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Costello's Ace Hardware in North Brunswick, N.J.
Johanna Dorn, manager of the store's spa business, with Joey Costello.
John Fiffick, store manager.
Customized store branding in the fastener aisle.
At the checkout, Costello's Ace gift cards.
Digital sales, and delivery, are expected to fuel sales gains.
A fireplace display heats up the North Brunswick store.
"The Backyard Experience" is prominently promoted on the outside of the building.
Grills, coolers and lawn and garden displays are pare of the outdoor-living experience inside the store.
HBSDaily

Backyards and big plans at Costello’s Ace

Hardware-store company builds on its desire to be 'famous for more.'

BY Ken Clark

Ace Hardware Corp. has a catchy slogan for its member dealers: “Famous for Four.” It’s a rallying cry to dominate in the core hardware-store categories of paint, power, home preservation and backyard-and-BBQ.

Costello’s Ace Hardware checks all four of those boxes, and then some. “We want to be famous for more,’” said Joey Costello, director of marketing for the growth-focused 36-store hardware chain based in Deer Park, N.Y.

“Those four categories — they line up perfectly for us,” he explained. “We are fully embracing Ace’s new growth strategy. It really aligns with our beliefs in the things that we feel are important. And a large part of that is the focus on premium brands and those four essential categories — but we take it a step further.”

Costello’s merchandise strategy marches famously into hot tubs, the hearth business, patio and outdoor furniture, and seasonal merchandise, especially Christmas.

With this product mix and a focus on e-commerce and business-to-business sales, Costello’s has embarked on an ambitious five-year growth plan to achieve $250 million in revenue and 75 stores by 2025. Much of that growth is expected to take place through acquisition in the Mid-Atlantic region (see sidebar).

Costello’s newest store — in North Brunswick, N.J. — showcases several approaches to retail fame. No fewer than five hot tubs invite inspection near the entrance. And in a neighboring display, fireplaces decorate an entire wall. During a reporter’s recent visit, patio furniture and a fire pit served as a conference area for a discussion of what the company calls its “Backyard Experience,” a concept promoted in big letters on the store’s exterior.

Costello’s Ace carries fireplaces in eight stores. It also carries hot tubs in eight stores.

“We know that our customers are interested in finding ways to spend more time in their backyard, ways to have community at home,” said Doug Cashmere, vice president. “They are building their backyard — with grilling, with the patio, and with hot tubs.”

There’s more than just relaxation to be found in a hot tub, Cashmere said. “The one benefit that doesn’t get talked about a lot is just the family community,” he said. “Unwinding at the end of the day, after the kids’ soccer game — it’s part of a trend to hang out at home, and we really believe in that.”

The company further believes in the power of paint, especially Benjamin Moore, which is also promoted on the outside of the building in big letters. The North Brunswick store features the latest Benjamin Moore décor package and product assortment, including the paint brand’s exterior stain line, Arborcoat.

Other areas of growth include e-commerce, where the company intends to double its sales in 2020. Also, The Supply Place business-to-business unit is described as low-hanging fruit for sales growth. Around 2018, The Supply Place sales represented about 6% of Costello’s overall sales. By the end of 2020, it is projected to increase to more than 10%. And by 2025, Costello’s hopes The Supply Place will generate 20% to 25% of overall sales.

“We’re investing a lot into that part of the business because the opportunities are there,” said Costello.

The ambitious growth plans are just part of the family culture at Costello’s Ace, said Costello. The business for decades was guided by the growth-focused leadership of Vincent Costello, who became involved in the company in 1976. Vinnie died in 2016, but the culture he created lives on in his six children who now run the growing family business.

“It’s all about family and community and being of service to our neighbors,” Costello said. “That’s part of our culture of growth. You can have all the strategy in the world, but if you don’t have the right culture in the building, it’s not going to go anywhere.”

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