Ace has a bold plan for garden growth
ORLANDO – The lawn and garden category is a huge chunk of Ace Hardware Corp.’s business, amounting to $2.5 billion annually for the Oak Brook, Illinois-based co-op.
But from the stage of the Orange County Convention Center here in Orlando during the kickoff of the Ace Convention, CEO John Venhuizen pointed to some of the category’s challenges. And he described a bold plan to grow in the garden through a program called “Ace Yard Rx” – a personalized prescription and upfront sale for the customer’s year-round lawn care.
Venhuizen said the idea is for Yard Rx to do for lawn and garden what assembly and delivery has done for backyard BBQ, which has grown five times faster than lawn and garden and generated 22 percent compounded growth over the last five years.
Laying out the case for Yard Rx in terms of “observation, implication and solution,” Venhuizen pointed to challenges observed in the category. Among them: It’s weather dependent, and it’s operationally demanding.
But perhaps the biggest problem is the lack of differentiation – a problem particularly jarring giving Ace’s long-time mantra of “differentiate or die,” he said.
One supplier —Scotts — accounts for sixty percent of the category sales, and that supplier is available at virtually every competitor.
The prescription for growth in lawn and garden is to differentiate Ace’s service by providing a recommended, personalized yard solution to the customer’s door step, when the customer needs it. The plan is to boost market share (all the products would come from Ace) and sales (all the products purchased together.)
The program introduces complexity, but Venhuizen promoted the value to the brand. He couldn’t promise to have the program fully baked by early spring, but people are working on it.
Venhuizen described two other initiatives. One is to capitalize on digital search, which delivers $8 in revenue for every $1 in advertising.
Ace has invested $100 million on paid search advertising, Venhuizen said. The co-op has crunched the numbers and believes there is sizeable return available for an increased investment.
It’s unclear, however, how the co-op will pay for an increase in digital search, he said. But the CEO felt compelled by the economics to pursue an increase.
A third initiative involves expanding Ace Home Services as a response to the growth in do-it-for-me spending over do-it-yourself spending – a trend Venhuizen described as an “existential threat.”
A solution, he explained, is to “own the service” and “bring helpful to the home.” He painted a picture of Ace striving to be “the place to repair, replace, preserve, protect, fortify and beautify the home.”
