Ace plans for ‘transformational growth’
Suppliers hit with a 1% allowance to fund branding and supply-chain investments.
Ace Hardware Corp. will charge vendors a 1% annual fee on all distribution center and drop-ship purchases of their products beginning Jan. 1. Described as the “Ace Hardware Transformational Growth Allowance,” the fee will support growth in two primary areas – advancing the brand, and enhancing the supply chain.
In a letter to vendors distributed Wednesday morning, Ace VP of Merchandising Brian Wiborg said the co-op’s board of directors has approved $2 billion in wholesale and retail investments that are intended to pave the way for another 800 stores and more than $20 billion in sales over the next five years.
“This allowance is 100% focused on growth,” Wiborg said in a video accompanying the announcement. “It’s aimed directly at improving our customer value proposition for your products, and then shouting it from the rooftops with more marketing.”
According to Wiborg’s announcement, Ace will spend 50% more marketing dollars over the next five years to boost instore and online traffic. The co-op will also make significant investments in acehardware.com, digital marketing and customer experience. Also, he said Ace will invest in expansion of its retail support network to handle more products and faster shipments.
Wiborg said Ace is transforming the hardware channel and will continue to do so at an increasing pace. The $2 billion in investments come as the co-op approaches 10 straight years of same-store sales growth and nine straight years of net new store growth. Wholesale sales grew from $4.2 billion in 2013 to $6 billion today. And at the Ace convention in Atlanta in September, the co-op will unveil a new long-term growth strategy, similar to its 2020 Vision strategic plan, he said.
“It is clear; Ace Hardware Corporation will continue to take an increasingly significant share of the wholesale distribution channel,” he wrote to vendors. “As such, your support and focus on our growth initiatives will help position your business with the best opportunity for step change growth in the years to come.”
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