Ace CEO: Hurricanes, Plans and an ‘Incredibly Good Enemy’

Ace Hardware’s president and CEO, John Venhuizen, recently sat down with Hardware Retailing for an interview. He discussed weather events that have impacted Ace retailers, strategies for competing with “an incredibly good enemy” in Amazon and the co-op’s opportunities and plans for growth.

Hardware Retailing (HR): What have been Ace retailers’ biggest successes in 2017 so far?

John Venhuizen (JV): Resilience. Our retailers’ resilience is awesome. Anybody in the hardware business had a tough start to the year if you happen to find yourself in a cold weather state because we didn’t get any cold weather. But the comeback has been terrific. Once again, our retailers find themselves with positive comps in every region and what appears to be another year of increased customer counts in the face of declining transactions in virtually every other retail segment.

And speaking of resilience, it would be an act of ingratitude if I didn’t brag on the grit, determination and resilience of our retailers serving their neighbors in the Harvey- and Irma-impacted areas. The degree to which Ace retailers sacrifice themselves to serve their neighbors never ceases to amaze me. And I hope our Ace owners are finding the exact same thing to be true from the Ace team that is busting their hump around the clock to support their efforts throughout Texas, Florida and much of the Caribbean.

HR: What can independent home improvement retailers do to compete with Amazon?

JV: I really do think that service, convenience and quality are the keys, and it manifests itself in a whole host of local ways that can be really fun and creative. That, to me, is the formula to compete against an incredibly good enemy. I wouldn’t place the word ‘never’ to Amazon on anything.

It almost seems unlimited on what they can do. But when you think about how local Ace stores—and the human beings they serve there—interact with their customers, the number of ways they can do that in really inspiring, emotionally engaging ways is a strategic advantage. I never stop being impressed with what they do daily.

Quality is all about the product. We will continue to push and reward suppliers who are committed to long-term thinking and differentiated, high-quality merchandise.

I’m pleased with how many of them get it and are coming our way with a lot of cool ideas that our neighbors want, and that you can’t get on Amazon. It’s why so much of our growth continues to come from outdoor power equipment and grills, because of the quality and the service that they need.

Amazon is very, very good at convenience. We’ve got to redefine that in more relevant ways. In the United States, about $1.75 billion of inventory is sitting in Ace stores right in the neighborhood and 75 percent of America’s homes and businesses are within 15 minutes.

We’re going to try to continue to push and leverage and exploit that very big advantage. I’m very optimistic about our ability to do that well.

For example, we’re probably going to end the year growing grills for the third year in a row between 25 and 30 percent. That’s because of service (assembling them), convenience (either in-store pickup or delivery), and then the quality of the brands we sell. It’s the perfect model of what we think can work in a lot of other categories.

HR: What are you looking forward to most for Ace retailers in 2018?

JV: Momentum is a leader’s best friend. If you’ve got a locomotive moving down the tracks, it’ll blow through a brick wall. I feel like our stores are taking action on the things that matter most, and they’re starting to see the fruit of that labor.

I’m excited as we move into the end of this year and ’18, given what we have in the hopper. I call it our “More Strategy.”  We have more advertising, more training, more product exclusivity and greater differentiation and—in part—we believe that will fuel our efforts to fuel more customers, visiting Ace more frequently, as they buy more stuff to drive more profit.

In my view, business to business (or what we call The Supply Place) continues to be our No. 1 opportunity for domestic growth. The stores we study that are already best in class are winning with businesses.

Most of our best ideas bubble up from the stores. And business-to-business growth is yet another example of that. This notion of studying our best stores—to share and replicate with the rest—works. It’s timeless. And lots of stores are now adopting the principles and initiatives. It’s not a hope nor a guess. You can see it working.

HR: What are some tangible ways Ace is investing to help retailers compete online?

JV: We’re investing significantly to relaunch acehardware.com in spring 2018, which is going to localize the website more than ever before and give us increased opportunities to further localize the inventory, the pricing and even the store branding.

We’re also looking at other digital and social areas. How do you respond when a single bad review on Yelp threatens your business? We’re going have some tools to help stores with that locally. And then, keyword buying. How do we help retailers locally with search-word marketing specific to niches they carry in their community? We’re also trying to help stores leverage the increasing power of social media.

HR: You’re changing things logistically with Ace’s wholesale company, Emery Jensen Distribution. How are things going?

JV: We’re embarking on a new, very large facility in Fredericksburg, Pennsylvania. That process is well underway. It’s on track, but it’s very early.

Approximately 75 percent of the retailers, who will move to another larger facility when [the old facility] closes, will be closer to that facility than the one they’re leaving. It is always good when you’re close to a distribution facility.

Execution is everything and we’ve got lots of work to do yet. Q3 or Q4 of ’18 is when customers will begin seeing significant changes in receiving.

HR: Are you eliminating any Emery or Jensen sales staff?

JV: No. We need them and more of them. We have Jensen on the West Coast and Emery-Waterhouse on the East Coast, so we continue to build in the middle of the country. We’re building that staff.

HR: How does Ace plan to strategically grow the wholesale company?

JV: The largest growth areas, and they’re many right now, are the hardline categories for independent lumber and building materials retailers. It’s kind of crumbs to them and core to us.

For retailers, independent or otherwise, where our core is their crumbs, we’re having wonderful success. There’s a whole bunch of stuff that’s not core to grocery but that’s core to us. There’s lots of growth there. The same with farm and ranch and independent nursery, where their core is not ours.

There’s really good penetration, interest, adoption and growth in those kinds of areas with Emery Jensen Distribution. We see that growing double digits for quite some time.