Chicago — Ace Hardware Corp. had some positive news to tell its members during the co-op’s Spring Convention general session. Sales were on the increase — particularly fourth-quarter sales. POS data was beginning to help retailers benchmark their performance, and a new Craftsman program was expanding that brand to smaller-format stores.
But then there was that other thing — the company’s supply chain transition.
“As you know too well,” Ace CEO Ray Griffith said from the stage of the McCormick Place Arie Crown Theater, “our transition was more challenging than we anticipated. And although it’s necessary and provides a long-term benefit for Ace, it was a painful transition for all of us.”
Griffith and a handful of Ace executives confronted head on the recent challenges of the co-op’s phase-four transition to an SAP supply chain management system. Their unified message: The supply chain has stabilized, the biggest part of the challenge is over, and the transition will soon pay off. With the new system, Griffith said he expects Ace to lead the field in key metrics, including RSC sales per employee, sales per RSC and RSC sales per store.
Meanwhile, the steady parade of programs continued — one of the brightest, according to John Surane, the co-op’s VP merchandising, was that of Craftsman tools, which continues to develop from a partnership originally formed in February 2010, when Sears agreed to share its popular tool brand with Ace stores.
“We have enough numbers in the bank now to know that this is working,” Surane said, adding that Ace is “back in the tool business, with Craftsman.” He said the category has seen 20% sales growth, 9% transactions growth and 9% gross profit growth for those roughly 500 stores participating in Craftsman programs.
Ace projects 900 stores will participate in the Craftsman program in 2011. And to make it easier for smaller stores, the Craftsman booth was showing off its latest merchandise program specifically designed for their needs.
Ace CFO Dorvin Lively expressed enthusiasm for a new benchmarking tool. In March, the co-op received its first peer group report from some 2,700 stores that share POS data. Analysis of the data will help retailers identify specific areas in which to improve performance.
Over the years, store data has pointed to several basic factors of success, Lively said: the location and size of the store, local competition, great customer service, inventory amount and mix, best retail practices, and store owner and operational practices.
Wholesale sales were a positive story — Ace showed a 2.1% gain in 2010. Even better, sales are riding momentum, with the fourth quarter being the strongest of the year — with a sales increase of 7.4%.
It was also the strongest quarter from a retail comparable-store basis — positive 3.7%. For the year, retail comps were positive 0.7%, a big improvement from negative 6.1% in 2009.
Griffith said same-store sales at retail in February were up an impressive 5.8% over last year. Transactions increased an “equally impressive” 3.6%, he said — that’s the best performance in 47 months.
Ace is planning for sales growth of 3.0% in 2011.
“Consumers do seem to be spending more freely than a year ago,” Griffith said. “Obviously it’s too early in 2011 to get overly confident about sales, but it has the feel of a much better year.”
His advice to retailers: Take advantage of the economic upswing, but be prepared to act quickly in response to change.