Ace Hardware knows it can’t be Amazon. Instead, it’s about to become a lot more of its hands-on self.
The world’s largest retailer-owned hardware cooperative is rolling out a $1 billion initiative of new and remodeled stores squarely aimed at helping customers see, hear, feel and even taste why walking into its stores is worth the effort. (Yep, you might try flipping a burger at one of Ace’s weekend grill demos.)
Behind the bold plan to flaunt exclusive brands and show off its new, experiential format is long-time CEO John Venhuizen, who has been with Ace for 19 years. His drive for superior customer service is legendary and he wants more of that, too.
NRF contributor Bruce Horovitz spoke with Venhuizen about his outside-the-box mission and how it ranks as his big-bet response to the overarching changes within all of retailing.
How big a deal is your new ‘Elevate Ace’ program?
It’s a really big deal. We’re putting money where our mouth is, too. We’ll spend $1 billion in new and remodeled stores over the next five years.
Why is it so important?
We just celebrated our 100th year in business and we have to constantly work at remaining relevant. You know how many retailers who were once great are no longer here. That’s because they stopped being relevant to the consumer.
When is the last time Ace spent this much on a new initiative?
Maybe seven or eight years ago when we launched a new store format. A lot of the spending for Elevate will be on new stores. We’ll add 170 to 200 new stores annually in the U.S., and remodel 280 to 350 per year.
What’s at the heart of this Elevate Ace initiative?
The buzzwords are exclusive and experiential. We want walking into an Ace store to feel like an experience for the consumers.
How will Ace do that?
The typical Ace store has 260 categories and 23,000 SKUs. We want four categories to come front and center: paint, power, backyard and barbecue, and home preservation. It will look and feel like a store within a store. Brands including Weber, Traeger, Big Green Egg, Craftsman, DeWalt, Milwaukee, EGO and Stihl each will have its own immersive brand shop within the store.
How will Ace’s in-store experience change?
It’s unique to any store format we’ve done before. We went with the most exclusive brands and the highest quality products. It will look like a store within a store — kind of like Best Buy does by giving brands their own shops. Think of the Apple store within Best Buy, for example. There will also be outdoor grilling space for demos and events. We’ll wrap that in with our special customer service.
How does this change your staffing?
Equally important is the optimization of our labor force so that we’re efficient and providing world-class service. In our 5,000 stores we have what I like to call 100,000 red-vested heroes who make or break our promise that service is the most important thing.
How does this initiative play into responding to challenges from other, larger retailers?
It’s about staying relevant to the customer. But we know consumers have a choice. Those chains are incredibly good at what they do. But we are in a very different business model. The Home Depot and Lowe’s are driven by home renovation. Ace is about home preservation.
Do you feel outgunned by the big-box rivals?
There are more Ace stores in the U.S. than Home Depot and Lowe’s stores combined. Some 75% of people in the U.S. are living within 15 minutes of an Ace store.
How will it feel different when customers walk into a new or remodeled Ace store?
We will give the big-name brands their own experience. If you are loyal to, say, Benjamin Moore paint, when you walk into the store, you’ll see that brand shop, so you’re embedded within the brand.
How will your barbecue section change?
If you like Weber, you won’t see it in a box, but on the floor where you can feel and touch it. And if you like a grill, we’ll assemble it and deliver it for free.
With this new focus, did Ace have to drop some products or services?
Nothing was dropped. But we’ve become more productive with home preservation. For electrical, plumbing and building hardware, we’ve reduced space allocation. Profits are up, but with less space.
What’s Ace’s best-selling item year-round?
On a unit basis, it’s keys. On a dollar basis, it’s liquid paint.
What do most customers walk into the store for?
Anything to preserve their home. Think lawn and garden. We sell lots of products to help reduce bugs, eliminate weeds and grow greener grass.
What’s your seasonal best-seller?
Christmas lights. For six weeks, trim-a-tree is the number one category in our stores.
Winter is coming — what sells best in the cold weather?
Snow blowers, ice scrapers, ice melts, and snow shovels.
What role is technology playing in your initiative?
Nothing materially that the customer will see in the store. But we’re using technology to better equip our people. They wear headsets so they can connect to everyone else in the store and, if necessary, everyone else in the chain.
How are Ace’s digital sales doing?
A huge number of our visits begin online. We’re investing in those platforms to make them frictionless. Ace’s app revenue is up 67% this year compared to last year. The app is replacing the phone call. The entire inventory of every store is available on the app.
Is Ace also trying to grow a home services business?
That’s a small but emerging part of our business. If you think of the Geek Squad and home electronics at Best Buy, that’s what we want Ace Hardware Home Services to be to home preservation. It’s only in nine states right now. This is not a national program.
With many consumers eager to save a buck, how does a premium hardware chain survive?
There has to be value. That doesn’t mean offering Walmart’s price, but whatever you offer has to be a value to the consumer. That value can be on the premium end or the discount end. Anywhere in the middle is probably long-term death. We are blessed to be in the business of serving others. It’s a path to a fulfilling life. It’s a long-term winning strategy. We want to be the best.
How is the hardware industry changing?
There’s a slow but steady shift from do-it-yourself to do-it-for-me. More people are paying pros to do work inside their homes today than yesterday.
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How is retail changing?
The biggest elephant in the room is the incredible impact of Amazon on the bricks-and-mortar business. They are very good at what they do and trained Americans on free, fast, frictionless experiences. You must either differentiate your store from them or you die. There are few sectors that they are not willing to go after. They have changed the way the world shops.
What is the key advice you offer to retailers?
Develop a crystal-clear point of relevance and differentiation to consumers. Unless your business is uniquely different from your competitors, everything else is just chasing after the wind.
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