Hardware Retailing The Industry's Source for Insights and Information
John Venhuizen
President and CEO
Venhuizen has worked at Ace Hardware for more than 25 years, serving in a variety of leadership positions. In the past, he has overseen marketing, business development, strategy, supply chain, IT and Ace International.
Hardware Retailing (HR): What is new with Ace’s strategic plan?
John Venhuizen (JV): It’s our belief that, while the tactics will change, strategically, the three battles we will wage to win the retail war are service, convenience and quality. We want an irrational pursuit of amazing service. When you walk into an Ace store, the consumer has to feel it is noticeably better than the competitor. The definition of convenience is changing, but really working in our favor. We’re trying to exploit the fact that just under 75 percent of the U.S. is within 15 minutes of an Ace store. We have $1.9 billion of inventory sitting in our stores within 15 minutes of most of U.S. homes and businesses. We’re going to continue to accentuate and leverage that. When it comes to quality, we compete against some very big, well-funded enemies, but our niche is to have high-quality, differentiated, locally relevant products. Having the widest assortment of goods with the most unique, locally relevant product is critical to our foundation and our strategy.
HR: How has purchasing the wholesale companies Emery-Waterhouse and Jensen Distribution served Ace’s mission?
JV: A supply chain is a hard, capital-intensive, low-margin business. The way to make a capital-intensive, low-margin business work is by skill and scale. The No. 1 thing we can do to help the local home improvement store owner is to drive down the cost of goods. In the very first year, we were able to deliver, through synchronization of costs across multiple vendors, just under $20 million in lower cost of goods.
HR: Where do you see Ace’s place in the home improvement market?
JV: In the home improvement industry, local owners really are competing against the biggest, best, most well-capitalized companies in human history. Look at Home Depot, Lowe’s, Menards and Amazon. These are direct competitors, and the way we’ve articulated this is, who do you want to go to war with against those Goliaths? We think you’re going to want to be aligned with a co-op that can bring you the lowest cost, best brand, biggest, best supply chain, best economics and most services. We think the combination of those things is a powerful proposition for local owners. The consumer is the one that makes the choice and that’s why brands matter.
HR: What are some ways Ace’s strategy has changed over time?
JV: We are disproportionately investing, not in lieu of but in addition to, three really important things.
First is digital. We spent a lot of money to re-platform our website. We were up 40-some percent in 2018 in e-commerce sales, and on every single one of those sales, 100 percent of the profit goes right to that local store. That growth is going to be material going forward. We’re delighted with the 40-plus percent increase, but we’re just getting started,
and we’re going to continue to invest significantly.
Second is The Supply Place, our business-to-business function. The Supply Place is our No. 1 fastest-growing area. We’re going to continue to disproportionately invest in that.
Third, from a supply chain perspective, we’re investing the majority of our capital to ensure we have the biggest, best, most efficient supply chain. We’re providing a new, unique and relevant benefit to local owners. Our stores now can order whatever they want to satisfy and win over a customer, and we’ll ship it to them the next day. We want to be faster than Amazon on products we stock.
HR: What’s your vision for the future of the co-op?
JV: The co-op is alive and well and aligns completely with the aspirations of our owners. We have grown. We have more equity than debt and more capital to fuel our aspirations than we need.
We’ve entered our 95th year with record sales, 6 percent revenue growth and a lot of momentum. How will we sustain ourselves for the next hundred years? I think it’s by being the best, most helpful hardware stores on the planet. Corporately, our mission is to be the best provider of products, services and operating methods to entrepreneurial retailers around the world. I’m more excited about tomorrow than I am about today.
