Ace Hardware appears to have come up with a novel approach to make it more competitive against the likes of Home Depot and Lowe's. The company is considering making a switch from a member-owned cooperative to a for-profit corporation.
Ray Griffith, president and CEO of Ace, wrote a letter that was republished, in part, by Crain's Chicago Business. In it, Mr. Griffin wrote, "We believe that becoming a traditional corporation is the best path for our retailers and the company."
According to Crain's, Ace has been aggressively pursuing an expansion strategy and converting to a for-profit corporate structure, which may offer advantages over its current coop model.
Peter Jankovskis, chief investment officer of quantitative products at Oakbrook Investment, said, "If (Ace) wanted to ramp up its creation of stores and expand, going public would of course bring some capital in to make that happen."
What's not known at this point is the reaction Ace members have to the move being considered. Crain's reported that members are likely to get more information at a company convention next month in Denver.
An Ace dealer from the Chicago-area who requested anonymity told Crain's, "This has huge ramifications for the dealer base. This clearly is a corporate takeover."
Discussion Questions: Will changing from a coop to a corporation have an impact on Ace Hardware's competitive position? Do you see inherent benefits in one structure versus the other?