brands include: • OakBrook Collection • Steel Grip

• Ace brand • Celebrations
• Home Plus • Living Accents

They drive all of their members (regardless of store size, store type, or market) to stock their
designated “Best Brands”, which include: YETI, Traeger, Milwaukee, Big Green Egg, Toro,
Weber, Craftsman, STIHL, and Benjamin Moore.

Historically one of Ace’s best brands is Craftsman—which isn’t what it once was. It is a tired
brand that is now oversaturated in the marketplace. Seemingly every retail outlet, including
Ace, Amazon, Costco, Love’s Truck stops, Lowes, Menards, NAPA, Sears, and others offer
elements of this line.

Programs
Ace’s offering of Discovery Planogram Assortments is their way of forcing their members to
stock what Ace corporately believes is the right product mix.

Ace also offers Level I, II, & III resets to attempt to help their members keep their product
assortment relevant. These are the equivalent of our Category Solutions and Core Solutions
programs.

Orgill offers a product assortment of over 75,000 SKUs in their seven warehouses.

Exclusive and Private Label Brands

Orgill offers the following private labels:

• Boston Harbor • Diamondback • HomeBasix • MintCraft • PowerHouse
• TopMost • Vulcan
• PowerZone • ToolBasix

They do not offer any well known exclusive brands.

Programs
Orgill does offer the following in an attempt to help their customers keep their product
assortment relevant:

• Smart Starts - Program designed to integrate customer’s store with Orgill backed
warehouse inventory at reduced expense and elimination of existing slow selling products.

• Hardware 101 - This program helps ensure the customer is stocking core products within
assortments within a particular category.

True Value offers a product assortment of over 70,000 SKUs in their 13 warehouses, including

private labels such as:

• Green Thumb • Master Electrician • Master Mechanic • Master Plumber

They however do not offer any well known exclusive brands, such as CHANNELLOCK Products.

True Value does offer their True Blue resets in attempt to help their customers keep their
product assortment relevant. This is the rough equivalent to our Category Solutions Program.

It is worth noting that they have no program with Milwaukee, as this has become a brand
leader in hand & power tools.

Revised 03/20 CONFIDENTIAL | 21

Paint

We offer the most robust paint program in the industry.

Liquid paint program consists of:
• warehouse-stocked exclusive labels Best Look and Color Solutions,
both produced by Sherwin-Williams
• warehouse-stocked national brands including Pratt & Lambert,
Valspar, and Glidden
• drop ship program with national brand, Benjamin Moore

PSS Partnership - Additionally, we offer a wide range of top branded sundries in all
of our warehouses, and have an exclusive partnership with Paint Sundries Solutions
(PSS) to provide thousands of additional SKUs, including regionally popular items and
customized assortment planning. No one in the industry offers their members more
choices in liquid paint or sundries necessary to create a unique paint destination in
a market.

In Store Selling System - We have designed a consumer-friendly shopping
environment in the paint department with The Color Bar™. This re-envisioned in-store
experience for our members’ paint departments is scalable, flexible, and customizable
for any budget or store footprint.

Do it Best is the first choice, the best choice,
and the only choice in paint.

22 | CONFIDENTIAL Revised 03/20

After requiring their members to liquidate Benjamin Moore in 2014 as part of their Valspar
“Paint Reinvent”, Ace pivoted yet again back to Benjamin Moore as its preferred paint
supplier in 2019. Ace’s paint brands now include private labels Clark + Kensington and
Ace Royal produced by Benjamin Moore; Magnolia Home produced by Kilz; and Benjamin
Moore. Every time Ace pivots and forces its members in a new corporate direction, the
burden is on the membership.

In Store Selling System - Additionally, the “Extra Mile Promise” is a key tenet of their paint
growth strategy. This is a nationally advertised promise to the customer that they can
“Get everything you need to paint in one trip or delivery is free.” This pledge has been
wildly unpopular with Ace members, viewing it as an unnecessary mandate and a
huge cost burden on the backs of its members. They must cover the cost of increased
personnel to transport a small order (like a roll of painter’s tape) to a customer. Additionally,
the member needs a way to transport the item and must absorb additional insurance
on vehicles.

Their customers are offered the same line of Valspar products available to our members.

In Store Selling System - Orgill introduced “The Paint Works” in 2016. The program is
a collaboration between Orgill and Valspar (now owned by Sherwin Williams). The Paint
Works features a 4-ft. main counter, a four-sided backlit halo sign, a 10-ft. equipment wrap,
and additional backlit end cap kits. Also included in the gold version is a 2-ft. coffee bar.

Revised 03/20 True Value owns its paint manufacturing plant known as General Paint & Manufacturing
(GPM). The facility manufactures latex paints, oil based paints, stains, and aerosols. GPM
also manufactures jansan/cleaning chemicals.
Due to low volumes, manufacturing their own paint is inefficient and leads to higher costs
with lower margin. It is likely that the quality control and technological advances are less
than that of a global leader like Sherwin Williams.
Their private label is EasyCare (previously TruTest).
In Store Selling System - True Value’s paint department layout launched in 2018 is called
Inspiration Realized. The primary sign element is an oversized carousel-style island in their
paint department that requires an enormous amount of floor space.

CONFIDENTIAL | 23

Paint (continued)

Best Look® Do it Best Glidden™
Quality Paints™
Premium paints
Private label paints Nationally-recognized brand
Leveraging the strength
of Sherwin-Williams New to the Do it Best
warehouse, PPG’s Glidden
Manufactured by paint line provides even
Sherwin-Williams, our more options. Now, you can
Do it Best Quality Paints™ easily replenish one gallon at
line is offered exclusively a time and combine all PPG
to you. This complete products like Liquid Nails®,
program ensures you PPG Paints®, Deft®, Flood®, and Olympic® to meet drop
receive the best technical expertise, research and ship minimums, all while billing through Do it Best and
development, quality control, and marketing support earning additional rebates. The expansion into Glidden
in the paint industry. also offers another strong, nationally-recognized brand
that works well alongside our private label line.

Pratt & Lambert® Benjamin Moore®
and Valspar®
Premium paints
Premium paints No-adder drop ship
Delivering a complete program
paint solution
It’s even easier to become
We have an extensive a Benjamin Moore dealer
selection of premium with our no-adder drop
and professional paints ship program. Enjoy all
through Pratt & Lambert® of the benefits of a single
and Valspar® in-stock and ready for your shelves. These bill-through program while
programs are available to complement your Best Look® carrying top paint lines like Aura®,
paint selection so you can offer a comprehensive paint Regal® Select, and more!
solution to meet all your pro and DIY customers’ needs.

DEFY® Stains

Do it Best exclusive stain

A strong paint program includes
both interior and exterior stains.
Set yourself apart from the
competition with DEFY® stains,
a Do it Best exclusive, as well as
a number of other warehouse-
stocked options like our private
label Best Look®, Cabot®, and Flood®.

A Strategic Partnership Best Look® Applicators
Access to new vendors and products
National & Private Label Brands
Paint Sundries Solutions (PSS) offers you access to Rounding out your paint department
dozens of new vendors and hundreds of products
that go beyond what we have in stock. Leverage our Of course, no paint department is complete without
strategic partnership with PSS for unique products a full selection of applicators and supplies for getting
and brands that can be combined into one drop ship the job done right. Provide your DIYer, contractor, and
order. PSS has low order minimums and prepaid freight professional customers with top quality Best Look
requirements. applicators as well as other top brands like 3M™, DAP®,
Graco®, Purdy®, Werner®, and Wooster®.
24 | CONFIDENTIAL
Revised 03/20

Engaging End Caps Header Box
This piece brands the
End caps are space and provides
redefined as engaging additional lighting for the
color selection process
multifunctional sales
tools that inspire with Friendly
robust merchandising Wayfinding
Easily navigate
opportunities The Color Bar to find
the right product

for the job

Paint Counter Design Station Trending Color
Highlight
Designed as module Provides a working
pieces, this counter will station for the consumer Inspire color and keep
the department looking
work in the space to select their color fresh by changing out
available this piece periodically

The Color Bar

While consumers may go online for color inspiration, the brick-and-mortar store remains their primary shopping destination
for paint. Consumers expect a different experience when choosing colors to paint their homes than when they come in to
make any other hardware purchase. The Color Bar delivers a re-envisioned in-store experience for your paint department.

Revised 03/20 CONFIDENTIAL | 25

Marketing

Our marketing approach uses data-driven insights to guide our members marketing
decisions, enabling them to reach their customers at the right time and in the right ways
with content and products that matter most.

We are dedicated to pinpointing the best time to run promotions to drive increased
sales to our members’ stores. Alongside our region-specific, dedicated consumer
marketing specialists, we help our members identify the right time to reach their
customers and create a customized plan that includes the right mix of digital, print, and
in-store marketing to reach their targeted customers. Promotional programs like our​
circulars and Digital Dashboard provide members the right tools to make their business
more relevant.

Members only pay for the marketing that directly benefits their business.

Do it Best also partners with Independent We Stand to provide members a full suite
of marketing resources, tools, tips, and more to help them stand out from the big box
stores and tap into America’s growing desire to support locally owned businesses.

Expert recommendations enable members to reach
their customers at the right time and in the right ways

with content and products that matter most.

26 | CONFIDENTIAL Revised 03/20

Offers a 3-tiered advertising strategy based on what’s best for Ace corporate:

National
Promotes Ace corporate through commercials and digital. This is funded in part by the
2% brand assessment on each member’s weekly warehouse invoice per location, up to
$13,000 annually. Member cost starts here.

Local
Determined through regional advertising groups. A member who wants to conduct
additional advertising on a local or regional basis must pay for this, too. Some of these
are subsidized by Ace (and ultimately their members) through funding in certain areas
strategically important to the company (Chicago or Phoenix, for example). Additional
member cost incurred here.

Own the Mile
Store level marketing, including events and the loyalty program. These flyers or incentives
are funded by the member on top of any local advertising or the national brand
assessment. Yet additional member cost incurred. This is the only portion of marketing
and advertising that is focused on your local market.

Ace is funding prominent sports venue sponsorships in key Westlake and Great Lakes
markets, and has historically supported Chicago sports teams.

Revised 03/20 The basic marketing tools Orgill has available to their customers include:
• Print advertising such as circulars, broadsheets, postcards, etc.
• Website development assistance through a recommended third-party
• Basic interior décor like aisle markers, departmental signage
• Access to an email marketing program
• Retailers hand out branded calendars at the register
• Pre-written Facebook post suggestions

True Value offers rudimentary marketing assistance. This includes:
• Print media (including circulars, broadsheets, catalogs, and postcards)
• Ecommerce platform assistance
• Digital media planning
• True Value Rewards
• In-store signage

All of these programs are optional, and charged a la carte. True Value has not proven
successful at maintaining a strong national brand or in helping their customers market their
local individual brand.

CONFIDENTIAL | 27

Loyalty Program

Our Best Rewards customer loyalty program helps grow sales by tracking customers’
purchase data allowing members to target their most loyal customers with customized
messaging and promotions. This program offers a turnkey option to use data to
connect with the best customers in order to drive traffic, increase sales, and enhance
their profitability.

With Best Rewards, members own their customer data and can target those customers
based on previous purchases and demographics. The best part about Best Rewards is
the flexibility, making the program customizable and tailored to their store.

On average, Best Rewards members spend over $30 per transaction while non-Best
Rewards customers spend $24 per transaction.

Do it Best members own their customer data.
Unlike Ace and True Value members in which
all customer data is owned at the corporate level.

28 | CONFIDENTIAL Revised 03/20

Revised 03/20 Ace Rewards is a required part of their 2020 Vision growth strategy. All customer data
collected by the store is owned by Ace Corporate. If a participating member leaves Ace,
the co-op retains the customer data and charges that member to print and mail postcards
referring the loyal customer to the closest remaining Ace location.
Consumers earn 10 points for every dollar they spend on qualifying purchases. For every
2,500 points, they earn a $5 reward. They also receive exclusive member-only offers.
IBR members are not permitted to participate in the program.

No solution.

True Value Rewards offers the customer:
• Points with each purchase
• Points for ship-to-store purchases
• Members-only offers
• $5 for every 2,500 points.
• App to redeem points and manage account

True Value owns all consumer data collected as part of this program. The retailer can
leverage it as long as they are affiliated with True Value. Once they are not affiliated with
True Value, they lose all customer data.

CONFIDENTIAL | 29

Ecommerce

30 | CONFIDENTIAL Our Ecommerce program offers ship-to-store, allows members to earn revenue on all
orders, and gives them the option for customization, including their logo, the products
they want to feature, local prices and quantity on hand, and a space to promote the
aspects of their business that make them unique. They can even add pages to feature
key brands, products, rental equipment, and more.

Additionally, we’ve launched a brand new ecommerce program that brings members
increased flexibility, relevance, and growth to their online and in-store sales strategy.
This new program ensures they remain relevant in their local market by allowing
customers to start shopping their store before they even walk in by providing the
option to:

• Show your in-store price on your website
• Offer the ability to buy online and pick up in store
• Show products that aren’t from the warehouse
• Present a more modern storefront
• Drive traffic to your website with digital ads through Digital Dashboard
• Streamline returns
• And more!

Our approach is to provide the right balance of ecommerce agility in an increasingly
digital world.

Revised 03/20

As a result of Ace’s top-to-bottom corporate-first philosophy, their website has limited
ability for their members to showcase their niches and key selling points. Rather than
focusing on the member’s individual strengths, the website focuses on central corporate
themes. It does include the member’s individual retail pricing and inventory quantity
on hand.
Order online with assembly and delivery included has been heavily advertised nationwide.
This is one of those areas that sounds great in concept but has been a contentious point
for many of their members. The member must comply or they appear to be making false
promises. Ace members are the ones absorbing the increased overhead associated with
these programs.
Ace has stated they intend to take on Amazon—again, more member investment to drive
business to Ace corporate, but not necessarily to their stores.

They have a third-party vendor, Web Essentials, that can assist their customers in building
a custom website. This doesn’t include features such as same day pickup, showing
quantity on hand, or customer retails. The offering is very basic.

Revised 03/20 Much like Ace Hardware, their website has limited ability for their customers to showcase
their niches and key selling points. Rather than focusing on the store’s individual strengths,
the website focuses on central corporate themes.
True Value is currently piloting a ship-to-store program, leveraging inventories available
at stores to enable customers to pick up products within hours. This will include the local
store’s individual retail pricing and quantity on hand.

CONFIDENTIAL | 31

Brand Identity

The member’s local brand drives customers to their stores. To support this approach,
we provide a robust program with flexible and customizable programs to help our
members market their own brand most effectively to their customers.

32 | CONFIDENTIAL Revised 03/20

As a result of their national advertising efforts, they boast that their brand is recognized by
90% of the US population, and is a central element in maximizing customer traffic for their
members. The slogan “Ace is the place with the helpful hardware folks” has been used for
over four decades and they have featured high-dollar talent in the national television spots.
This national advertising isn’t free. It costs their members an additional 2% on their weekly
warehouse invoice per location, up to $13,000 annually. There is no tiered system in place
so every branded member number pays this fee, even if they have multiple stores.
Success is measured by Gallup top of mind awareness scoring; the score does not
increase sales or profits for their members.
Tip: Ask the member or prospect what percent of their marketing budget are they
willing to spend outside of their market?

Orgill has no national brand identity, and does no national advertising.

True Value announced in 2017 that they would be discontinuing any further national
advertising, instead focusing on local advertising, omni-channel, and social media. With
their sale to ACON Investments in 2018, they also announced that they would no longer
be charging a brand assessment of 1.5%, but would instead charge their customers $150/
month fee to use the True Value name—even though the brand identity has lost most of its
value. This branding option is also only available to customers purchasing at least $200k/
year in warehouse volume.

Revised 03/20 CONFIDENTIAL | 33

Store Design

Fully Branded
The Signature Fully Branded Do it Center is the right track for
members wanting to fast track their branding. Leveraging the use of
the eye catching warm red, the Do it Center design capitalizes on
the successful brand equity earned over the past 30 years. With fully
branded Do it Centers, you will see consistent execution of brand
elements across all locations.

Co-Branded
The co-branded store design is perfect for members with established
brand equity that want to promote it along with the Do it Best brand.
This program provides some flexibility in design, giving members
the option to use their own brand color and name. You will see some
variations in color and use of brand elements among co-branded
stores.
This is our preferred method.

Member Branded

For a member who has built tremendous equity around their own
brand, they should consider the member branded design. Member
branded stores will look differently from one location to the next and
allows the most flexibility. Even member branded stores can promote
their affiliation with Do it Best.

Our Signature Store Design program provides three comprehensive interior and
exterior store design branding options. Whether a member chooses a fully branded
Do it Center®, a co-branded Do it Best design, or a member branded option, they’re
taking a major step to improve their store’s market positioning with their customers. We
also have partnerships in place to deliver exceptional lumberyard design and planning.

Regardless of what they choose, all three branding options focus on creating great
selling environments that maximize sales and build local brand. Stores that have used
our Signature Store Design program have experienced up to 58% increase in sales in
year one.

Multiple financing options are available, including the use of preference shares for
design projects.

As part of any store design project, Do it Best will also provide a floor plan and
suggested merchandise plan for the store.

Do it Best is the only co-op to offer complete
interior and exterior store design services.

34 | CONFIDENTIAL Revised 03/20

Ace offers interior store design, which includes a floor plan, merchandising plan, electrical
plan, and lighting plan. They do not offer any exterior store design assistance aside from a
picture book of ideas to take to a local architect. This cost, which can be substantial, must
be absorbed by the member and can’t be offset by preference stock or other incentives.

Orgill has partnered with a third-party signage provider that offers both exterior and interior
branding. Their services include:

• Exterior signage
• Interior décor elements
• Design and layout
• Field surveys
• Décor installation
• Assistance with permitting

True Value offers interior store design, including a floor plan, merchandising plan, electrical
plan, and lighting plan. In regards to exterior store design assistance, they offer retailers
a picture book of ideas to take to a local architect. The cost for interior or exterior store
design, which can be substantial, must be absorbed wholly by the retailer.

Revised 03/20 CONFIDENTIAL | 35

Logistics

36 | CONFIDENTIAL We work to accommodate member requests relative to delivery frequency, days, and
times. Our on-time deliveries and our fill rate are consistently the highest in the industry.
We pride ourselves on excellence in responsiveness during times of emergency,
positioning Do it Best members to best serve their communities.

Warehouses
We own eight strategically placed warehouses across the United States that allow
shipments to any member in the continental US within 36 hours.

Trucks
Our third-party partners provide us with drivers, vehicles, and maintenance through a
transportation agreement.

Due to our exceptional performance with delivery times, Do it Best has not needed to
invest in additional dollars to track our fleet. When trucks are regularly where they are
expected to be, there’s no reason to build a system to check.

Revised 03/20

Ace began implementing their Logistics Revolution in certain markets in 2018. The goal
of this is to get smaller deliveries more often to stores, which can then get products to
customers faster. This has been one more contentious initiative as most members with
bi-weekly deliveries were forced into once-a-week deliveries to accommodate this
initiative.
Warehouse
Ace has 14 warehouses across the country.
Trucks
Ace employs their own drivers and owns their own trucking fleet which comes at a cost
of capital investment and headcount. They have also used member money to develop
a “Where’s My Truck?” app that wouldn’t be necessary if their trucks were predictable
and reliable.

Warehouses
Orgill services the United States and Canada from their seven regional warehouses.
Trucks
Orgill utilizes a private trucking fleet, which comes at a cost of capital investment
and headcount.

Revised 03/20 Warehouses
True Value has 13 warehouses. In 2019, True Value opened its first all new custom
designed distribution center in over 30 years. The new warehouse is a 1.4 million square
foot facility in Hanover Township, PA. Along with the new distribution center, True Value has
also adopted the hub-and-spoke model along with new software.
Trucks
In 2015, Ryder System Inc. announced that it would provide True Value, with
drivers, vehicles, maintenance, routing, and scheduling services through a
transportation agreement.

CONFIDENTIAL | 37

Profit Drain

38 | CONFIDENTIAL Do it Best is a good steward of our members’ investment in the co-op. We consistently
make strategic investments to grow business, such as upgrades to our warehouses,
technology advancements, and strategic staff additions to better serve our members.
To date, we’ve primarily grown the co-op organically through helping members grow,
and adding new members in areas that needed additional market representation. We
consistently have the lowest cost of operations and have the best return of investment
for our members—illustrated by our industry leading rebates.

Revised 03/20

Revised 03/20 A $152 million accounting error announced in 2008 forced Ace to restate earnings down for
three fiscal years. As a result, they restated earnings for fiscal years 2004, 2005 and 2006,
and corrected numbers for fiscal 2007. In addition to the impact to earnings during those
years, the investigation also cost approximately $10 million.

Ace has also shown a pattern of risky investments over time using members’ money.

This began years ago with forced member investment in Ourhouse.com, an early ecommerce
venture that quickly failed.

Emery and Jensen Distribution
Ace purchased Emery and Jensen Distribution (EJD) several years ago with their members’
money. The plan was to acquire these distribution companies and then begin selling to non-
member locations (Ace members’ competitors whether down the road or right across the
street). This has been a rocky relationship to date. Members have been upset about their
competitors getting product from Ace and even more so as fill rates dropped substantially.
Their financial reports show how disastrous this investment has been with profit taking major
hits. Now, in an effort to try to get this back on track, Ace is implementing an 8.5% adder on
each item purchased through EJD.

The Grommet
Ace expended more money by investing in the trinkets company, The Grommet, provider of
gifty items similarly found in what people used to see in airline magazines or now defunct
retail stores like The Sharper Image or Brookstone. Not only did they invest in this business
but certain items in the Grommet’s catalog are forced to be stocked in Ace stores by showing
them available at your local Ace regardless if the member believes the product is right for their
business.

Westlake and Great Lakes stores
Ace assumes all risk of owning more than one hundred and eighty hardware stores tied to
Westlake and Great Lakes. Ace owned stores operate at a cost advantage relative to other
Ace members, as they aren’t charged the customary handling charge (up to 10%). Stated
differently, Ace members at large are subsidizing these operations.

Handyman Matters
Most recently, Ace purchased the Handyman Matters franchise with the promise of driving
handyman business into Ace member locations. They are banking on changing the behavior
of home repair professionals with existing business relationships and habits. For this to work,
these individuals would need to choose to buy some materials at lumber stores, and then go
buy other materials at an Ace store—hardly a good use of a contractor’s valuable time.

CONFIDENTIAL | 39

Profit Drain (continued)

40 | CONFIDENTIAL Revised 03/20

As a privately held wholesaler, Orgill doesn’t publish their financial statements. We do
know that they have over 2,300 employees (including more than 350 territory managers).
Additionally, they have a private trucking fleet, which comes at a cost of capital investment
and headcount. Most importantly though, any profits made by Orgill go to the Orgill Family,
not to their customers, as would be the case in a co-op model.

True Value has been a profit drain to their customers for more than 20 years. Their customers’
return on every dollar of gross profit earned by True Value was approximately $0.12 in 2017,
leading to the lowest rebates in the industry.

The roots of this dismal return on investment for their customers has a long, sad history,
starting with a 1999 audit that uncovered accounting irregularities of about $100 million.
This led to a $131 million loss that year causing the value of their members’ stock to plummet.
During this tumultuous period (1999–2001), a number of hardware stores chose to leave
True Value to join other hardware co-ops. True Value brought in new management following
this loss, eliminated the ServiStar and Coast to Coast brand names, and closed many of
their warehouses.

Since then, they have continued to lose store count, top-line sales, sold all of their properties
(leasing most back), and have struggled to make a profit.

In 2018, True Value’s management convinced their members to sell 70% of the company to
ACON Investments, who invests in troubled companies and assets. During this acquisition,
True Value converted from a member-owned co-op to a wholesaler. As a result, they now sell
to anyone and everyone within any and all markets.

Revised 03/20 CONFIDENTIAL | 41

Tools to Manage Margin

42 | CONFIDENTIAL Do it Best has a dedicated pricing team which utilizes state-of-the-art pricing
intelligence, gathering from Do it Best members and competitors to determine
suggested retails.

Landed Cost
We utilize landed costs when selling product to our members, which means that our
freight is built directly into catalog cost. This benefits all of our members, as it allows
them to build their retail strategy on their true cost of goods, maximizing margin
opportunity. No one else in the industry provides such straight forward pricing.

Margin Master
For members whose business model is best served by a more localized pricing
strategy, they have access to Margin Master. With Margin Master, they can effectively
and accurately manage their pricing in just a few minutes. It allows a member to
develop, maintain, and implement any number of pricing rules. Margin Master will
display Do it Best suggested retails, price sensitivity codes, and custom pricing levels
to make developing your pricing strategy easier. These rules can be applied at any
level: store, department, class, product group, and more.

Revised 03/20

Revised 03/20 Ace offers its members three pricing levels: Suggested, Level I, and Level II, with an
average store-wide gross margin of 38%, 42%, and 44%, respectively. Sensitive and
competitive items are largely priced the same across all three options. Dealers can pick
and choose pricing levels by department.

Margin Master
Ace also offers Margin Master as an option to help their members increase margin.

Orgill offers the following:

Market Specific Pricing
Market Specific Pricing (MSP) utilizes retail sensitivity codes to manage retail pricing.
The program is designed to enhance price image and boost gross margin. A research
team conducts a price audit, covering a sampling of products from all departments over
all levels of price sensitivity.

After the research has been gathered, this pricing information is then entered into a
pricing template. Through this template, the retailer is able to determine where their store
is positioned compared to other similar retailers in their market. Once the data has been
applied, the retailer can create a price plan by making a price decision for each
sensitivity code.

Electronic Market Specific Pricing
Retailers who want to keep their retail pricing competitive without investing in an entire
plan may choose the electronic MSP option. This is a price-shopping service enabling the
retailer to compare store retails with those found at Home Depot and Lowes.

Using third-party software, Orgill’s electronic MSP price-shopping service shops a market
basket of SKUs against market-specific pricing at the big boxes.

Market Responsive Pricing
Market Responsive Pricing (MRP) profiles are provided at no cost to Orgill customers as
an alternative to the company’s Market Specific Pricing (MSP) service. The MRP strategy
is market-based, but is not market-specific. There are three profiles, or pricing strategies,
based on the price sensitivity perception in the retailer’s market. The Leader Pricing
Strategy is used in multiple big-box markets, the Aggressive Pricing Strategy is for one
big-box markets, and the Passive Pricing Strategy is for indirect big-box competition.

Margin Master
Orgill also offers Margin Master as an option to help their members increase margin.

True Value also offers its members three pricing levels: Suggested, Level I, & Level II.
Dealers can pick and choose pricing levels by department.

Margin Master
True Value also offers Margin Master as an option to help their members increase margin.

CONFIDENTIAL | 43

Member Health Insurance

Do it Best works with a third-party, Member Insurance. Member Insurance provides

optional coverage to members in the following areas:

• Commercial auto • Cyber liability

• Earthquake • Flood

• General liability • Professional liability

• Property • Umbrella/excess

• Wind • Workers’ compensation

Member Insurance can provide members with health care coverage through a
selection of third-party carriers. Our offerings through Member Insurance are leveraged
across the industry.

44 | CONFIDENTIAL Revised 03/20

Ace used to participate in Member Insurance. They developed their own competing
programs though in order to capture additional margins from their members’ insurance
needs. It is now leveraged only through the Ace member network.
Ace Hardware provides all of the Member Insurance coverage options (including health care)
through their private insurance program.

No solution.

True Value’s insurance offering is identical to what we offer through Member Insurance.

Revised 03/20 CONFIDENTIAL | 45

Member Education

46 | CONFIDENTIAL Do it Best offers a comprehensive suite of training and development programs
at all levels of experience.

Market Seminars
Each spring and fall, Do it Best develops a slate of free education sessions designed to
help members grow their sales and profitability, enhance their operational excellence,
and become stronger leaders through personal and team development.

Plumbing & Electrical Workshop
Two full days of training to prepare store staff to handle the most common plumbing and
electrical projects bringing customers into member stores. Attendees learn about the
tools and add-on items they can offer to help customers achieve safe and professional
results with every project.

Beyond the many opportunities at each market, we offer outstanding training and
education throughout the year:

Rental School
This four-day intensive training session builds an understanding of the details of
rental equipment and learn management skills and techniques necessary to help
maximize profits.

School of Design
Members gain invaluable product knowledge, take away interior design tips to pass
along to customers, and increase their close rate with practical sales techniques for
a variety of home design solutions.

Leadership Development Institute (LDI)
This intensive leadership opportunity equips current and future leaders with the tools and
concepts to effectively manage themselves, their team, and their business.

LBM School
Designed to train the next generation and provide the foundation of knowledge to excel,
participants gain product insights, increase their understanding of building science
education, and participate in a full-day of sales training.

College of Retail Education (CORE)
During CORE, new members learn how to benefit from the many Do it Best products,
programs, and services designed to help their business be the first and best choice in
their market.

NRHA Partnership
NRHA offers retailers hundreds of resources, including Hardware Retailing magazine,
online employee training, college-level leadership and management programs, annual
roundtables, conferences, awards programs, research studies, and more. That’s why
Do it Best has partnered with them to offer discounted annual memberships, as well as
scholarships for these services.

Revised 03/20

Revised 03/20 Ace offers various training opportunities with a primary focus on the Ace Learning Place and
Professional Retail Services (PRS) sessions.

Ace Learning Place
Online learning, available through their member portal (acenet.com), this learning ranges from
micro-learning to full courses. Topics include customer service, product knowledge, people
development, and software training. This training is automatically tracked for the owner and/or
territory manager to review.

Professional Retail Services (PRS) Sessions
Training sessions are led by a PRS consultant for members and their teams. These sessions
typically run $4,500 a week and cover topics such as:

• Computer instruction and inventory management
• Business processes and store management
• Customer service
• B2B sales
• Loss prevention
• Becoming a paint destination

Two of these PRS Sessions are required for new members, and automatically billed to them
upon acceptance of their membership application.

Orgill offers training opportunities at their shows, and partners with the NRHA on additional
training opportunities.

True Value offers various training opportunities with a primary focus on the
True Value University.

True Value University
Available through their member portal (membersonline.com), this online learning course ranges
from micro-learning to full courses. Topics include customer service, product knowledge,
people development, and software training. This training is automatically tracked for the
owner and/or territory manager to review.

Reunion Seminars
Each spring and fall, True Value offers its customers free seminars related to product
knowledge, customer service, and areas such as rental and industrial commercial sales.

Rental School
Training session designed to help their customers better understand the rental business.

NRHA Partnership
True Value also partners NRHA to offer their customers resources, including Hardware
Retailing magazine, online employee training, college-level leadership and management
programs, annual roundtables, conferences, awards programs, and research studies.

CONFIDENTIAL | 47

New Store Program for Conversions

48 | CONFIDENTIAL Bringing new members into the Do it Best family is very important for the company’s
continued growth that we incentivize territory sales managers. In order to help a
prospective member join, we have established the programs outlined below.

Twelve months dating and 66% credit (33% incentive credit payable within 30 days of
the OSO and 33% credit at end of project). The program includes professional project
management (Retail Performance Manager), 5% to use towards promoting a grand
opening event, and 5% to use toward merchandising costs.

Restrictions
• Signature Store Design
• Minimum commitment of $150k in new merchandise
• Financial approval
• Commitment to stay with Do it Best for a minimum of seven years
• 75% of planogram must be ordered
• The 66% credit applies toward approved planograms on the
merchandise plan
• There is also a 16% incentive credit on additional and add-on
warehouse inventory.

Financing options available upon credit approval.

Revised 03/20

Revised 03/20 Free Discovery (planogram) merchandise. There is also a credit equal to 10% of their
warehouse volume potential the member can use toward fixtures, equipment, merchandising
costs, signage, or grand opening expenses.

Restrictions
• Does not include merchandise the member already has in their inventory (UPC matches)
• Must commit to be Platinum or Pinnacle within two years
• Must use Ace Store Design
• Must incorporate planograms on the merchandise plan only
• Must use Ace certified merchandising team (this costs upwards of $100,000. Ace
Corporate earns margin off of these teams)
• Financial approval
• Commitment to stay with Ace for a minimum of 5 years

Financing options available upon credit approval.

One year dating and 30% discount on warehouse OSO.

Restrictions
• Inventory must be $40.00 per foot
• Must stock Valspar paint
• Must maintain certain purchase level for 5 years
• Orgill must approve format and size of the store
• 3 year annual purchase minimum of 90% of initial stocking order

Financing for fixtures, merchandise, and merchandising services is also available if the
customer drops any co-op affiliation. Details include:
1st year: No payment or interest for the first 6 months. No interest for the second 6 months.
2nd year: Interest = 1/2 prime
3rd year: Interest = 3/4 prime
Subsequent years: Interest = prime

Free planogram merchandise. There is also a credit equal to 10% of their warehouse volume
potential the member can use toward fixtures, equipment, merchandising costs, signage, or
grand opening expenses.

Restrictions
• Must use True Value Store Design
• Must be planograms on the merchandise plan
• Must use True Value certified merchandising team
• Financial approval
• Commitment to stay with True Value for a minimum of seven years

Financing opportunities available upon credit approval.

CONFIDENTIAL | 49

Warehouse Cost Comparison

The chart below illustrates the true cost of what would appear to be $1,000 of product from our respective catalogs.
In this comparison, it’s important to remember that our cost is landed. This means that freight is built into the catalog
costs, allowing members to optimize their margin opportunity.
When looking at catalog costs for our competitors, freight (and in the case of Ace Hardware, brand assessment)
need to be added.
Finally, factoring in rebate and anticipation discount is critical. Considering that our rebates are the highest in
the industry, and none of our competitors offer an anticipation discount, these must be deducted to establish an
accurate net cost.

CATALOG $1,000 $1,000 $1,000 $1,000
COST Landed
FREIGHT $42*1 $50*5 $59

REBATE -$100*2 -27*3 $0*6 $10

BRAND $0 $20*4 $0 $0
ASSESSMENT -20
ANTICIPATION $0 $0 $0
DISCOUNT

NET COST*7 $880 $1,035 $1,050 $1,049

1. Based on 2018 average freight rate of 4.2% 6. Each invoice is upcharged by 4.5%, and paid back at year’s end if
2. Based on Do it Best Classic rebate purchases are greater than $200,000, and statements were paid in term.
3. Based on Ace’s average 2018 rebate of 2.7%
4. Minimum $6,000/year, Maximum $13,000/year 7. Freight, rebate, and brand assessment are based on $300k in annual
5. Stop Charge warehouse volume.

50 | CONFIDENTIAL Revised 03/20