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The Best of Ace

BY HBSDEALER Staff

Ace has big ideas to win at retail. Here are some of them.

Ace Hardware had its best year in 2016 in terms of net sales, net income and shareholder return. It also recently posted its highest ever store count, crossing the 5,000 mark for the first time. As the co-op’s dealers know, retail is detail. And record years are the result of many inter-related factors. Here are some of the other “Bests” around Ace Nation — from best commitment under fire, to best grilling advice.

Best of commitment to community service

Gatlinburg Ace lifts a fire-ravaged community

When Libby Murphy of Gatlinburg (Tenn.) Ace Hardware began to describe to a reporter how she and her team, in the aftermath of Gatlin burg’s devastating firestorm, gave away homemade ash sifters made out of Ace buckets, she had to pause and suppress the emotion.

Her passion for the community was showing again.

“This store was a place of healing and hope,” she said. And it still is.

Murphy and her team received congratulations during the co-op’s recent convention for their pursuit of amazing service during the fire, a “perfect storm” that decimated Gatlinburg on Nov. 28, 2016. Through luck, and relentless effort, the store was saved and up on its feet.

It was a close call. A Napa Auto Parts store three doors away was completely destroyed. And in a city of 4,000, some 2,500 homes and cabins were lost, along with 70 businesses. “It’s unfathomable,” she said.

It just so happened that a former employee was part of the firefighting crew. It just so happened that the wind seemed to shift at a right angle as it approached the store. And after the fire, it just so happened that Murphy’s team had friends in the police department who agreed to allow an Ace truck loaded with clean-up products to pass through closed streets.

But Murphy doesn’t believe it was luck. “We were just doing what we feel like we were called to do,” she said.

One important objective was to get the hardware store open as soon as possible after the fire. “I called the mayor and explained that we’re a service to the community and we gotta be open,” she recalls. “And he said, ‘You’re absolutely right.’”

In the aftermath, Murphy managed an ad hoc relief fund, combining cash from the store’s till and a contribution from a distant church. Fifty dollars here, fifty dollars there, all for people in need, she said.

“It makes them feel like they’re not alone and there are people in the community who want to help,” Murphy said. “We’re absolutely in it for the long haul.”

Ace CEO John Venhuizen described the store’s effort as a commitment to the community in a way that Amazon.com will never have. And that, he said, is one of the greatest strengths of the independent hardware store.

Today, Gatlinburg Ace continues to do what it can to support the community comeback: promoting the slogan “Gatlinburg Strong” on the store’s marquee, keeping its workforce employed, and planning ways to reinvent itself as a retail business.

Meanwhile, the buckets have earned a place in Gatlinburg lore. “There were a lot of Children’s Miracle Network buckets with the Ace logo on them,” she said. “I wanted Ace to be visible because they were here to help.”

Best eye for new ideas

Ace’s merchant of product innovation

On a recent day on or near the desk of Maya Schultz, Ace Hardware’s new “Product Innovation” lead, one can find traces of a connected car platform. There’s also an Ergie Shovel, with an ergonomic handle fused to the central pole. Elsewhere, indestructible cables from Fuse Chicken can be found.

It’s Schultz’s job to find the latest and greatest, and that brings some interesting products her way.

“We’re looking for that three-carat diamond in the jewelry case of one-carat diamonds,” she said.

Her title, “Product Innovation,” is a new one for the co-op, and it is aligned with the strategy of creating differentiation between Ace stores and its competitors.

“My big thing is ‘What’s the next big idea?’” she said. “It comes from a variety of inputs: cold calling, sales meetings, and some of it’s awareness of what’s out there and what’s trending.”

To find a winner, there are correlation formulas and hypothesis testing, but also a lot of pure gut feelings, she said.

Among the recent promising products being incubated and cultivated are the Hero brand of men’s cleaning products and the GoSun solar cooker — both of which reflect societal trends that give cause for optimism.

Schultz also invests energy into finding innovation in existing products, and working closely with The Grommet — a new product discovery platform — to bring the latest items to retail shelves in one easy installment.

There’s a perception, she said, that the only way for product innovations to reach the mainstream is through “Shark Tank” or through one of the big boxes. That’s not the case. Ace, she said, looks to put these innovations on the path to controlled growth, avoiding the “retail death trap” of overreaching.

“We have a bunch of entrepreneurs running our stores,” she said. “If I can help our vendor entrepreneurs succeed, that’s a win-win proposition.”

Best grill advice

Here’s how to heat up sales in the backyard

Ace Hardware reported comp-store sales growth of 25% in barbecue grills in 2016 — as well as a 34% comp growth figure for the month of December.

The category is clearly heating up. Adding fuel to the effort was a recent “Sell More Grills” presentation to dealers. Here’s some of the best advice for growing the grilling category: Put one in the backyard of your sales force.

“Passionate, educated associates sell more products,” said Craig Hansen, senior merchant for barbecue. “Owners of these types of grills sell more grills. It’s important to create those barbecue ambassadors in your store.”

Demonstration days are also extremely effective sales tools. It’s typical for a successful event to generate sales measured in the tens of thousands of dollars. And stores that execute grill demonstrations have 23% higher grill sales than those that don’t.

Demos can be extravagant or simple, Hansen said: “You can have a grill that’s just sitting there smoking — it could be crackers. Or you can cook and serve frozen pizza.” (You don’t want to use a gourmet pizza, he said, because customers will suspect the involvement of a gourmet chef.)

A well-trained in-store grill ambassador will ask the customer questions and guide the customer accordingly, said Jason Morse of 5280 Culinary and BBQ Provisions, a grilling expert who regularly works with the Rocky Mountain Ace Dealers group to promote the category.

It’s important to know how the customer will use the grill, and helpful to know how much time they expect to spend preparing meals, he said.

Above all, a true grill ambassador will sell the experience of grilling.

“It’s about having fun,” Morse said. “It’s about showing the customers we’re more than a big box chain. And people want to come and see us because we’re the experts.”

Best of training

Advanced product knowledge and service 101

“We want to be the most helpful hardware stores on the planet,” said Lyndsey Lane, marketing and design manager for Rocky Mountain Ace Stores, a group of 80 Ace stores across four western states.

That’s a lofty goal that begins on the front lines and can be achieved only by extensive training and product knowledge, she said.

“Our associates on the floor are the ones who form the relationship with the customer,” Lane said. “They’re the ones who see the customer first. And we want them to be able to answer any question.”

Rocky Mountain Ace takes its training seriously, with dedicated training classrooms in four locations — Denver; Grand Junction, Colo.; Salt Lake City and Taos, N.M. These form the backbone of its training effort.

Lane explains the curriculum: “We ask vendors to come out, and when associates are there, it’s just like school. They change classes, they ask questions and it’s fun for them to get out of the store for a day or two of learning.”

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The ROI of remodeling

BY HBSDEALER Staff

Societal trends point to big ticket opportunities all around the house

Adding insulation to an attic is a smart move. For an investment of $1,343, homeowners will recoup 108% of its value at resale, according to the Remodeling Magazine’s 2017 Cost-to-Value Report.

But as anyone who’s ever painted a room “just for a change” can tell you, people don’t always choose home renovations on ROI alone.

Take the kitchen, where Simmons Consumer Research tells us 7.8 million kitchen remodeling projects were completed in the U.S. over the past year. Major kitchen remodels only deliver a 65.3% ROI. But, changing trends in consumer lifestyles and new products are converging to make it fun to cook again. And people want to cook in a kitchen they love. So, while a kitchen remodel may not deliver the highest resale ROI, it does deliver a high emotional ROI. Here’s how:

More family moments

According to the 2017 Houzz Kitchen Trends study, among homeowners who completed kitchen renovations, 49% said they did it for more family time. And after completing their kitchen renovation, 76% of homeowners said they are now cooking at home five or more days a week.

This certainly fits the lifestyle of hyper-busy Gen Xers who want to slow down to share more family nights together with a homecooked meal in the comfort of their own kitchen.

Healthier lifestyles

That same Houzz study says one in three homeowners report healthier changes in their lifestyle after a kitchen makeover. They’re exchanging takeout for homemade Brussels sprouts and cauliflower steaks. Baby boomers, in particular, are at a life stage where the transition of diet and lifestyle are meaningful and important.

Millennial maturation

Millennials have condensed milestones like marriage, buying homes and having children. In the National Association of Realtors 2016 Homebuyers and Sellers Generational Trends report, 35% of all buyers in 2016 were millennials and 89% are buying existing properties, often ripe for renovation. “I have been working on a full kitchen remodel for the past few months,” said Nate Miller, a millennial homeowner from Pittsburgh. “The old kitchen was a dark hole in the house, so it was the most imperative project to tackle.”

According to NAR, 50% of millennial homeowners are buying homes with more than 2,000 sq. ft. These homes may be larger than a traditional starter home, but they also require more updates. And with young families, sizeable mortgages and a lengthy renovation checklist, it’s often easier and more cost-effective to eat in.

Creating an experience

The millennial generation loves the idea of personalizing experiences. Cooking allows them to do that. As their home begins to serve as a source for entertaining, the kitchen becomes elevated as a central gathering spot.

Often influenced by their millennial children on what they should and shouldn’t eat, a good portion of baby boomer parents are newly independent from their children, with time to rekindle shared experiences to cook as a couple. They’re also using kitchens to create baking and cooking memories with young grandchildren while their children are at work.

Gourmet at home

Meal delivery services, like Blue Apron, generated $1.5 billion in sales in 2016 with strong projected growth over the next five years, according to Packaged Facts. Smartphone apps, low-subscription commitments, doorstep delivery and fresh ingredients make for an easy and fun kitchen experience. The step-by-step directions and unusual recipes bring the joy back to cooking, allowing families to expand their culinary boundaries while providing a shared kitchen experience.

The Houzz study says that more than half of kitchen renovations result in a more open access to connecting rooms and one-third of homeowners are increasing the size of their kitchen as a result of a renovation.

And with a big-ticket project like a kitchen remodel comes the trigger to upgrade other big-ticket items in the space. The Houzz study reports that 83% of homeowners will also upgrade at least one appliance during their kitchen renovation.

While a home renovation often does add tangible value, it often offers a much higher intangible value. More family time. Healthier eating. A shared experience. These intangible values aren’t measured in dollars and cents.

David Sladack is SVP, director of channel marketing at BrunnerWorks, and leads the agency’s Home Enrichment Practice.

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Market Recap: RISI Crow’s Construction Materials Cost Index

BY HBSDEALER Staff

A price index of lumber and panels used in actual construction for March 24, 2017.

Western – regional species perimeter foundation; Southern – regional species slab construction.

Crow's Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow's Weekly Market Report.

Lumber: The SPF market sustained good follow-through. Buyers continued to replenish inventories while wholesalers took positions, sold them and then purchased more. Gains in lumber futures for much of the week, remaining at a premium to cash, underpinned market confidence. Mill sales activity in Southern Pine improved, allowing producers to sell off surpluses built up over the prior few weeks. Demand for 2×6 #2 out of Texas was particularly strong, generating premiums for that item in the West zone by week’s end. Pricing was generally on firmer footing in response to better demand for a wide range of Coastal species items. Yards in California increased their shipments to job sites and upped their rate of inventory replenishment. Activity levels in Inland lumber were universally reported to be strong. A common negative issue focuses on lumber transportation. Both BN and UP are tight with cars, and delivery rates are slow. Demand for studs left prices firm or propelled them higher in many instances. Buyers continued to purchase significant volumes of SPF to cover spring needs. Meanwhile, several western species prices edged higher, led by green and dry Doug Fir. Radiata Pine volumes available in the US market have been less assured than in the past, global demand changes being the primary reason for that. Prices have been consistent, however, and they remain so. Movement in Ponderosa Pine has been sporadic in recent weeks, but the clear direction has been toward strength. While this has included Mldg&Btr material, the focus of both demand and price increments has been in #3 Shop and P99. Ponderosa Pine board demand has extended now to the #2 Common, as home centers advance their business volumes and fill their bins. Sales remained strong in the Western Red Cedar market. Buyers continued to pay higher prices while mills attempted to aggressively elevate prices toward levels needed to cover the cost of potential duties.

Panels: OSB price changes have been limited, but the market clearly has an upward bias, based on demand. Slight upticks in price are shown in the Southeast and Mid-Atlantic regions, with most Canadian areas simply flat. Southern Pine plywood producers made a concerted effort to extend order files by cutting rated sheathing prices early. Discounted levels attracted more buyers Wednesday, offering mills the volumes needed to push order files out solidly into the weeks of April 3 or 10. Any price adjustments in the Western Fir plywood market were modest and usually only a couple of dollars higher. After a slow start, demand picked up, reaching an apex Thursday. By Friday, mills had managed to extend order files into the weeks of April 3 and 10. Canadian plywood moved strongly this week, energized by a mill closure announcement. The market was already quite firm, bolstered by some buying volume and strong mill order files. A number of particleboard and MDF producers reported improved sales activity. One major producer reported the best week of bookings this year for both MDF and particleboard.

For more on RISI, click here.

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