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August 8, 2024
Is Ace Hardware’s New Store Model a Good Concept?
Ace Hardware is celebrating its 100th anniversary in 2024 with an expansion, having opened 100 new stores this year, including its 5,000th domestic location. The company is on track to open more than 200 new stores by the end of the year, a notable achievement in a year marked by rapid growth. This milestone includes the recent opening of Fixit Ace Hardware in Roswell, Georgia, which stands as the 5,000th store in the U.S.
The retailer’s growth has been driven by a combination of factors, including existing retailers opening additional locations, competitors converting their stores to Ace, and new investors joining the brand. Over the past five years, Ace has opened more than 900 new stores globally, demonstrating strong interest in its cooperative business model. In the first half of 2024 alone, Ace activated 111 new stores, which was “a record-breaking feat,” according to the hardware retailer.
With over 5,800 locally owned stores across 50 states and 60 countries, and global sales exceeding $22 billion, Ace Hardware’s cooperative model continues to attract new entrepreneurs. This model allows local store owners to become shareholders of Ace Hardware Corporation, further enhancing the appeal of owning an Ace store.
Coinciding with its anniversary, the home improvement retailer, headquartered in Oak Brook, Illinois, introduced a new store concept called ELEVATE3 Ace at its fall 2024 convention in Chicago, according to Store Brands. This experiential concept is planned to be integrated into current stores as well as built from scratch in new locations, starting with limited stores this year and a full rollout over the next five years.
Per John Venhuizen, Ace Hardware’s CEO and president, the company plans to invest at least $1 billion dollars in “opening new stores and remodeling existing stores to better serve our neighbors. The ELEVATE3 Ace store model will be at the heart of this investment.”
“Elevate Ace is not just a new store format; it’s our vision to become famous for four things in the neighborhoods we serve; namely Paint, Power, Backyards & Barbeque, and Home Preservation. We believe in the power of local, and this initiative strengthens our community ties by creating experiential spaces that are not only places to shop but also places to connect. Our neighbors will benefit from locally relevant, premium products, expert advice, and immersive retail innovation. With Elevate Ace, we are setting a new industry standard as we aspire to truly be the best, most helpful store on the planet.”
John Venhuizen, Ace Hardware president and CEO, via Store Brands
The ELEVATE3 Ace store model introduces several key features to enhance the retail experience. It will showcase premium brands such as Weber, Traeger, and DeWalt in a “brand-immersive shopping environment that is unique to Ace,” as reported by Store Brands. This approach aims to elevate the shopping experience by highlighting exclusive products.
Customer service is also a focus of the ELEVATE3Ace model, which addresses evolving consumer trends and aims to improve overall service standards. The store design includes an outdoor space for live goods displays and grilling demos, offering an “aspirational backyard experience.”
Additionally, the ELEVATE3 Ace model will feature new product assortments and store enhancements designed to boost sales and enrich the consumer shopping journey.
Ace Hardware’s VP of merchandising, Dale Fennel, told Chain Store Age that this new store concept provides customers with a more “experiential, in-depth shopping experience.”
“That’s what we aimed to build here with Elevate3 Ace,” he explained. “We tried to create a unique shopping experience that can’t easily be replicated online or in-store anywhere. We have a small number of our best, most-exclusive brands that really have been fueling most of our growth, and so we set out to elevate those brands.”
Fennel added, “From the assortment to the store environment, we wanted to bring everything together and make the shopping experience easy for them so they don’t have to shop across multiple categories. But still at the heart of the hardware store are those home preservation categories. They still represent the lion’s share of the gross profit in a store and are central to Ace, but when you first walk into the store, you’re going to be immersed in these brands.”
Discussion Questions
How will the focus on premium, brand-immersive environments influence consumer expectations and competitive dynamics in the hardware sector?
Will the integration of experiential elements, such as live grilling demos and tailored product assortments, become a new standard for retailers looking to differentiate themselves?
How will the success of the ELEVATE3 Ace model influence Ace Hardware’s ability to attract and retain local entrepreneurs, and what impact might this have on the cooperative retail model’s evolution in the coming years?
Poll
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I have seen this new model, and I think it is much more inspiring and interesting than the previous store fit. Visually, it moves Ace from being a convenient destination for improvement essentials to being a place where people will also come to get ideas and explore premium products and brands. That tied with Ace’s strong customer service ethic, should win it more sales. While Ace is still a minnow compared to the home improvement giants, it has carved out a very good niche for itself over the past few years and it is good to see it try and build on this. And how refreshing to see a store proactively invest in the ambience!
This appears to be a thoughtful, fresh new store design that should resonate well with ACE customers. And I also think that it will help ACE attract and retain some of the more progressive retail entrepreneurs who may be considering the ACE model. However, as with all franchise/dealer models, the trick is to convince the established ACE dealers to evolve. No doubt that some will be very interested, while others will resist the change and the hefty costs associated with the new store design. That said, it’s right for ACE leadership to move their business forward and evolve, and that’s what this new store design and approach seems to be.
Exactly my thoughts. A big issue for Ace is enticing its franchisees to execute the changes and make the financial investments to implement changes that the corporate team recommends.
Exellent points Mark! ACE has a strong brand reputation of providing the best customer service in the home improvement segment and I try to shop there whenever possible. The new experiential store concept will attract even more customers as the experience will be a bonus to the great service. ACE has carved out a great niche and it is great to see their success.
The success of the ELEVATE3 Ace model could be a game changer in terms of attracting and keeping local entrepreneurs. For local business owners, this means they can be part of a brand that’s not only innovative but also deeply connected to their community. For entrepreneurs, seeing how ELEVATE3 transforms the customer experience and boosts sales can make the decision to join or stay with Ace much more appealing. They’ll feel confident that they’re investing in a brand that’s evolving with the times and staying ahead of the competition. If ELEVATE3 proves successful, it could inspire more entrepreneurs to join Ace, knowing they’re part of something that’s not just about selling products but also about creating meaningful experiences for their customers. This could lead to a stronger, more resilient network of locally owned stores, all sharing in the success of a brand that’s committed to helping them thrive.
Isn’t ACE a franchise model (?)…it seems rather peculiar to talk about it “opening” stores (as opposed to stores signing up). Anyway, back on topic: hardware is an excellent example of an industry split on the price / service dipole – logically so, since help is far more likely to be need in hardware than somethign like groceries or office supplies – and as one of two main brands, along with Tru-Value, it’s in a strong position.
The success of Ace Hardware franchises has been largely attributed to their convenience. There is an Ace store within 15 minutes of most households in every populated area. Running in and out of an Ace store when one knows exactly what one needs is much less of a hassle than going to Lowes or Home Depot.
Ace does not compete well with Home Depot and Lowes in terms of offering building materials, kitchen appliances, flooring, lighting, gardening, plumbing, windows, shutters, etc. This is like a David and Goliath situation, where Ace has to compete with much bigger companies offering much more.
The company is smart enough to differentiate its new stores by focusing directly on painting, grilling, backyards, and power, with in-store demonstrations, trials, and consultations.
In-store demonstrations allow customers to see products in action, making it easier for them to understand their features and benefits. This hands-on experience builds confidence in their purchasing decisions. Additionally, customers can ask questions and receive personalized advice from knowledgeable staff, enhancing their overall shopping experience.
As I read in Forbes, most advertising will be digital, primarily due to its efficiency. However, I am finding that digital advertisements work best for e-commerce and not so well for brick-and-mortar stores. Advertising in the digital media is aimed at generating clicks and purchases.
One of the limitations of digital advertising for physical retail locations is that it may not effectively drive foot traffic to the store. While online ads can generate awareness, they often fail to convey the tactile and personalized experiences that in-store visits offer. This disconnect can lead to missed opportunities for engaging customers in a more meaningful way that encourages them to visit the physical location.
To that end, I believe Ace will need to increase its marketing so that consumers, even those in the local market, are aware of what makes Ace different from the competition, as well as what new benefits and services it offers.
One effective strategy could be partnering with local influencers or community groups can help spread the word and create a buzz around the store. Offering exclusive in-store promotions or loyalty programs can also incentivize customers to visit the physical location more frequently. Db
Ace Hardware’s key competitive differentiators are convenience and customer service. If they can maintain those, but also up their game on premium assortment and immersive shopping experience, it will be a winner. Given their franchise model, not all stores are the same, so it will be interesting how the new concepts get adopted and rolled out.
Ace continues to find ways to be helpful and convenient. This concept is an example of not resting on what has made (and kept) them successful. This is how they compete – on convenience. When they go up against large big-box stores, such as Home Depot, which have a larger footprint, larger selection, and very competitive prices, the way Ace remains competitive (and thrives) is through service and CX. They are making new and exciting changes but staying true to one of their most important core values, which is to be the most helpful retailer on the planet.
This is a good step forward. Too often, franchisees are very satisfied with their businesses and don’t see the need to keep up with the times. This initiative will help them focus.
Hopefully, ELEVATE3 will not replace the real value of the ACE relationship with its customers—the connection to its neighbors.
Ace is a wonderful case study in branding and strategy. And their growth is clearly indicative of these strategic decisions. From the power of local to brand immersive environments to experiential store remodels, they are differentiating their offerings from the big DIY competitors (HD and Lowe’s) and galvanizing their community feel. It’s no wonder why shoppers like to visit their local Ace.
Great to see ace using data and developing a store format that plays to their strengths. This news clip provides an excellent overview of the new format. https://abc7chicago.com/post/ace-hardware-celebrating-100-years-new-store-design/15159768/ what jumps out is the in-store brand partnerships. A lot of stores within a stores. And premium brands across the board. The challenge will be if customers will pay what are typically premium prices at ace for products that are often discounted online or at big box DIY stores. A promising move and good use of purchase data to inform a store refresh that focuses on selling more of what’s selling most.
Sounds intriguing. As someone who appreciates the convenience of my local Ace Hardware store, I will be curious to see how quickly this concept can be rolled out/implemented by existing franchisees. The location near me will never win on ambiance…don’t think its been updated in 40 years and my sense is that the owners are not operating with much of a profit margin. How is ACE providing support for these owners or is the goal to attract new owners and replace these longstanding local shops?
I like this approach a lot- it’s focused and specialized, allowing for ample depth. Ace has achieved longevity because it’s reliable and specific in what it offers. This doubles-down on that in smart ways.
I personally like the better brands in this space so, I have a bias in favor of this model. Consumers should too. The key factor in this environment is the knowledge and enthusiasm of the sales associates. Typically, in this segment, that happens naturally, but enforcing the ‘be helpful’ component cannot be overemphasized. Additionally, new technology (not the archaic walkie-talkie) for improving communications among store personnel, such as Theatro – if adopted by ACE – will greatly improve the customer experience. I’m in!
Ace’s value proposition is the personal experiences customers can have in their stores and the convenience of being able to find or be guided to that part, piece of hardware, or lawn tool I need without having to navigate acres and acres of stuff. Local ownership, local knowledge and differentiation in customer experience have been the key to success. This initiative amplifies the things that make Ace successful.
One of the issues they have to navigate, however, is execution. They don’t have the ability, like Home Depot or Lowes, to make changes to assortment or planograms at the corporate level and then direct their stores to implement them. To the contrary, they need to entice/convince/sell their owners on the benefits of a change for those owners to make the investment in time and capital to make store design changes. The good news is they have been very successful at getting owner buy-in, and these changes will certainly improve business at the store level.
Prices at Ace have gone insane – everyday products like batteries and light bulbs are way more expensive than Lowe’s or Home Depot – the convenience is not worth the price difference.
ACE is not Lowe’s or Home Depot…and they should not be.
The stores are locally owned businesses, and personally, that’s a big deal for me. They offer high-touch customer experiences and are easy to get in and out of. That is the value prop. Ace has never claimed to be the low-price leader. If low prices and convenience were the only considerations, I’d shop on Amazon and avoid the crowds altogether. Which, from time to time, I do.
This new model has promise, and I hope it comes to the store I shop soon!
This space is driven by both convenience, friendly service and expertise. Walking into a local “hardware” store the shopper recognizes that price may not be as competitive as the big box stores but the other factors more than make up for paying a bit of a premium on common use items. This evolution of store concept is a brilliant move in response to make the store a “destination”. If the merchant teams can secure truly exclusive or premium goods plus the floor plans can accommodate a more “comfortable” experience for product demonstrations and more, all the better. Their average ticket will never match the big box stores, but frequency of visit and better margins for cooperatives is key – ACE, True Value especially.
There is a similar (albeit much smaller scale) brand with a model like this. Cooperative retail with more skin in the game. This brand is known for excellent customer service and quality products. If you’re going to compete as the underdog, these are the brand values you want to have. The “Paint, Power, Backyards & Barbeque, and Home Preservation” categories driving the new store format are smart too. All of them tend to be categories that don’t play well digitally and/or are high-value enough that shoppers still often prefer in-person shopping