2001 Annual Report - Investor Relations - Sherwin Williams

paint Stores segmentSherwin-Williams stores are the exclusive outletsfor Sherwin-Williams ® branded architectural and industrialpaints, stains and products. In 2001, our Paint Stores Groupadded or acquired 85 stores, bringing the total to 2,573 companyoperatedoutlets in North America. These stores supply a diversecustomer base, including architectural and industrial painting contractors,residential and commercial builders and property managers,OEM product finishers, and do-it-yourself homeowners.PAINT STORES63% of Net External SalesThis unique store network enables us to maintain closeworking relationships with the end users of our products.Staying close to customers helps us to better anticipate andsatisfy the diverse needs of each market we serve. In recentyears, we have sharpened the focus of our product developmentand store merchandising efforts on the needs ofsome key customer segments. This customer-focusedapproach helps ensure the success of our new products.Our new Cashmere interior wall paint is a good example.Its ease of application saves residential paintingcontractors time and effort. Its smooth, stipple-free finishappeals to upscale homeowners. This combination of benefitsmade Cashmere paint an overnight success and willpropel its growth and popularity for yearsto come.Other examples include Harmony ® ,a low-odor, low-VOC wall paintthat minimizes disruption inoccupied areas; AquaClad Water-Based Alkyd, a onecoatwaterborne industrial andmarine topcoat; and aSher-Wood ® productline extension to helpproduction wood finisherscomply with ever-tighteningenvironmental regulations. Each of the21 new products introduced by the PaintStores Group in 2001 builds on our reputation as an innovatorand technology leader.Color is as fundamental to our business as producttechnology. In 2001, we launched Color Excellence , anongoing program to establish Sherwin-Williams paintstores as the industry leader in color selection and delivery.The Color Excellence program is an end-to-endprocess-control initiative that improves color accuracy anduniformity by improving batch-to-batch manufacturingconsistency, container fill level accuracy, and store tintingequipment calibration. The Color Excellence program setsthe stage for the introduction of a new color system,including an exclusive color palette by Martha Stewart, inthe spring of 2002.In 2001, we also initiated key changes to the structureand focus of our Chemical Coatings business. Recognizingthe increasing globalization of the OEM product finishingindustry, we organized teams of technical, marketing andsales specialists to serve specific user markets and expandedour supply capabilities beyond North America. This neworganization offers customers aroundthe world professionalconsultation based ona thorough understandingand depth ofexperience in theirspecific industry, combinedwith a vasttechnological resource.We will continueto explore anddevelop e-businessapplications that providevalue to our customers.For example, customers can now search through thousandsof wallpaper patterns and place orders on-line. In 2002, wewill launch our on-line business center, offering wholesalecustomers password-protected 24/7 access to order history,account status, pricing, on-line ordering features and otheraccount-management tools.9