Ace prepares for ‘logistics revolution’

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Ace prepares for ‘logistics revolution’

By Ken Clark - 08/16/2018
Chicago – Retail success stories, plans for supply chain improvements and a spirited endorsement of the co-op hardware model highlighted the Ace Hardware General Session here during the co-op’s Fall Convention.

During the 90-minute presentation, a wide variety of Ace dealers were recognized for achieving growth and serving their communities. In a video segment titled “Retailers in Stores eating Popcorn,” Brett Seright, owner of Seright’s Ace in Post Falls, Idaho, described his store’s successful renovation. He pointed to 14% sales increase along with a 5% increase in customer count in 2017.

“if you’re not growing, you’re stagnating,” he said.

Also on the big screen, owners of Costello’s Ace Hardware of New York described the company culture as established by the founder Vince Costello: “We have a culture of growing and creating more opportunities,” said Michael Costello. “That’s very important for us.” His sister Jaimie added: “We love what we do.”

There was no shortage of these feel-good retail stories during the 90-minute session. They came from Sneade’s Ace Home Center, in Maryland; Ken’s Ace Hardware in Jackson, Mo.; and the story of Whitmore Ace Hardware in Wilmington, Ill., was the show stopper. Here a prom-dress drive honors the tragic death of a former teenage employee. The drive has grown over the years into a major community program supplying thousands of dresses – and professional styling – to girls in need.

“We have to remember it’s way bigger than just money,” said Ace CEO John Venhuizen, describing the role of Ace nation in general. “We’ve got to make distinctive impacts in the communities we serve.”

John Venhuizen

The co-op pointed out that more than 400 stores converted and joined the Ace family over the last seven years. These stores have generated more than $1.3 billion and nearly $2.5 billion at retail.

The event was punctuated with a surprise performance from musical star Rachel Platten to close the curtain.

Ace executives also addressed challenges – specifically, the disappointing supply chain performance during the recent high-demand spring selling season. “For several areas of the country our supply chain hasn’t lived up to our high expectations,” said Venhuizen.

The problem was fueled by several factors, and Executive VP and Chief Supply Chain Officer Lori Bossman described them: rapid growth, an unprecedented surge in demand that accompanied a late spring, a shortage of truckers, and high turnovers in distribution centers magnified by very low unemployment across the country.

In response, Ace added $150 million in inventory to its retail support centers. It also established new rules that penalize vendors for late shipments – these rules have led to 10% improvement in on-time shipments. In its DCs, Ace has addressed turnover with retention bonuses. An expansion of its Ohio facility has been moved up a year.

Within the next two months, the co-op will launch an Uber-like tool called “Where’s my truck,” an app that shows retailers the location of delivery trucks.

Striving to be the best wholesaler, and investing for the long-haul were major themes of Venhuizen’s presentation. “We will not think quarters,” he said, referring to investment strategy. “We will think quarter centuries.”

Areas receiving investment include digital marketing (“moving from mailers to mobile,”); The Supply Place B2B business; and the distributor's supply chain.

By the second quarter of 2019, Ace intends to realize in 70% of the country what it calls a “Logistics Revolution” to make Ace “faster than Amazon” on the 100,000 items Ace stocks.

Venhuizen also carried the flag of the co-op model into the general session, pointing to the track record of growth, and embracing the benefits of collective ownership for Ace members. Since 2002, Ace Corp. sales increased from $3.4 billion to $5.7 billion. And Ace Corp. net project increased from $77 million to $155 million, delivering more than 30% return on equity for Ace shareholders.