DISTRIBUTORS/CO-OPS

Ace CEO sees positive signs in economy

BY HBSDEALER Staff

Chicago — Ace Hardware Corp. CEO Ray Griffith pointed to some positive metrics that should give encouragement to hardware retailers in 2011.

Speaking during the opening general session during the Ace Convention & Exhibits here in Chicago, he said across Ace, same-store sales at retail in the month of February were up an impressive 5.8% over last year. Transactions increased "an equally impressive" 3.6%, he said. 

"We have not seen that kind of increase in over 47 months — not since February 2007," he said.

While housing starts and new-home sales continue to languish at or near-historic lows, other macroeconomic factors support optimism for hardware stores. Griffith pointed to February consumer confidence as the highest in almost three years. The International Council of Shopping Centers retail sales increased 4.2% in February.

And almost as if on cue, the nation’s unemployment rate for March slipped a tenth of a percentage point on Friday to 8.8%, down from 8.9% in February.

"Consumers do seem to be spending more freely than a year ago," he 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.

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Ace addresses 2011 strategy, supply chain

BY HBSDEALER Staff

Chicago — During a general session that included sales and marketing strategies for success, Ace Hardware Corp. executives also expressed disappointment in the co-op’s wholesale performance during its recent supply-chain conversion.

They also expressed optimism that its systems have stabilized and that the transition will bear fruit in the form of sales and growth.

"For 100 years we were the best in the world, and for the last five months, we struggled," said executive VP John Venhuizen, about the company’s phase 4 transition to SAP. The system’s Event Planner merchandise tool disappointed users during the transition, but he added that the systems transformation represents a "new V8 under the hood at Ace."

Just a few seconds into his opening remarks, Ace CEO Ray Griffith acknowledged the problem in the company’s more-challenging-than-anticipated supply chain transformation: "Ace as a wholesaler has not performed up to your or our expectations, nor our historical high standards," he said.

Reflecting an effort to go back to basics, Griffith spelled out several areas where the co-op will benchmark its wholesale performance.

Cost of goods compared with wholesale competition: Ace expects to be the lowest, he said.
• Service level: The co-op’s service level was 95.9% for 2010; that’s below its goal of 96.7%.
• Wholesale inventory turns: The 2011 goal is 4.6.
• Wholesale purchases: "If you’re not growing, your dying," Griffith said. In 2010, revenues were up 2.1%. The goal for 2011 is an increase of 3.0%.
• Distribution productivity: Ace expects to be No. 1 in RSC sales per employee, sales per RSC and RSC sales per store, Griffith said.

Regarding sales performance in 2011, Griffith said same store sales at retail in the month of February were up an impressive 5.8% over last year. Transactions increased an "equally impressive" 3.6%, he said. 

"We have not seen that kind of increase in over 47 months — not since Feb. 2007," Griffith added.

 

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[email protected] says:
Jun-14-2011 06:39 pm

Maybe if you had not shunned
Maybe if you had not shunned all the smaller stores you would be doing better! I left Ace in 2001 after my dad and granddad where Ace dealer because Ace tried to steal $150 per 2 weeks for Atlanta advertising and we were 2 hours from Atlanta! They didn't even care that I left and the President of Ace at that time told me that was their philosophy! I told him I wasn't going to build his retirement anymore with my hard earned dollar! Ace gets what they deserved in my opinion!

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True Value’s 2010 Annual Report looks ahead

BY HBSDEALER Staff

In addition to glossy case studies of growing members, Chicago-based True Value Co.’s freshly released 2010 Annual Report forecasts a sixth straight "consistent patronage dividend" in 2011.

The report’s letter to retailers, co-signed by CEO Lyle Heidemann and chairman Brian Webb, also forecasts about 40 line reviews this year. Another forecast is for an additional 1.25 million sq. ft. of Destination True Value retail space, up from the 900,000 sq. ft. that was added in 2010.

Destination True Value — or DTV — is the co-op’s high-performance concept store that, once again, figured prominently in the True Value Annual Report. In addition to before-and-after redesign photos, the report promotes DTV facts such as: "DTV outperformed non-DTV stores by 9% in the first year," and "True Value Co. loaned more than $8 million for new and remodeled DTV stores in 2010."

Profiles of Nuts and Bolts Hardware in Overland Park, Kan., and Prairie Side True Value of Kenosha, Wis., focused on the appeal of the DTV format.

Earlier this year, the company reported wholesale revenues of $1.804 billion in the year ended Jan. 1, 2011. That’s down 1.1% from $1.823 billion in the previous year. On a comparable-store basis, sales were up 0.3%. 

"At the outset of 2011, we grow increasingly hopeful that consumer confidence will improve as the year progresses," reads the co-op’s letter to retailers. "However, we take nothing for granted, as we know consumers will remain staunchly value-focused and somewhat conservative in their spending."

As a result, the co-op said it intends to maintain an aggressive approach to marketing.

Patronage dividends related to the year ended Jan. 1, 2011, were $57.1 million, compared with $57.3 million in the prior year.

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