Seen and heard at the Ace show
Dallas — There was plenty of talk of overarching strategy and disruptive competition at the Ace Hardware Convention and Exhibits in Dallas from March 15 to 17. There was also a lot of tire kicking, aisle surfing and product demonstrating on the exhibit floor.
While Ace executives kicked off the market with a detailed overview of strategies to succeed in the new retail environment, the show floor educated and entertained. The co-op’s Famous For 4 categories — paint, grills and outdoor power equipment, home preservation and Christmas lights and gifts — received extra emphasis on the show floor.
Educational sessions ran continually and focused on topics from “What’s New with AceHardware.com” to “Tools to Help You Coach Your Team More Effectively.”
A new convention wrinkle took the form of Experience Zones, areas of concentrated product knowledge in the middle of the show floor’s main aisle. These zones focused on cleaning products, tools, paint, electrical & plumbing and lawn and garden.
Dealers in attendance were encouraged to bring their expertise to the forefront. “That’s what entrepreneurism is all about,” said executive VP John Surane, during the co-op’s general session. “Think about what you’re famous for, build on that, and be famous in the communities you serve.”
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Fighting words from Ace and True Value
First came the blockbuster announcement from True Value concerning its plan to sell a controlling interest in the Chicago-based company. Then came the analysis on web bulletin boards and intranets.
And then the gloves came off.
One of the most recent shots fired in the co-op structure debate comes from Ace Hardware Executive VP and CFO William Guzik, who sought to point out some major differences between True Value’s recent deal with ACON Investments, and Ace’s 2007 plan to convert from a co-op to a c-corp. Guzik was responding to a post by True Value CEO John Hartmann, in which Hartmann said the current True Value’s plan and the old Ace plan are essentially the same.
Not true, Guzik wrote, in a letter to Ace members that was reposted on a popular industry bulletin board.
“Yes, Ace did consider a conversion from a co-op to a c-corp in 2007. And yes, it would have resulted in an elimination of patronage dividends in exchange for traditional corporate dividends and a floating stock price that would have resulted in retailers sharing in the growth of the company through increases in stock price. But Ace never considered a sale of the company and giving up control of your future to an outside group.”
Guzik called Hartmann’s note an attempt to confuse two issues: conversion from a co-op to a c-corp, and the sale of a company to outside investors.
“True Value is giving up control of the company to a private equity firm,” Guzik wrote. “We all know what private equity firms do.”
The post-announcement discussion of the True Value deal also raised the history of past accounting transgressions experienced by both co-ops – in terms that can be described as less than generous.
In his March 16 post defending the True Value-ACON Investments deal, Hartmann wrote that the Ace plan to convert “failed miserably because of a $150 million accounting error. We don’t have any accounting errors and this isn’t the merger from two decades ago either – we are returning money to our members, not destroying it.”
Guzik responded: “Hartmann’s reference to our accounting error is also a cheap shot. He fails to mention that True Value had its own $131 million accounting error a few years earlier. And how have each of us done since then? Since our accounting error, Ace has grown from a company with $3.9 billion in sales and $174 million in members’ equity, to over $5 billion in revenue and $550 million of members’ equity that consistently pays out over $150 million in annual patronage dividends.”
Guzik concluded his note: “Don’t let Hartmann’s distortion of the truth or HBSDealer’s headline this week that ‘In the True Value deal, echoes of a derailed Ace plan’ fool you.”
True Value has not immediately responded to a request for a comment on Guzik’s letter.
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What’s your take on the True Value-ACON Investments deal? Let us know at [email protected]. Or comment below.
Advice to heat up grill sales
Awareness and visibility are two keys to boosting sales in the hot-opportunity category of grills. There’s always opportunity in the grill arena, and the products have a strong pull on customers, but it takes effort to effectively merchandise this category.
That’s some of the advice from Orgill’s Alan Shore, senior category manager for outdoor living for the Memphis-based distributor. “Dealers who succeed in selling grills give it proper attention in the store,” he said. Placement in the store, depth and breadth of offering and employee expertise all factor in the success equation.
First things first: location. Dealers should put their grills on display in the front of the store. “It is an attention grabber, and it is a visually appealing category,” he said. The more grills the better. Orgill recommends an assortment that hits all the major price points and all the categories that match up with a specific region – whether that’s charcoal, pellet, gas or kamado style.
An important point in the path to sales is that moment when the customers “lift the lid and see what’s inside,” he said. And that can’t happen when the grill is in a box unassembled.
“The customer will want to know that they’re getting a quality product, and an unassembled grill in a box won’t convey that quality,” Shore said. “Along with this, dealers should utilize any sort of point-of-purchase material that is available to highlight the key features of each grill.
And then there’s the weekend demo.
”There is simply no better way to sell a grill than to have customers see it in action, smell the food that’s cooking and taste the end product” he said. Weekend demos not only promote visibility, awareness and sales, they also tend to increase traffic to other departments within the store.
As grilling season approaches, the category can expect to benefit from the simple fact that grills are getting better. Significant upgrades in quality and new features combine to help generate new sales, he said. Shore listed some of these improvements: heat retention, starting capabilities, cooking surfaces, cart enhancements.
“Grills are a little like cars,” he said. “Each year, there are significant upgrades. But, there are customers out there who still like the classics.”
Among the bigger trends heading into the 2018 grilling season are versatility and ease of use. Pellet grills are popular for their ability to maintain consistent temperature without much effort on the part of the “grillmaster.” Another trend is smart grilling, through Wi-Fi or Bluetooth thermometer readings. And Shore doesn’t expect grills to get much bigger than they already are. In fact, many consumers, he said, are looking for a smaller product that saves space on the patio or the deck, and saves fuel as a bonus.
There’s no substitute for expertise on the sales floor, to walk customers through the various features, and at the same time promote add-on sales, such as covers, fuel, accessories – even barbecue sauces.
“Customers are looking for the grill destination, where they can see a wide offering, determine which grill is right for them, have their questions answered, and get value with their purchase,” Shore said. “Dealers that address those areas on the floor tend to have the most success.”
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