Ace aims for ‘Higher Ground’
The co-op trusts ‘the process’ as it replaces its 2020 Vision.
Atlanta — Ace Hardware nation assembled in Mercedes-Benz Stadium here in Atlanta for the co-op’s fall convention general session. To kick things off, Ace Chairman Brett Stephenson, owner of Ace stores in Colorado in Wyoming, thanked The Home Depot co-founder Arthur Blank, owner of the Falcons, for sharing the football team’s state-of-the-art stadium.
For the rest of the morning, Ace leaders unleashed a blitz of programs and strategies designed to sack Home Depot and other big competitors – or at least, take market share from them.
Some of the highlights from the Ace playbook are here:
• A new vision. Ace introduced its “Higher Ground” initiative. As the co-op’s 2020 Vision plan has run its course, the announcement of the new “Higher Ground” plan received spontaneous applause. (“The name is the easy part,” said CEO John Venhuizen.) The five-year plan includes a $2 billion investment to fuel $20 billion in retail revenue, up from $16 billion today. The co-op also hopes to add 800 new locations. The investment includes a 50% increase in the amount of money spent on distribution and supply chain.
• Advertising boost. Ace says consumers mistakenly believe that Home Depot carries more Ben Moore paint, more Big Green Eggs and more Stihl products. In actuality, Home Depot carries none of the above. And that’s one reason why the co-op intends to boost its advertising spend from $80 million to $120 million in no more than five years.
• Product differentiation. Venhuizen had some colorful words for vendors who fail to stand up for the independent dealer. “Too many suppliers are intoxicated with selling to discount web sites and big box stores,” he said, “chasing after them like a drunk to a drink.” Product commoditization and price transparency are fast moving trends, he said. The Ace CEO tipped his hat to three vendors for their independent approach to distribution – Benjamin Moore, Big Green Egg and STIHL, companies that won’t sell Home Depot, Lowe’s, Menards or Walmart. The Ace convention here in Atlanta is the first since the co-op’s partnership with Benjamin Moore was announced in July. Venhuizen said that as Benjamin Moore has shown its loyalty to Ace, “It’s time for us to show them ours.”
• Famous four. Ace hammered on the four categories for which it intends to become famous: paint, power, backyards and BBQ and home preservation. “Folks, we have got to become famous for four,” Venhuizen said. “Because if all we do is sell the same commoditized crap you can get on some discount web site. We’re dead.” One reason for Ace’s plan to invest disproportionately in these four areas is “because we’re killing it, and we still have room to run,” he said.
• Basic math. Andy Enright, VP of development and strategy explained that of three drivers of sales – traffic, conversion and average ticket – two are controlled entirely by the employees in the store. He pointed to research that shows that when a customer receives personal help inside the store, the spend increases more than 50%, from $24.09 to $37.50.
• Store of the future. Ace erected an 8,000 sq. foot Cornerstone Hardware store on the market floor and described it as the evolution of the Ace store model. “It’s something really cool at the show that we haven’t done in about 25 years,” said John Surane, executive VP and chief merchandising and sales officer for Ace. “You’ll be able to see actually how this stuff can come to life.” Merchandising tactics in the store layout are based on analytics of the co-op’s best-in-class Ace retailers.
• Ace’s acquisition. Just before the event, Ace acquired Denver-based Handyman Matters, changing the name to Ace Handyman Services, which carries the slogan “bringing helpful to your home.”
• A pitch for BODFS. Venhuizen made the case for making buy-online-deliver-from-store a strategic imperative. He pointed to stats showing that stores that BODFS stores have 57% higher sales than stores that simply allow for in-store pickup. Also, the average BODFS transaction during the last 2.5 months is about $361 – 18 times the average ticket. “We have got to exploit geographic proximity,” Venhuizen said. “In today’s world, as much as some of you may not like it. You either deliver or you die.”
The Ace convention draws to a close Sunday, Sept. 8.
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