Ace Hardware

Presenting itself as a company full of “helpful hardware folks,” Ace Hardware wants to be viewed as just another member of consumers’ communities. With thousands of stores across the United States, Ace estimates that 70 percent of the country’s population is within five miles of one of its locations. With its brand in such close proximity to so many consumers, this is a strategic advantage that the company plans to use to the best of its ability.

Although the economy has been in a slump since last year, people are still investing in improving their homes, and the National Retail Hardware Association predicts sales for the industry will continue to increase by 3 percent to 4 percent for the next few years. However, because of the recent push from “big box” retailers, smaller stores are having a tougher time competing in the marketplace even with its continued growth.

This is not on the case for Ace, which is comprised of a network of independent retailers bearing its name. In an effort to be more competitive, however, the company is working to present itself as a unified team, ready to help.

Ace, headquartered in Oak Brook, Ill., is a Fortune 500 retailer-owned cooperative of approximately 5,000 independent stores in all 50 states and 72 countries. With 15 retail support/distribution centers, the company is able to supply its stores with more than 65,000 products, including 8,500 products under its own brand.

All of these aspects are designed to gel together to ensure that Ace retailers continue to show the brand’s helpful image for generations to come.

Vision 21

Ace Hardware is looking to the future. Knowing that the company’s stores will not be able to count on sales to baby boomers forever, the company is looking to appeal to Generations X and Y. Ray Griffith, executive vice president, retail, notes that these two younger generations now account for 42 percent of the population, according to the recent International Mass Retail Association’s market study, “The Future of Shopping and Capturing Tomorrow’s Consumer.”

The study noted that Gen Y (born between 1979 and 1995) currently accounts for 79 million individuals, or 27 percent of the U.S. population. Currently, there are 77 million baby boomers in the United States, and 40 million Gen Xers (born between 1965 and 1978). When these younger generations, who are already showing their buying power, were asked about the future of shopping and what would be most important, Griffith notes that the top three aspects listed were customer service, fast checkouts and geographic location.

In January 2000, the company summoned 250 retailers to a conference in Las Vegas for a strategic planning session.

“We told them this is your company, you represent all the stores,” Griffith says. Everyone involved spent the next three days discussing all facets of the company and what was most important to them.

“What came out of the talks ended up supporting what we already knew,” Griffith says. “Retailers said we needed to improve sales and profits,we need to take money and costs out of our processes and we need to work closer together – and leverage the strength of the entire organization. They wanted to bring us together, as an Ace team.”

The idea that generated the most discussion was the importance of customer satisfaction. In almost every breakout group or roundtable discussion, the company discussed ways in which it could improve processes where the stores deal with customers; for example, finding the best way for customers to return merchandise. “We looked at the business profile of where we thought we should be going and how to get there,” Griffith says.

In an effort to develop its retail operations as a means to deliver “ultimate customer satisfaction,” Ace worked with its retailers to develop the company’s strategic plan,Vision 21. The company describes this as a new way of thinking for all involved; it is a system where all members of the Ace team – retailers, associates, retail support and vendors – work together and focus on providing the best service in the industry. Currently, 2,000 retailers are participating in the Vision 21 program.

“This is part of our effort to transition from a world-class distribution company to a world-class retail organization,” Griffith says.

“For years we thought of ourselves – we were – a world-class wholesale company. We want to become a world-class retail organization.”

In an effort to move from a focus on wholesaling to a focus on the consumer, the Vision 21 strategy is concentrating on seven key areas: retail consistency, people, culture, customers, differentiation, success and the Ace brand and image. The company has already started integrating changes to display its new focus. For example, Ace is developing a new computer technology platform that will provide accurate, consistent and timely reports from the entire Ace organization, and has developed a new Vision 21 membership agreement that holds its member retailers to higher standards, such as actively participating in the Helpful Hardware Club, Ace’s preferred customer loyalty program, and implementing category management for optimized product selections. In addition, the company has created a more consistent look and feel to Ace stores all over the country, including a core mix of products, and has developed new programs to attract, train and retain employees who embody this new vision at both the store and retail support levels.

“The 2,000 retailers represent 58 percent of our volume,” Griffith says. “Vision 21 retailers, year-to-date, have purchases through Ace up 13.2 percent. Our partners, the others, are relatively flat. This shows there is value in the Vision 21 equation.

“As we look into the future, we need to be more retail oriented, like our competitors, the big box retailers,” he continues. “By working together, we can achieve efficiencies that have never been leveraged."

“We believe that by all of us joining hands and moving forward together, while taking costs out, we will become more successful,” he continues. Part of Vision 21 is the development of the new “Ace way of retailing,” according to the company. All stores should operate through best practices, and should meet benchmarks to achieve the highest level of performance, which the company believes represents the preeminent retailers who live the vision and mission of Vision 21. Ace believes the platinum status will show a level of commitment that sets those retailers apart from all others in the company’s network.

“Some of our retailers do not like the idea of us telling them what they need to do to compete,” Griffith says. “It has to do with their independence, how they value independence. Vision 21 is not a mandatory program, and right now we’re busy fulfilling our commitment with the 2,000 stores already enrolled. If we show value in Vision 21, more and more will want to join. If they value the brand strategy, they will join.”

The company believes, however, that because of the history behind the Ace name, and the value of the brand, those who participate will have an easier time succeeding. Through Vision 21, the company believes it is simply enhancing an already wellknown brand. “We’re focused on enhancing the brand, making ourselves more helpful,” Griffith says. “Our company brand promise is to become the most helpful hardware store on the planet – this goes beyond just location and convenience.”

Ace is also focused on training to meet its new goals, and building its work force to improve operations and better serve its customers. “We see a correlation between the number of employees in store and the quality of service we provide,” Griffith says. In addition to more training, however, the company also has supported its work force with its newly formed “Next Generation” store concepts. Griffith explains this is simply “taking a great hardware store and making it more helpful.” In this, Ace is placing a greater emphasis on training and recruiting, but also has incorporated more planning techniques, instruction on point-of-purchase materials and greater use of technology. For example, the stores now use a personal digital assistant called the HDA, which stands for helpful digital assistant. This allows employees to scan merchandise to gain more information on a given item, and then provide that to customers.

“We are actively engaged in making stores more helpful,” Griffith says.

“We have worked on this for three years and it has evolved,” he continues. “Those owners who embrace the direction we are taking, our vision and understand the vision, sign a consent form saying they are committed to the process and agree to do functional things in unison. We recognize that some stores are unique and might not fit the vision, [such as] stores that serve more of an industrial client base. These are stores that elect not to participate.”

EagleVision

One of the main facets of improvement discussed in the original planning of Vision 21 was that to become a worldclass retail organization, the company must implement the use of a common computer system. With EagleVision, now the corporate office, for example, can send electronic enhancements directly to each store or supply information as to what is selling by region. “That’s an advantage the big box stores have right now,” Griffith says.

Through the activities of a number of breakthrough action teams (BAT) at the Las Vegas meeting, the company developed a variety of ideas on how to improve customer satisfaction. Griffith explains that the group of retailers at the conference came up with the idea of the single computer system, which the company has named “EagleVision.” They then “sell” it to other Ace retailers by describing its functions in terms of how it relates to the end user. He cites an example of how checkout times are much faster with EagleVision than with the stores’ current system.

“When a customer goes to the counter with a bottle of windshield wiper fluid and pays with a credit card, we have a stopwatch to time the old and new system just to show retailers how much faster the new system is. The information can be used by the retailer, the retail business manager and also the company headquarters to get the right assortment of products in warehouses and then turn product much faster.”

He explains that the new system provides a number of other enhancements. For example, in the past the company would send each store an upgrade disc related to the Helpful Hardware Club. Now someone at the corporate headquarters can simply send any upgrades electronically and each store gets the same enhancements at the same time.

Another challenge was that many stores already were using improved information technology systems, but are not officially part of the EagleVision program; they will need to be upgraded to be compatible with the other members. Ace is optimistic that most retailers will embrace the program, however. The company plans to get most of its retailer members on board with this new system through its retailer conventions. There are two national shows each year, and in its recent show in Philadelphia, nearly 470 retailers signed up for EagleVision at its official launch. “We want to put in 300 systems in our stores in 2003. That’s almost one per day in our initial phase , but we definitely believe we’re headed to having it in 3,000 to 4,000 stores by 2005,” Griffith says. Though the main focus of the current improvements is to create a better means of delivering information to its member stores and then ultimately the customers, Ace is working toward other continued improvements to reach world-class status.

“The BAT team that was focused on a common computer system is still functional,” Griffith says. “They’re developing functions that the system needs for retailers. We haven’t disbanded the other BATs, but we have communicated to them that we have plenty of ideas – that they supplied – and now we’re concentrating on implementing them.”

The company’s improvements through Vision 21 have already garnered some industry attention. This year, CIO magazine named Ace as a winner of its CIO-100 award for technology and process integration. Each year this award honors the top 100 companies around the world that demonstrate a certain aspect of business or organizational excellence. A panel of experts and CIO staff chose Ace after an examination of companies that synthesize technologies and procedures to improve products, services and relationships with partners and clients.

“Now, more than ever, companies rely on integrated applications that freely share information,” says Abbie Lundberg, editor in chief of CIO magazine. “This year’s CIO-100 award recipients are being honored because their companies developed an integrated enterprise to enhance their business, from improving relationships with customers to creating a seamless value chain.”

The selection of CIO-100 award recipients was a three-step process. Companies either applied via CIO’s Web site, or the magazine’s staff and its expert panel nominated possible recipients who fit the criteria. After CIO editors and writers reviewed the submissions, they voted on the final 100.

“We’re able to deliver positive business performances to our retailers and consumers through an ever-increasing use of technology that streamlines our processes and garners additional efficiencies throughout the organization,” said Paula Erickson, Ace corporate communications and public relations manager, at the time of the award. “Being recognized as a leader in this arena by CIO magazine is a tremendous honor.”

Vendor Collaboration

The company believes its leading market position is mostly due to its strength in distribution worldwide. Ace credits its ability to do this, however, with its relations with its vendors.

Using collaborative planning, forecasting and replenishment, the company has partnered with its vendors to replenish inventory and, in turn, the vendors use Ace’s system to determine its needs.

“We are forerunners in collaborating with vendors to drive efficiencies at Ace and for our vendors,” says Lori Bossmann, vice president of merchandising. “We only pick up the top vendors, and those we work with closely.” The company has used its supply chain management system with vendors for approximately 10 years, but before that it relied on inventory managed through the vendors’ own systems. Now vendors go into Ace’s system to replenish needed inventory.

“We have approximately 40 vendors on it now, handling 20 percent of our volume,” Bossmann says. “Our service levels are up 1.5 percent and our inventory turns about one full turn better. We are trying to get the majority of our volume managed in this fashion.”

The company hopes that by 2003, the EagleVision computer system will help with this by linking to Ace’s centralized inventory management systems. “It is the last step to connect the supply chain completely,” she says. “It is one of our big strategies. We will drive costs out of the supply chain, increase sales and we can monitor sales from the consumer all the way through.”

A History of Helpfulness

ALTHOUGH ACE CURRENTLY PLACES MUCH IMPORTANCE ON the issue of service, it has worked to be known as the place for the “helpful hardware folks” for much of its history. Four Chicago-area retailers – Richard Hesse, Oscar Fisher, Gern Lindquist and William Stauber – founded the company in 1924. Hesse was operating a hardware store on Chicago’s Clark Street and realized that buying from a middleman was cutting into his profits.

One day a peddler came to Hesse’s store to sell sponges, and pointed out that Hesse could realize large savings if he bought by the bale, rather than individually. Although he could not afford to buy that many sponges, he contacted the other three retailers to see if they would split the bale with him. Their decision to do so started the Ace business. After this first cooperative purchase, Hesse sought out more merchandise to buy in bulk. This established Ace’s mission of buying at the lowest possible price, which allowed small stores to compete equally with larger stores in the same market.

Ace started as a privately owned organization, using the Ace name and the concept of cooperative buying. Although the owners liked the positive connotations associated with the Ace name, it was chosen because an Ace Laundry truck drove by during a meeting, and Hesse realized the name would be near the front of the telephone book.

The company was incorporated as Ace Stores Inc. in 1928, with a five-member board of directors and Frank Burke as president. The next year Burke stepped down, at which time Hesse took the position and held it until his retirement in 1973. Hesse led the company to realize more than $650,000 in sales by 1934, with 41 dealers in operation. The company believes that much of its growth during these early times was due to an emphasis on its low-cost program and the growing selection of merchandise offered to its members.

Under Hesse’s leadership, the company also grew through its retailer conventions. “These allowed retailers to meet in one common marketplace and see all of the national products and promotions available to them,” the company says. “Today conventions remain an integral part of the basic activities Ace offers its retailer-owners.”

Ace’s sales and strength continued during the years. By 1958, it had realized $25 million in national sales and in 1974 it opened its fourth distribution center in Toledo, Ohio. This was also the year that the company moved its expanded corporate headquarters to Oak Brook, a suburb west of Chicago. Two years later the company became a retailer-owned cooperative and reached $382 million in sales.

Selling its own private-label paint since 1932, the company began manufacturing the paint in 1984, with the addition of a plant in Matteson, Ill., that produces a variety of solventbased and latex paints. The paint facility grew by 100,000 square feet in 1991, for paint production and storage, and an additional 5,000 square feet for extra laboratory and office space, now taking up 355,000 square feet. In 1995, the company bought another paint plant in Chicago Heights, Ill., which was then renovated with the addition of new technology. The two facilities combined have an annual production capacity of 20 million gallons.

The company started a push for aggressive brand building in 1987, when a new logo was created and John Madden became the spokesperson. Ace notes that in a recent Gallup poll, Madden is now associated with Ace Hardware by more than 80 percent of consumers.

The company opened its largest retail support center in 1993; this facility, located in Princeton, Ill., spans 1.1 million square feet and is almost a quarter of mile long and has more than 120 dock doors, housing more than $65 million in inventory. The most recent support center was opened in September 2001 in Prince George, Va., encompassing 778,000 square feet. The company explains that each retail support facility serves approximately 325 Ace retailers and holds about $40 million in inventory.

In late 1999, the company opened its first Solutions Concept Store in Longview, Wash., and a second one in 2000 in Highlands Ranch, Colo. “Designed to accommodate the rapidly shifting demographics in hardware and home center retailing, the innovative new retail concept stores provide the customer with a total home solutions environment,” Griffith says. “From in-store signage to enhanced customer service via interlinked radio headsets, Ace’s Solutions Concept stores are another example of Ace’s progressive approach to home improvement retailing.” The company plans to open two more of these stores in 2003 in the Denver market.

The Big To-Do

Any smart business works hard to understand its customers, and Ace Hardware Corp. has taken the bold step of surveying 1,000 homeowners nationwide to learn details about their home repair priorities. Released earlier this year, “America’s To-Do List” provides some surprises about the people who shop at and use the products of the retailer-owned cooperative’s more-than 5,000 stores.

Among the findings: Most American homeowners consider themselves “do-it-yourselfers.” Their top priority is reorganizing home storage areas. And, they are not reluctant to ask for help – either from a friend or hardware store – if they are stumped on how to perform a certain task.

“Most people think of their homes as both an asset and a comfort zone,” Erickson says. “They want to ensure every home product works, so they plan ahead to either head off potential problems or complete the projects that will enhance the enjoyment of their homes.”

One of the study’s more-interesting findings calls into question whether society should finally retire the term “handyman.” “The hardware store has typically been a man’s domain, but that has changed,” Erickson notes. “Today,women not only shop for materials, but they also do the hands-on work.”

Ace found 62 percent of homeowners report the woman of the house is at least partially responsible for performing home repairs and improvement projects. Women also appear more likely to be responsible for compiling the all-important to-do list; scratching off completed projects, however, seems to be more of a shared role.

In a finding that is likely to create some debate around the household, Ace discovered that women appear less likely to procrastinate in the completion of projects. “Women, by nature, are more likely to ask for help or hire someone if they don’t know how to get something done,” Erickson explains. “Men, on the other hand, tend to avoid seeking directions, whether they are driving a car or driving a nail. As a result, they can get frustrated and end up putting things off.”

Other stereotypical behavior came to light when Ace asked survey respondents to prioritize projects. Women are more likely to rank highly such decorative tasks as painting and hanging art, the company found. Men see mechanical tasks such as replacing a faucet or showerhead as more important. Men and women alike, however, view reorganizing storage areas and performing yard improvements as high priorities.

Make a List

Ace Hardware, of course, sells screwdrivers, fixtures and other products that do-it-yourselfers need. But its survey found one of the most important tools for consumers is a simple to-do list. About 75 percent of homeowners maintain this sort of list, and 10 percent have lists containing 10 or more tasks. Households of young families were likely to maintain the longest lists. “It seems that preparing a home for the arrival of a first or additional child often causes a flurry of home improvement activity,” Erickson says. “Painting and furnishing a nursery, child-proofing a home or building bunk beds are just a few of the many tasks that young families find on their to-do lists.”

A vast majority of respondents told Ace they feel gratified when projects are completed. This is particularly true of people under age 55.

“Using a to-do list breaks down what could be viewed as overwhelming projects into doable parts,” explains Dr. Martin Steigman, a clinical psychologist, psychotherapist and professor at Chicago’s Northeastern Illinois University. “And, as the person completes each task, he or she feels good about it because it provides relief from the overwhelmed feeling and, therefore, is encouraged to try the next one.”

However, it can take a while for projects to be scratched off the list. Ace found 33 percent of people have kept an item on their lists for more than one year. “Human beings are born procrastinators,” Steigman says. “We just need to discipline ourselves to focus on and complete tasks in a timely manner.”

Ace found certain projects tend to dominate the to-do lists:

  • Reorganizing storage areas, which was on 63 percent of lists.
  • Improving the yard, 62 percent.
  • Hanging pictures or art, 52 percent.
  • Painting the house’s interior, 51 percent.
  • Fixing an item with glue or epoxy, 39 percent.
  • Replacing an electrical switch, outlet or light, 36 percent.
  • Changing or replacing a faucet or showerhead, 36 percent.
  • Repairing walls or millwork, 34 percent.
  • Repairing windows and screens, 30 percent.
  • Painting the house’s exterior, 28 percent.
  • Changing or replacing a plumbing fixture, 26 percent.
  • Enhancing the house’s safety and security, 25 percent.

Most of the people Ace surveyed will ask for help if they don’t know how to perform a task. Most often, they’ll consult with a friend or relative, or seek help from a hardware store or home center. More than half will also consult how-to books.

“Because a home repair can be a critical activity, people are relying on personal contact from trusted advisors, whether it’s someone they know or the knowledgeable hardware store manager located down the street,” Erickson says.

Men were more likely to try to figure out a problem on their own, but, Erickson adds, “While some elements of macho pride may still exist in this area, it is encouraging to note that many homeowners – 72 percent – no matter the gender, will conduct research or ask for help if a home repair task challenges them.”

Part of the Club

In an effort to continue to be known among consumers as the “helpful hardware folks,” Ace has used a number of initiatives to better convey the service aspect of its business. In 1997, the company launched the Helpful Hardware Club (HHC), a preferred customer program, and now more than 1,200 retailers offer it to approximately 4 million customers. Members have the opportunity to receive discounts on merchandise, advanced notification of sales, a subscription to the company’s Homeplace magazine, and can be entered in a number of contests. In addition, if members lose their keys but have the Helpful Hardware tag on their key chains, the keys can be mailed, postage guaranteed to Ace headquarters, where they will be overnighted to the member’s local store.

“Helpful Hardware Club is designed to increase customer visits and transaction sizes while improving retention and rewarding Ace’s best customers for their loyalty,” Griffith says. “In fact, these customers’ shopping frequency is 16.6 percent and their sales are up 15.7 percent. Any way you look at it, these are outstanding results.”

Even if a person is not a frequent customer at hardware stores, Ace still aims to provide him or her with the best service. The company has used its Web site as an extension of its stores, where customers can go to research “Answers @ Ace.” Consumers are able to search for a product through the features they need, browse a list of common hardware and home improvement questions and answers or examine the “solution source,” which provides the definition of certain products or hardware-related words. Ace has also catalogued an extensive list of projects with simple-to-follow instructions that take a novice step-by-step through a particular job.

Famous Faces

In 2002, Ace added to its service roster by naming national home improvement expert Lou Manfredini as the company’s official “Helpful Hardware Man.” Manfredini began working at a local Ace store in his hometown of Chicago as a teenager, continued this path by working as a carpenter’s apprentice while in college, and by 1985, he had opened his own construction company in Chicago. While he still runs his construction company and enjoys building and renovating homes, he currently acts as the company’s editorial media spokesperson. Customers are invited to submit questions to Manfredini via Ace’s Web site; he responds to hundreds of consumer inquiries each week. He also makes appearances at Ace stores across the country. In addition to being a familiar face among Ace customers,Manfredini is the official home improvement expert for NBC-TV’s “Today Show,” and writes a bi-monthly column for USA Weekend magazine.

“Lou’s professional work is devoted to helping others get expert, easy-to-use advice about how to repair and improve their homes, a mission that our retailers embrace daily,” said Erickson at this year’s National Hardware Show, where the company made the announcement. “He is a perfect extension of our Helpful Hardware brand.

“We see Lou’s media spokesperson role with Ace as an ideal complement to that of the company’s popular advertising spokesperson, former football coach and football commentator, John Madden,” she said. “While John generates awareness for Ace through national advertising, Lou will further extend the Ace brand through his helpful home improvement expertise and advice.”

Although Ace’s Vision 21 process focuses on strengthening the brand, the company has added to the visibility of its name since 1988, when famed football coach John Madden became the company’s spokesperson. The company explains that although Madden readily admits that he knows more about football than hardware, he often “likens Ace retailers to football greats in that both are tough, aggressive, knowledgeable, determined to be the best and have pride in their work.”

The company felt that Madden would appeal to its customers because of his strong football career, which includes being the youngest National Football League coach in league history. His career was extended in 1979 when he became a broadcaster, and he has won 11 Emmy awards as television’s “Outstanding Sports Personality Analyst.”

Madden appears in Ace’s national television and radio advertisements and his likeness is used in the company’s circulars and on signage in Ace stores. Each year he packs up his “Madden cruiser” and travels to one of the Ace conventions to meet with Ace store owners and guests.

“Ace’s national television, radio and print campaigns, along with spokesperson John Madden, work together toward increasing individual Ace retailers’ sales,” Griffith says. “Other retailer services offered, including optimized merchandise planograms, retail training, store planning and décor, serve to drive more sales success for all Ace retailers.”

National Distribution

Ace's Retail Support Centers (RSC) are exactly what their name claims them to be, and although they have not been part of the company since its inception, they have been an integral part of Ace’s growth strategy. The company operated for almost 50 years with just one distribution center, but decided in 1969 that a key factor in its future growth was to expand nationally. The first retail support centers were opened near Atlanta and San Francisco, and the company now operates 15 such centers across the country to meet regional needs.

The largest RSC is in Princeton, Ill.; at 1.1 million square feet, it is one of the largest of its kind in the entire home improvement industry. The newest center is in Prince George, Va., which is about 25 miles south of Richmond. Spanning 778,000 square feet, the center could hold 16 football fields and serves approximately 325 Ace retailers in Virginia and in neighboring states.

Each center operates seven days a week, 362 days a year, and combined, the centers employ about 75 percent of the company’s work force. The centers also have access to approximately 65,000 items, which provides the individual retailers with a widely varied selection. To ensure low-cost distribution, the centers use advanced information technology that performs functions such as offload scanning, bar code scanning, radio frequency, a quick response program with vendors and ACENET.

“Introduced in 1997, ACENET is an Internet-based private intranet for use by Ace retailers,” Griffith says. “More than 4,800 stores are actively using the system for item and invoice inquiries, stock reservation, defective goods processing and more.”

State of the Industry

Ace credits the Vision 21 initiatives as being instrumental to its growth in recent years. In the past five years, the company has shown an annual compound average growth of 8.5 percent, with annual retail sales exceeding $13 billion. It has also built market share with the addition of 220 new Ace stores in 2001.

“Even in the downturn, we’ve had a good year and business continued to grow,” Bossmann says. “Our core categories of paint and lawn and garden were up about 8 percent and double- digit, respectively. We also saw strong sales growth. We were up compared to most big box competitors, outpacing them.”

Much of the industry is surviving the downturn with growth, mostly due to the fact that the new, single-family home market remains strong, boosted by record low mortgage interest rates. Some smaller, independent retailers are having a hard time competing against the big box retailers, which is much of the reason Ace is putting so much focus on its Vision 21 program. The National Retail Hardware Association’s (NHRA) estimation that sales for the industry will continue to rise in the next few years is mostly due to the strength of the housing market and homeowners’ focus on do-it-yourself (DIY) projects. Also, leaders of the hardware industry believe that in a slow market such as this, consumers are more likely to focus on making their own projects and gifts instead of spending money on something pre-made, which will also continue to help the industry.

During a speech at this year’s National Hardware Show, Ace President and CEO David Hodnik explained that the company’s research found nearly 75 percent of customers maintain a DIY project list. To benefit from this, Ace is stressing its stores focus on outdoor enhancement products and items for painting and decorating to complement their core hardware business.

Also discussed in this year’s National Hardware Show was the industry’s trend toward embracing technology as a means to increase its business. Ace is demonstrating this through the computer systems integration of its Vision 21 program. In addition, Hodnik announced at the show that the company plans to expand its Web site in the near future to allow consumers to purchase products online.

Growth from an Improved Vision

In addition to opening new stores from the ground up, the company has also expanded in a number of other ways. Ace will often convert competitors’ stores for a new owner, but it will also work aggressively with existing retailers to open branch stores for owners who want multiple stores in their market. Currently, the company’s largest retailer owns 75 stores.

“To gain more market share in the United States, Ace offers 8,500 Ace label products in every major hardware category,” the company says. “All Ace products carry Ace’s satisfaction guarantee with a no-hassle return policy and are priced competitively to comparable products, providing an exceptional value. Ace label packaging is designed to inform and educate consumers in their buying decisions, enabling consumers to match products to their specific hardware needs.”

The company is growing internationally, as well. Currently Ace has a presence in 72 countries on six continents. In November 2000, Ace signed a licensing agreement with Sunstar Engineering, an Osaka, Japan-based global manufacturer. Through this agreement, Sunstar will build and develop more than 200 Ace stores throughout Japan in the next 10 years, making Ace the first non-Japanese hardlines retailer to enter this market. The partnership’s first store opened in the fall of 2001 under the name Ace Home Place.

Although the company aims to grow ever larger, it is comfortable with its current place in the marketplace and confident that it can continue to compete against “big box” retailers. Griffith notes that recently Home Depot had opened four stores on the East Coast named Villager Hardware, a concept similar to Ace stores, but he says it did not pursue expansion of them. Griffith adds, however, that although the Villager Hardware stores are not popping up throughout the country, the mere presence of them got the attention of Ace, making the company more focused and eager to get its retailers together on the same page.

“When a consumer tells us customer service is No. 1, that fits our model better than any big box in the market today,” Griffith says. “At Ace, you don’t have to park a mile away. Big boxes are not fast-in, fast-out stores. They don’t offer the knowledge, personalized service and advice that we do. Ace retailers are independent business entrepreneurs with their life invested in the business and in the store. That’s a competitive advantage in how you treat the customer.”

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