Ace Hardware - Franchising Today Magazine

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resenting 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.
ACE UP ITS SLEEVE
Ace Hardware rolls out its Vision 21 pr0gram to redefine its
brand and be more competitive in the market.
B Y
S T A C I
D A V I D S O N
Vision 21
In January 2000, the company summoned 250 retailers to a conference in Las Vegas for a strategic planning
that the company’s stores will not be able to count on session.
“We told them this is your company, you represent all the
sales to baby boomers forever, the company is looking to
appeal to Generations X and Y. Ray Griffith, executive vice stores,” Griffith says. Everyone involved spent the next
president, retail, notes that these two younger generations three days discussing all facets of the company and what
was most important to them.
now account for 42 percent of the population, according to the recent International
“What came out of the talks ended up supPROFILE
Ace Hardware
Mass Retail Association’s market study,
porting what we already knew,” Griffith says.
www.acehardware.com
“The Future of Shopping and Capturing
“Retailers said we needed to improve sales
Projected 2002 sales: $13
Tomorrow’s Consumer.”
and profits, we need to take money and costs
billion
Headquarters: Oak Brook, Ill.
The study noted that Gen Y (born
out of our processes and we need to work
Employees: 5,000
between 1979 and 1995) currently
closer together – and leverage the strength
Specialty: Hardware retailing
accounts for 79 million individuals, or
of the entire organization. They wanted to
Ray Griffith, executive VP,
retail: “We believe that by all
27 percent of the U.S. population.
bring us together, as an Ace team.”
of us joining hands and movCurrently, there are 77 million baby
The idea that generated the most discusing forward together, while
sion was the importance of customer satisboomers in the United States, and 40
taking costs out, we will become even more successful.”
faction. In almost every breakout group or
million Gen Xers (born between 1965
roundtable discussion, the company disand 1978). When these younger generations, who are already showing their buying power, cussed ways in which it could improve processes where the
were asked about the future of shopping and what stores deal with customers; for example, finding the best
would be most important, Griffith notes that the top way for customers to return merchandise. “We looked at
three aspects listed were customer service, fast check- the business profile of where we thought we should be
going and how to get there,” Griffith says.
outs and geographic location.
ACE HARDWARE IS LOOKING TO THE FUTURE. KNOWING
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Ace Hardware has approximately
5,000 stores around the world,
offering more than 65,000 products,
including 8,500 products under its
own brand.
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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 orient3M
Creating innovative products and services that respond to customer needs has
always been a way of life at 3M. For more than a century, 3M’s culture has fostered
creativity and given employees the freedom to take risks and try new ideas. This culture has led to a steady stream of products. With no boundaries to imagination and
no barriers to cooperation, one good idea swiftly leads to another. So far there have
been more than 50,000 innovative products that help make people’s lives easier.
Products such as Filtrete Filters give consumers affordable, high-efficiency air filters for cleaner indoor air. 3M™ SandBlaster™ High Performance Abrasives cut
three times faster, last three times longer and are project oriented to make the job
of sanding easier. Scotch Brand Painters Masking Tapes, specially designed for specific painting situations and surfaces, make a wide range of painting projects easier.
The list goes on, driven by the perseverance, ingenuity and creativity that have made
3M’s first 100 years a century of success.
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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
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ed, 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
ny 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 tak-
Tagging itself as the place for “helpful hardware
folks,” Ace is using its Vision 21 program to unify the
brand to be more helpful. So far, approximately 2,000
of Ace’s retailers are on board with the program, and
their purchases through Ace are up 13 percent.
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ing, 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 corRUBBERMAID
Beginning with its first patent for a rubber dustpan in 1933, Rubbermaid leads the
industry in trends for innovation and product design. With categories spanning from
home and garage organization to food storage and refuse removal to closet organization and outdoor storage, the research and development team at Rubbermaid creates innovative ways to organize life, while its marketing team energizes consumerfocused merchandising and advertising. Rubbermaid partners with Ace Hardware to
bring innovative solutions to consumers and to remain at the forefront of the hardware industry. As only one of a hundred companies named a “Brand of the Century”
by BrandMarketing magazine, this distinction is a testament to the impact that
Rubbermaid has made on Ace Hardware customers.
US BUSINESS REVIEW OCTOBER 2002
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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 compa-
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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
DELTA®
Scott Brennan, Delta® National Account Manager based at Delta headquarters in
Indianapolis, says he enjoys working with the people at Ace Hardware, calling their
relationship a collaborative partnership. “They know the Ace consumer,” he says,
“and they rely on Delta for recommendations to meet the Ace customer’s faucet
needs. The buyers are experienced and knowledgeable. They take an interest in
growing the faucet category, both for Ace and Ace Retailers. And they aren’t afraid to
take chances with new products.” Brennan points out that Ace was among the first
to carry the new Delta Victorian™ bath faucets. Being Ace’s leading faucet vendor
gives Delta the opportunity to get involved in special programs. For example, Delta
recently introduced a pallet program with Ace in mind. Pallets hold a maximum of
six pieces (instead of the typical 48 or 96), making it easier for small and large
stores to buy and promote. “We sit down together frequently to discuss promotional,
display and advertising ideas to help Ace move more products,” Brennan says. In
addition, he works closely with Ace to help new Ace Retailers get off to a good start
with their faucet business. Brennan gives Ace high marks for supporting the Ace
Retailers. “They are constantly looking for ways to break out of the mold and help
dealers increase profits with a designer faucet. I’ve been in this business for 22
years, and it’s refreshing to call on people that really care about their business.”
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porate 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
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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 relation-
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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
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Ace Hardware operates 15 retail support centers
across the country, which distribute products to
meet regional needs.
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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
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ships 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.”
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Corporate Giving
While “helpful” is the word Ace uses to
describe its people, “generous” might
apply just as well.
For the past 10 years, the Ace Hardware
Foundation has been a corporate sponsor
of the Children’s Miracle Network (CMN)
and natural disaster relief through the
American Red Cross. Through the charitable contributions of Ace stores, employees, vendors and consumers, Ace has
raised more than $25 million for the Red
Cross and more than 12 million sick or
injured children have been cared for by
CMN’s 170 member hospitals across the
country.
In 2001 alone, Ace donated nearly $4
million to CMN .
This past August, the company added to
its CMN donations by hosting the 11th32
annual golf outing in suburban
Chicago, raising more than $500,000
for children’s hospitals across the
country. This event has become the
largest of its kind in the Chicago
area, both in terms of golfers who
participate and dollars raised.
“We continue to be overwhelmed by
the support and generosity of our
vendor partners for this worthy
cause,” says Jimmy Alexander, vice
president of human resources, who
oversees Ace’s charitable contributions made through the company’s foundation. “For more than a decade now, we
have proudly supported CMN hospitals as
they continue to provide inspiring care to
this country’s children.”
The event took place at five Chicagoarea golf courses. This year’s celebrity
participant was CMN’s “Miracle Child,”
Mallory Code, who ranks 14th in the
Golfweek/Titleist world junior rankings,
despite her cystic fibrosis, diabetes and
asthma. “She is a real inspiration for all
the golfers around her,” Alexander says.
NFL Hall of Fame player Franco Harris
also participated in the outing.
–Michael San Filippo and Staci Davidson
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efficiencies at Ace and for our vendors,” says Lori Bossmann,
One day a peddler came to Hesse’s store to sell sponges, and
vice president of merchandising. “We only pick up the top pointed out that Hesse could realize large savings if he bought
vendors, and those we work with closely.” The company has by the bale, rather than individually. Although he could not
used its supply chain management system with vendors for afford to buy that many sponges, he contacted the other three
approximately 10 years, but before
retailers to see if they would split the
that it relied on inventory managed
bale with him. Their decision to do so
through the vendors’ own systems.
started the Ace business. After this
Now vendors go into Ace’s system
first cooperative purchase, Hesse
to replenish needed inventory.
sought out more merchandise to buy
“We have approximately 40 venin bulk. This established Ace’s misdors on it now, handling 20 percent
sion of buying at the lowest possible
of our volume,” Bossmann says. “Our
price, which allowed small stores to
service levels are up 1.5 percent and
compete equally with larger stores in
our inventory turns about one full
the same market.
turn better. We are trying to get the
Ace started as a privately owned
majority of our volume managed in
organization, using the Ace name
this fashion.”
and the concept of cooperative buyThe company hopes that by 2003,
ing. Although the owners liked the
the EagleVision computer system
positive connotations associated with
will help with this by linking to
the Ace name, it was chosen because
Ace’s centralized inventory managean Ace Laundry truck drove by durment systems. “It is the last step to
ing a meeting, and Hesse realized the
Ace is using its Vision 21 program and Eagle Vision computer
connect the supply chain complete- system to improve its operations in ways such as increasing
name would be near the front of the
the speed of check outs.
ly,” she says. “It is one of our big
telephone book.
strategies. We will drive costs out of the supply chain, increase
The company was incorporated as Ace Stores Inc. in 1928,
sales and we can monitor sales from the consumer all the way with a five-member board of directors and Frank Burke as presthrough.”
ident. The next year Burke stepped down, at which time Hesse
took the position and held it until his retirement in 1973. Hesse
A History of Helpfulness
led the company to realize more than $650,000 in sales by 1934,
ALTHOUGH ACE CURRENTLY PLACES MUCH IMPORTANCE ON with 41 dealers in operation. The company believes that much
the issue of service, it has worked to be known as the place for of its growth during these early times was due to an emphasis
the “helpful hardware folks” for much of its history. Four on its low-cost program and the growing selection of merchanChicago-area retailers – Richard Hesse, Oscar Fisher, Gern dise offered to its members.
Under Hesse’s leadership, the company also grew through its
Lindquist and William Stauber – founded the company in 1924.
Hesse was operating a hardware store on Chicago’s Clark Street retailer conventions. “These allowed retailers to meet in one
and realized that buying from a middleman was cutting into his common marketplace and see all of the national products and
promotions available to them,” the company says. “Today conprofits.
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t i m e l i n e
1929: Ace Hardware’s first warehouse was
opened in Chicago.
1932: The company begins carrying its
own private label with Ace Paint.
1946: Ace’s first Super Ace store is opened
in Minot, N.D.
1951: Ace has more than $9 million in
sales.
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1968: Ace expands internationally with its
first stores in Guam.
1969: Ace’s first distribution centers are
opened in California and Atlanta.
1971: The company achieves more than
$500 million in sales.
1979: Ace adds dealers in New York,
Pennsylvania, Maryland and New Jersey.
1984: Ace begins to manufacture its own
paint.
1985: Ace reaches $1 billion in sales.
1987: Ace’s 5,000th store is opened.
1995: Ace buys its second paint manufacturing facility.
1998: Ace achieves sales of more than
$3.1 billion.
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ventions remain an integral part of the basic activities Ace doors, housing more than $65 million in inventory. The most
offers its retailer-owners.”
recent support center was opened in September 2001 in Prince
Ace’s sales and strength continued during the years. By 1958, George, Va., encompassing 778,000 square feet. The company
it had realized $25 million in national sales and in 1974 it explains that each retail support facility serves approximately 325
opened its fourth distribution center in Toledo, Ohio. This was Ace retailers and holds about $40 million in inventory.
also the year that the company moved its expanded corporate
In late 1999, the company opened its first Solutions Concept
headquarters to Oak Brook, a suburb west of Chicago. Two Store in Longview, Wash., and a second one in 2000 in
years later the company became a retailer-owned cooperative Highlands Ranch, Colo. “Designed to accommodate the rapidly
and reached $382 million in sales.
shifting demographics in hardware
Selling its own private-label paint
and home center retailing, the innosince 1932, the company began manvative new retail concept stores proufacturing the paint in 1984, with the
vide the customer with a total home
addition of a plant in Matteson, Ill.,
solutions environment,” Griffith says.
that produces a variety of solvent“From in-store signage to enhanced
based and latex paints. The paint
customer service via interlinked
facility grew by 100,000 square feet
radio headsets, Ace’s Solutions
in 1991, for paint production and
Concept stores are another example
storage, and an additional 5,000
of Ace’s progressive approach to
square feet for extra laboratory and
home improvement retailing.” The
office space, now taking up 355,000
company plans to open two more of
square feet. In 1995, the company
these stores in 2003 in the Denver
bought another paint plant in
market.
Chicago Heights, Ill., which was then
renovated with the addition of new
The Big To-Do
technology. The two facilities comANY SMART BUSINESS WORKS HARD
bined have an annual production
to understand its customers, and Ace
Ace estimates its stores are within five miles of 70 percent of
consumers in the United States. The company expects to see
capacity of 20 million gallons.
Hardware Corp. has taken the bold
sales of $13 billion this year.
The company started a push for
step of surveying 1,000 homeowners
aggressive brand building in 1987, when a new logo was creat- nationwide to learn details about their home repair priorities.
ed and John Madden became the spokesperson. Ace notes that Released earlier this year, “America’s To-Do List” provides some
in a recent Gallup poll, Madden is now associated with Ace surprises about the people who shop at and use the products of
Hardware by more than 80 percent of consumers.
the retailer-owned cooperative’s more-than 5,000 stores.
The company opened its largest retail support center in 1993;
Among the findings: Most American homeowners consider
this facility, located in Princeton, Ill., spans 1.1 million square feet themselves “do-it-yourselfers.” Their top priority is reorganizing
and is almost a quarter of mile long and has more than 120 dock home storage areas. And, they are not reluctant to ask for help
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– 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
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.
Approximately 500 of Ace’s products are part of its own brand. It
started selling its own private-label
paint in 1932 and began manufacturing its own paint in 1984, adding
a second paint facility in 1995.
Combined, the two facilities have an
annual production capacity of 20
million gallons.
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“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.
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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.
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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
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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
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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
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ment 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
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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 improve-
More than 1,200 of Ace’s retailers offer the Helpful Hardware Club program to
approximately 4 million customers. Members of the club receive merchandise
discounts, advanced notification of sales and a number of other perks. Ace has
found that these members’ sales are up 15.7 percent.
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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 cen-
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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,”
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Each of Ace’s retail support centers operate seven
days a week and 362 days a year; combined, the
centers account for 75 percent of the company’s
work force.
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State of the Industry
ACE CREDITS THE VISION 21 INITIATIVES AS BEING INSTRU-
mental to its growth in recent years. In the past five years, the
company has shown an annual compound average growth of
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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
MTD
For more than 25 years, MTD and Ace Hardware have worked closely together to
develop power equipment programs tailored to the specific needs of Ace retailers
throughout the country. Ace supports the many brands in the MTD family of products, including Yard-Man, Troy-Bilt, Ryobi and Yard Machines Gold, a brand developed specifically for the independent hardware retailer. MTD continues to supply a
full line of products geared toward the specific needs of today’s consumer at a superior value.
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ter 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.”
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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
MUELLER/B&K INDUSTRIES INC.
Mueller/B&K Industries Inc. has been a leading supplier of residential plumbing
products to the hardware and home center industry since 1970. Mueller/B&K has
proudly partnered with Ace Hardware for more than 20 years to supply reliable,
quality products that provide solutions to its customers’ do-it-yourself challenges.
Together the companies continue to make “Ace the Place” for valves, malleable iron
fittings, and plumbing specialty products.
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(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.
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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.” ■
John Krukowski and Michael San Filippo contributed to this article.
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