Ace unveils Vision 21 plan at fall conference

Home Channel News, Oct 25, 1999 by John Caulfield

NEW ORLEANS -- Ace Hardware next year will launch a series of programs designed to improve the productivity of its dealer members' existing stores, encourage those dealers to expand and open more units and create a stronger, more uniform perception of the 5,100-store buying group among consumers nationwide.

At its fall convention held here earlier this month, Ace's officials laid the foundation for what they are calling "Vision 21," a 10-year plan that David Hodnik, Ace's president, said "will require a long-term, fundamental change" in the organization and the dealers that belong to it.

That plan calls for dealers to upgrade their stores using merchandising and operational techniques that have been tried and proven effective by the co-op's strongest members. The execution of these "best practices" will demand better-trained store employees and a far more comprehensive application of technology particularly the Internet, for business-to-business and business-to-customer connections.

The co-op is creating a new level of dealer participation in its programs, called "Platinum," that will set standards and guidelines its members will need to follow in order for the organization to achieve its "vision." Platinum's criteria will replace those currently applied for Ace's "Premium Hardware Dealer," or PHD program. There are 2,500 PHD stores in Ace's network, identified as such for their commitment to the co-op's various programs.

Ace is testing certain aspects of its Platinum program at one of its company-owned stores in Atlanta. Next month, it will begin surveying members about the specifics of the Platinum program, which will be discussed more formally and in greater detail at a Dealers' Conference in Las Vegas in January. Ace intends to unveil the program at its spring 2000 convention.

To assist dealers' move up to Platinum, Ace is making a commitment to significantly improve, standardize and simplify all aspects of its wholesaling functions, to provide stronger in-field support, and -- perhaps most important -- to help fund the dealers' physical growth. (In 1998, Ace's investment in retail totaled $32.9 million.)

"We have to be prepared to be perfect for that top retailer," explained David Myer, Ace's vp-retail support. "We need to be so good that [dealers] don't have to interact with the distributor side of the business." Rita Kahle, Ace's vp-wholesale, referred to this as "an issue of trust," between the member and its co-op.

"Vision 21 presents the retail and wholesale sides of Ace as one single entity," proclaimed Howie Jung, the co-op's chairman.

The motivation behind the development of and emphasis on Vision 21 is the threat to the co-op and its members from the prospect of a nationwide rollout of Villager's Hardware, Home Depot's hardware store format, which next month will open its second store in Garwood, N.J.

"All of us should know that speed kills, even in the retail business," said Hodnik. "All of the leaders, including our Orange friends, have one thing in common: a sense of urgency and speed. Ace has to execute faster." Bill Loftus, Ace's executive vp-retail, who will retire after 23 years with the co-op this December, warned members that "if we don't rise to the Platinum way of thinking, dealers like Villager's will beat us at our own game."

"We can't allow our 'slowest' members to keep us from staying with our fastest," stated David Bodzewski, the co-op's vp-marketing and sales who has assumed the added responsibilities of vp-store operations/eastern division.

Discovering Discovery

Ace officials used the fall convention to herald the early success of its 18-monthold "Discovery" merchandising program, give dealers a preview of the television advertising campaign the co-op would be running through next spring and showcase OurHouse.com, its new online selling program that will include placing e-commerce kiosks in selected dealers' stores to provide shoppers with instant access to this Web site.

Discovery is a category management program that uses data and research gleaned from the success of certain "best in class" dealers within Ace, which are applied to devising enhanced merchandising assortments and in-store layouts to increase foot traffic within a store and increase gross margins. (Switching to Discovery sets is likely to be one of the key components for dealers to become Platinum members.)

So far, Discovery "sets" have been established for the co-op's paint, tools, plumbing and electricals departments, and the initial results have been positive. For example, 1,153 dealers had implemented a Discovery set in their paint department and, in the first year, saw their sales rise an average of 11.8 percent and gross profit jump 11.6 percent.

A full department was set up inside the convention hall to show dealers the latest Discovery set for lawn and garden (complete with an audio tour explaining each section of the department). More than 500 dealers signed up for the lawn and garden Discovery set at the convention, which entitled them to special ordering and dating privileges, as well as credits to defray the cost of resetting their stores.