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Ace Hardware Corp. Celebrates 90 Years

In 1924, when four Chicago-area hardware retailers decided to combine their individual buying power to get better deals from suppliers, there was no way they could know their idea would grow into the home improvement industry’s largest distribution operation.

That’s exactly what happened, however, after Richard Hesse, E. Gunnard Lindquist, Frank Burke and Oscar Fisher joined forces to form Ace Hardware 90 years ago.

Today, the company has its name on more than 4,700 locally owned and operated hardware stores all over the world, making it the largest hardware cooperative in the industry.

Kane Calamari, vice president of retail operations and new business for Ace Hardware Corp., says that over the years the Ace brand has remained relevant in the consumer market because the company has remained steadfast to its core tenets of convenience, service and quality while expanding beyond its wholesale roots to embrace the retailer cooperative model.

“Our core principles are the bedrock of our company and we leverage retail initiatives to further advance the organization,” he says. “You can be the best hardware wholesaler on the planet, but if your stores aren’t succeeding, you’re not going to have anyone to serve.”

Focused on Growth

From the beginning, Ace has been a growth-minded company. Just four years after Ace was founded, 11 retailers joined the company, with its first 25,000-square-foot warehouse opening a year after that. A quarter-century later, the company’s ascent continued, as its retail network expanded to hundreds of retailers and annual sales reached to about $10 million.

In the years since, Ace has kept a keen eye on development, improving merchandising and developing innovative displays and promotions for its customers, always encouraging its retailers to expand their solid hardware image by adding new merchandise and, of course, delivering it with exceptional customer service, Calamari says.

Those efforts have paid off: Ace reported total revenues of $1 billion for the third quarter of 2013 and consistently takes top honors from J.D. Power and Associates for highest customer satisfaction among home improvement retail stores. 

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Today: An Industry Standout

Despite its position as the largest hardware cooperative in the industry, Ace continues to look for new ways to grow and help its retailers be successful in an ever-changing retail landscape, Calamari says.

In an effort to focus more on retail success, approximately 15 years ago Ace started collecting point-of-sale data and made the decision to have one preferred POS provider, a fundamental difference between Ace and its competitors.

Additionally, in response to consumers’ changing shopping habits, Ace also introduced a new retail pricing model after its Fall Convention last year. As part of the new initiative, Ace created 75 retail zones across the U.S., designed to better align with competitors in each market.

“Today’s customers are really price-conscious; the hardware store model needs to achieve a higher gross margin than big boxes, challenging us to make sure our retail pricing is right, and to make sure we’re also providing an experience in our stores that will attract and keep customers coming back,” Calamari says.

Striving for Lower Cost of Goods

Since 1924, Ace always has remained committed to its “helpful” brand promise for its customers, but also is continually pursuing financial growth opportunities for its retailers, Calamari says.

As Ace has grown into the largest co-op in the industry over the years, the company has been able to leverage its scale to ensure that it provides retailers the best cost of goods every day, Calamari says.

“We prove our cost of goods advantage by providing a one-year, 5-percent gross profit dollar increase guarantee for competitive retailers that join the Ace family. If in your first year as an Ace retailer, your gross profit dollars don’t increase by 5 percentage points, Ace will make up the difference,” Calamari says. “Since its inception, we have had more than 100 retailers join Ace Hardware, and we haven’t paid out a single dime.”

Ace understands each store’s market has unique needs and works with retailers to maximize growth by building upon a solid hardware store model.

“We stand by the philosophy that localizing stores and making them unique to their communities outweighs the potential of a store losing its identity,” Calamari says. “We can give you the recipe for a great hardware store—15 years of POS data helps—but what you build around that and how you localize it is what makes it stand out.”

Unique Store Concepts

Full-scale hardware stores have been the core of the Ace business model since the company started in 1924, but today it’s also branching into other store concepts. One prime example is the Ace Express format, which takes Ace’s 8,000-square-foot store model and pares it down to fit into 4,500 square feet or less.

Ace is focusing its Express format on three of the most likely business scenarios, including creating a store-within-a-store for nontraditional hardware retailers; providing an option for existing Ace retailers who want to open a smaller satellite store for a larger, primary location; and branching out into new markets where a full-size Ace location might not be supported.

Retail Store Growth and the Future

To further the company’s growth position, Ace’s five-year plan is to open 750 new stores, putting the company at a pace of 150 new stores every year—something the Ace founders likely could have never imagined when they joined forces 90 years ago.

Demonstrating its long-range vision, Ace is also taking proactive steps to help retailers pass on ownership to future generations. Among other things, it powers hardwarestoresforsale.com, a marketplace for the listing of hardware stores for sale, and offers incentives for Ace retailers to sell their businesses to fellow industry retailers.

“All of these programs help us move the needle forward and prepare the next generation to get into hardware,” Calamari says.

About Amanda Bell

Amanda Bell was an assistant editor of Hardware Retailing and NRHA. Amanda regularly visited with home improvement retailers across the country and attended industry events and seminars. She earned a degree in magazine journalism from Ball State University and has received honors for her work for Hardware Retailing from the Association of Marketing and Communication Professionals.

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