Building up, branching out
Dorvin Lively is the newest member of Ace Hardware Corp.’s upper-echelon management team — the Ace CFO hired three years ago was promoted to executive VP in January 2011.
Lively talked to Home Channel News about the co-op’s role as a growth engine, and the independent retailer’s fastest routes to high performance. He offers a credible vantage point, and brings a background equally fluent in retail shelves and balance sheets.
Lively was a professional accounting fellow at the Financial Accounting Standards Board in the early 1990s. He later became a senior VP and corporate controller at Toys “R” Us before moving on to Maidenform Brands, and then to Ace Hardware in 2008. In addition to overseeing all financial-related activities of the Chicago-based co-op, Lively looks over retail operations, business technology, retail training and business development.
For independent hardware stores, there are no shortcuts to success, he believes. But there are fundamentals. The following represents some of his free advice along these lines.
On common denominators of a successful retailer:
“There’s not a cookie-cutter answer to what makes a store successful. But for the sake of argument, it always comes down to a few basics. You’ve got to have the right products in the store. You’ve got to have the right amount of inventory. And then you’ve got to have the right people who are willing and eager to serve your customer when they come in the door. You can almost say that that’s the price of entry, and then you begin to differentiate yourself from there.”
On the opportunity for business-to-business customers:
“We believe that in most situations a store owner should try to drive some level of b-to-b business. In almost every small town in America, schools, churches and even local municipalities — they all need hardware-related products; they need things we sell in our stores. It can be the local plumber, handyman guys. We believe that that’s a huge opportunity that in some cases our stores aren’t capturing. Now there are some that do, and they do very well. But this is a point we’ve really been emphasizing in the last year or two.”
On the Craftsman brand’s rollout at Ace stores:
“Last year, we negotiated with Sears to have the exclusive rights to that brand in our channel. It’s not easy to just say, ‘OK take these SKUs and stick them in the store.’ There would be duplicate SKUs, Ace brand maybe, and stores have different footprints. So, it has taken us awhile to develop what we think is an ideal set for most of our different types of stores. We spent quite a bit of time in 2010 getting what we thought was the right set for a suburban market. We’ve been working on different sets for smaller, more urban markets. It’s been a slow process, but we’re really pleased with it. We have a lot of stores that have Craftsman now, and a lot more stores that are just starting to roll it out.”
On Ace’s SAP business IT implementation:
“We spent the last three months working with our retailers and getting feedback, trying to help improve the system, and I think we’ll continue this throughout the year. We knew that there would be what we call ‘optimization’ — or getting it to work the way it was intended. With IT systems, there’s always something that you’d like to do better. I think getting our system stabilized was a huge effort in 2010 as we went live. Now, the focus is optimizing that even more. We needed to modernize our systems internally, partly because we had a lot of old, home-grown systems that were 20 or 30 years old. We need technology to be more efficient and more productive. We want to open more stores and help our existing stores grow, and this implementation is going to give us the backbone to be able to do that.”
On the role of the co-op:
“We at Ace believe that we differentiate ourselves from some of our competitors out there — on the co-op side — in being able to be more than just a wholesaler, but to give our stores the lowest possible cost on the goods and be able to provide them with services and operating methods that help make them better. There will be some that believe they’re good enough, and they don’t need that help. But most of our stores are single-store operators, a very high percentage. And for many of them, it’s always good when you get outside your box and see how somebody else does things. And we do. That’s just one way we help them.”
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Lehman’s Hardware reopens
Lehman’s Hardware, a 56-year-old store that closed after a Feb. 28 flood, will reopen on March 5, according to a notice on its website.
Located in Kidron, Ohio, an hour south of Cleveland, Lehman’s is comprised of several pre-Civil War era buildings that took on 3 ft. of muddy water when a flash flood swept through the area. Local residents — the store serves a large Amish population — helped with the clean-up effort and damage repair.
Lehman’s has posted photos and video footage of the damaged store on its website, along with a invitation to their “massive flood sale,” which runs all month.
“In most cases, the boxes are wet, but the product is undamaged,” said Glenda Lehman Ervine, one of the owners.
Sorry to hear about Lehman
Sorry to hear about Lehman being flooded. Every industry member anywhere close to Kidron should visit this store. Amazing. Serving the Amish, you'll find non-electric products you didn't know still existed. Bob Vereen
AHMA Industry Confidence Indexes down slightly
The American Hardware Manufacturers Association’s AHMA Home Improvement Industry Confidence Index’s Current Situation Index declined in February to 229.2 from 270.8 in January (October 2008 = 100), while the Future Expectations Index also declined slightly to 246.6 from 250 a month earlier.
In comparing current sales levels with year-ago levels, 55% of respondents said sales were higher in February versus year-ago levels, down from 65% in January. For February, 18% reported sales were even, and 27% said sales were below year-ago levels.
“It is certainly encouraging that most of our members, through good management and aggressive product marketing, are reporting current sales levels above year-ago levels," said Timothy S. Farrell, president and CEO of the AHMA. "However, we continue to be concerned about the prospects for sustainable long-term growth, given the current macro-economic situation wherein unemployment in the country is at 9%, and the federal budget deficit is projected by the Congressional Budget Office to reach $1.5 trillion during 2011.”
Looking forward six months, 70% of February respondents said they expect sales to be above current levels, up from 61% in January. In February, 27% of respondents said they expect sales to be even in six months, and 3% expect sales to be below current levels.
Looking forward one year, 73% of respondents project sales will be higher, down from 84% who felt that way in January. Twenty-seven percent of February respondents project sales will be even one year from now and 0% project sales will be below current levels.
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