For Ace, retail is increasingly local
Even before Ace Hardware Corp. reported high single-digit sales increases for the quarter and the year — and even during a lingering housing downturn — CEO Ray Griffith told dealers that he liked the position in which Ace finds itself.
“Ongoing uncertainly keeps consumers cautious about spending, but many of you are doing well,” he told the members gathered in Denver for the co-op’s market last year.
In Orlando, Fla., at the Oak Brook, Ill.-based co-op’s Spring Convention, Griffith had an even better message. Performance in 2011 was ahead of 2010 and ahead of plan.
The trio of (relatively) new marketing and merchandising talent for Ace — John Surane (March 2009), Ken Goodgame (August 2010) and Jeff Gooding (came in June 2010) paint a picture of a co-op enjoying new tools for prosperity — brands such as Craftsman and the new paint-and-primer in one Clark+ Kensington, among them. A difficult transition to SAP supply chain management system is behind them. Said Goodgame: “We are now running it, and we intend to take advantage of it.”
Both Surane and Goodgame have Home Depot experience on their resume, and all three understand that part of their job is to give Ace retailers the support they need to thrive even in the shadow of the national chains. A shift to fully integrated line reviews and a tightening of e-commerce identity standards for retailer websites are geared to product long-term benefits for the co-op.
One concept they have in their favor — and an idea they intend to fuel with marketing and programs — is the association of Ace with the local entrepreneur.
“Our competitive positioning around the big boxes and everybody else, clearly the biggest competitive advantage for the Ace Hardware store, is that it’s locally owned and operated. It’s part of the community,” Surane said. “Being locally owned is a powerful competitive advantage by its stores — one that the other guy can’t copy.”
While eco-friendly and made in the USA remain trends to watch, going local is the one that Ace is most eager to promote. “I don’t know if there is anything more American than the local hardware store, and the entrepreneur that runs that store,” Surane said.
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Titusville, Fla. — Running a hardware store isn’t rocket science. But for the team at Ace Hardware Titusville, rocket science is never too far removed from the business equation.
Within plain view of the store’s parking lot across the wide Indian River sits the Kennedy Space Center and the Space Shuttle launch pad. Space launches are part of the culture here, and the nation’s space exploration apparatus is part of the customer base for the store, which has sent merchandise into orbit at least once.
“It was a little plastic gear, about a foot long,” said store manager Dale Bertels, who has been with the store for 18 years. “We had to find it — and it took a lot of research.”
The space program isn’t firing on nearly as many cylinders as the golden days of the Space Shuttle. But home improvement is in lift-off mode, according to Bertels and Bill Pastermack, owner. After rising to a peak in 2005, sales came back to earth until 2011, when sales jumped 7% to a new high. And so far this year, sales are running about 19% ahead of 2011.
How is the store able to post such a surge of its all-time record year in an economy like this one? “It’s hard to pinpoint one thing,” Pastermack said.
He described a number of small steps for a hardware store operator that add up to a giant leap for hardware store sales. Hiring (and retaining) good people is one. Communicating with fellow Ace dealers is another. And a willingness to experiment is another big part of the store’s success.
For instance, fishing.
“I love to fish, and in our smaller store, we set up an 8-ft. display of fishing gear, basically so I could get stuff at wholesale prices,” Pastermack said.
One thing led to another. Customers trickled in. Word spread. And the fishing section expanded to 16 ft., then 24 ft. And today’s store has become a destination retailer, according to customer feedback.
It doesn’t hurt that the region is known as the Red Fish capital of the world.
At a recent “Hunt For Red” fishing tournament, of which Titusville Ace was a sponsor, Pastermack said three different people from Orlando, Fla., — a 45-minute drive from Titusville — had heard about the store’s status as a fisherman’s paradise. “That’s what blows me away. About a year and a half ago, a West Marine pulled out of town, and we became the place.”
Another growth experiment took place in the apparel section, where the team saw demand rise for surf-related clothing and footwear. At about the same time, Pastermack was having trouble finding a tenant for the small space next to the hardware store. So he opened a surf shop called “Go Native.”
“One thing I’m not afraid to do is give something a try,” said Pastermack, part of a retailing family that includes his sister JoAnn Nichols, who runs smaller stores in Cocoa Beach and Cape Canaveral. “But you have to give a niche a full year before you can figure out if it’s working or not. You can’t do three months. And if nobody has even asked for it in three months, maybe they don’t know you have it yet.”
The list of experimental categories is lengthy: high-end sunglasses, Stihl power equipment, pet food, Craftsman tools. And the most recent addition: Ace’s new paint-and-primer in one Clark+Kensington.
“I’m really excited about Clark+Kensington because now we have our own name brand,” Pastermack said. “I’ve always thought we needed to take Ace off the label for paint. It’s great paint, but customers think of it as ‘not good enough to be a name brand.’ Now we have it.”
Networking with peers is another path to sales. Pastermack meets once a month with the 46-store Central Florida Ace group. “The fact that we get together, advertise together and share things helps us,” he said. “Finding out: ‘Hey what are you paying for that, where are you getting that, or what’s working for you.’ ”
A tangible result of such meetings is in the pet food aisle, where a Taste of the Wild pet food product has emerged as a major hit. “We almost have all Central Florida Ace dealers carrying this Taste of the Wild food now. And it all started with an employee who was here who suggested we carry it. He used to sell it at the place where he was before.”
Pastermack has also found success by following the playbook handed down by the co-op headquarters in Oak Brook, Ill.
“When it comes to Ace programs, I’m an early adopter,” he said. “My feeling is if you follow Ace’s guidelines and do it the way they suggest, there’s a pretty good chance it will work. They put a lot of money and thought into programs, and they’re not going to do something that’s not at least semi-successful for a lot of people.”
The old adage of location, location and location rings true for Pastermack and Ace Hardware of Titusville. The location of the well-trafficked store on the Indian River with ample parking and 30,000 sq. ft. was a wish come true for the owner, who previously set up shop in a 900-sq.-ft. store about a mile further up the road.
“I drove by this building for 11 years,” he said of his current location — a former light manufacturing facility that was a grocery store before that. “I would say, ‘Wow, this would make a great hardware store.’ Then one day, I saw the for-sale sign.”
A few rounds of complicated negotiations followed, along with $550,000 in remodeling, and the business took off.
The proof of a location is in the performance for the 48-year-old retail business. “Last year was the best year ever in the history of the business.”
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City of Hope honors industry giants
The stage of the 2012 City of Hope “Spirit of Life” event featured one brand new honoree, several more industry icons and 30 years of memories for the hardware/homebuilding group.
The man of the hour was Ray Griffith, Ace Hardware CEO and this year’s honoree who drew applause with his comment on the importance of social missions for all business, beyond market share and profit margins. “[Corporations] should possess a soul and a commitment to leave something behind that has a chance to help make the world a better place,” he said.
There was no shortage of big names on hand, as former Home Depot CEO Bernie Marcus played master of ceremonies for the 2012 event that raised $770,000.
City of Hope is a California-based treatment and research facility — soon to celebrate its 100th year — dedicated to finding cures and new treatments for cancer, diabetes and other life-threatening diseases.
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