Ace draws up battle plans

Make no mistake, say co-op executives, hardware stores are under attack.

It was a packed house at the Georgia World Congress Center Tuesday morning.

Atlanta — The military metaphors flew like bullets on a battlefield here at Ace's Spring Convention general session.

Weapons, enemies, battle plans, blitzkriegs — even a cross-section illustration of the WWII French Maginot Line — all served as symbols of the challenges facing hardware stores in 2017.

Marshaling all of these concepts, CEO John Venhuizen promoted sound business (and military) strategies — know the enemy, find their weakness and attack them relentlessly.

He also tackled service, convenience, and quality — "these are the three battles we've got to win," Venhuizen exhorted.

While sounding the alarm to rally its troops, the co-op also celebrated its financial strength. Ace Chairman Jim Ackroyd pointed to running success stories, including four consecutive years of increased customer transactions, seven consecutive years of increased same-store sales, and five years in a row of net new store growth.

He added that 2016 produced the co-op's strongest balance sheet yet, while the co-op's warehouse dividend grew to 5.18.

Meanwhile, the retail battle rages on. Diving into military history, Venhuizen described the failed French Maginot Line defensive fortification from WWII as a classic example of "fighting the last war," and he encouraged dealers to prepare for new threats — most prominently, Amazon.com.

In the Ace military analogy, Amazon plays the role of the blitzkrieg lightning attack.

"Folks, this is quite arguably the single most disruptive business in retail history," Venhuizen said, explaining that almost half of everything bought online is bought from Amazon.

Amazon's biggest weakness, he said, is they don't have local owners embedded in the communities they serve.

"Amazon doesn't have 5,000 stores," he added. "It would be a big mistake if we didn't exploit that. We've got to win the battle of convenience, and it's under attack."

Venhuizen pointed to recent success in the grill category, where promotions, strong selection of leading brands and an assembly-and-delivery program combined to boost grill sales significantly. The result of focus on quality and convenience is two consecutive years of stealing market share in this important category.

Venhuizen encouraged new store openings. "We need more stores with great owners," he said, adding that 98.5% of new stores are working and growing. The co-op's new Ace-to-Ace acquisition program allows dealers to tap into their capital stock to facilitate acquisitions.

And in a message designed to promote the independent hardware store as the channel through which vendor partners can build their quality reputations, Venhuizen described the big boxes and Amazon.com as “places that premium brands go to die."

Executive VP John Surane added his own advice: "Retail is as hard as it has ever been, and we realize how many fronts you're trying to battle on. My wish is that we make the next three days in Atlanta famous for something. Put a stake in the ground."

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