Ace reveals category marketing initiatives - Ace Hardware

Home Channel News, Nov 19, 2001 by Terry C. Evans

KANSAS CITY Mo. -- In its ongoing transformation away from a wholesale mindset, Ace Hardware unveiled a variety of initiatives at its fall conference designed to make its members more successful retailers.

A musical tribute to the stars and stripes opened the general session, as nearly 11,000 people (including close to 5,000 retailers representing 2,000 stores) turned out for the five-day event, held from Oct. 25 to 29. Donning a New York City Fire Department baseball cap in remembrance of the victims of the Sept. 11 terrorist attacks, Ace president and CEO Dave Hodnik presented a $275,000 check to the American Red Cross, before Ace executives started to talk business.

During a series of opening-day addresses, Ace executives announced programs to boost sales in the lawn and garden and paint categories, as well as plans for new technology that will enable the co-op and its members to operate more like a chain.

"While others, like TruServ, are wholesale-focused," said Rita Kahle, Ace's executive vp, alluding to the financial struggles of the rival co-op. "Ace is focused on being the retail leader."

Take the lawn and garden category, which Ace officials said represents a 4-percent to 5-percent per year growth opportunity. In order for its members to take advantage of that growth, the co-op introduced a shop-and-compare strategy, which will include the spring 2002 launch of Ace-branded lawn and garden products to compete with three of the category's best sellers: Scotts' Fertilizer, Miracle-Gro plant food and Roundup weed-killer.

"By developing a product that mirrors the packaging [and product formulation of a dominant brand], that [strategy] enables us to merchandise the two, side by side, to give the consumer a really good choice between two products," said Gary Paulson, group merchandise manager for Ace. "It's a significant dollar margin opportunity for our retailers when they sell a product with the Ace name on it."

Pushing paint

The co-op is taking a similar multi-brand approach in the paint category by inviting major manufacturers to test sales of their paints next to Ace's powerful brand.

"We're currently looking at four paint manufacturers, looking at their brand, and we're going to run a test in corporate stores with two brands, primarily to determine whether we can grow our overall paint department," said Lori Bossmann, vp-merchandising, who declined to name the companies because of ongoing negotiations. "The goal is not to cannibalize our brand. The goal is to grow the overall paint sales of the department and make the consumer view Ace as a place to come to for paint."

The national brand paint test is scheduled to begin in January in 17 corporate stores -- mainly in the Washington and Atlanta markets -- and continue through the end of 2002, when Ace will determine whether to roll out the wider paint selection to all of its members. Other paint-related efforts include increased training of field staff and a strong emphasis on Ace's 'Color Your Life in-store merchandising program, which is designed to "soften" the look of the paint department to target more women.

Becoming chain-like

In other moves aimed at getting more members to adopt programs Ace has already developed, Ray Griffith, executive vp-retail, pointed out that comp-store sales for the co-op's Vision 21 stores are up 2.9 percent this year, while other Ace stores are down 0.3 percent. Ace executives, who repeatedly urged members to commit to Vision 21, acknowledged that the program would make stores appear more "chain-like." But they also insisted it would make them more efficient and profitable.

Still some small-town dealers at the show were not convinced that Vision 21 is for everyone.

"We don't think there's a need to be chain-like to be successful," said Larry Gerald, a Buna, Texas, dealer who, with his wife, has owned an Ace store for nearly 24 years. "I don't know if it's Vision 21 [that s increasing sales] or just more highvolume stores are becoming Vision 21 stores."

"We're in a tiny town in Texas," his wife, Deneice, added. "We sell Pruina Feed in our store. [Vision 21] just wouldn't fit."

Focus on technology

Another effort aimed at fostering a more chain-like membership is the streamlining and simplifying of in-store technology through the development of a single computer system, known as Eagle Vision. Ace has formed a partnership alliance with CCI-Triad, an Austin, Texas-based provider of information systems and services.

"It's not only a different set of software, which is clearly important, but it's also a different structure," Hodnik said. "It's much more of a chain-like infrastructure. In essence, we're going to try to skim out of the everyday activities of the retailer things that are more burdensome than necessary and are better done at a central site."

Hodnik expects to test the new centralized system in 25 stores by the end of the first quarter of 2002. However, he said it could take up to four years to provide the system to all interested members.