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ACE HARDWARE retail

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resenting itself as a company full of “helpful hardware folks,” Ace Hardware wants to be viewed as just

another member of consumers’ communities. With thousands of stores across the United States, Ace

estimates that 70 percent of the country’s population is within five miles of one of its locations. With

its brand in such close proximity to so many consumers, this is a strategic advantage that the company

plans to use to the best of its ability. ■ Although the economy has been in a slump since last year, peo-

ple are still investing in improving their homes, and the National Retail Hardware Association predicts

sales for the industry will continue to increase by 3 percent to 4 percent for the next few years. However,

because of the recent push from “big box” retailers, smaller stores are having a tougher time competing in the marketplace

even with its continued growth. ■ This is not on the case for Ace, which is comprised of a network of independent retail-

ers bearing its name. In an effort to be more competitive, however, the company is working to present itself as a unified

team, ready to help. ■ Ace, headquartered in Oak Brook, Ill., is a Fortune 500 retailer-owned cooperative of approximately

5,000 independent stores in all 50 states and 72 countries. With 15 retail support/distribution centers, the company is able

to supply its stores with more than 65,000 products, including 8,500 products under its own brand. All of these aspects are

designed to gel together to ensure that Ace retailers continue to show the brand’s helpful image for generations to come.

Ace Hardware rolls out its Vision 21 pr0gram to redefine its brand and be more competitive in the market.

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ACE UP ITS SLEEVE

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Vision 21ACE HARDWARE IS LOOKING TO THE FUTURE. KNOWINGthat the company’s stores will not be able to count onsales to baby boomers forever, the company is looking toappeal to Generations X and Y. Ray Griffith, executive vicepresident, retail, notes that these two younger generationsnow account for 42 percent of the popula-tion, according to the recent InternationalMass Retail Association’s market study,“The Future of Shopping and CapturingTomorrow’s Consumer.”

The study noted that Gen Y (bornbetween 1979 and 1995) currentlyaccounts for 79 million individuals, or27 percent of the U.S. population.Currently, there are 77 million babyboomers in the United States, and 40million Gen Xers (born between 1965and 1978). When these younger genera-tions, who are already showing their buying power,were asked about the future of shopping and whatwould be most important, Griffith notes that the topthree aspects listed were customer service, fast check-outs and geographic location.

In January 2000, the company summoned 250 retail-ers to a conference in Las Vegas for a strategic planningsession.

“We told them this is your company, you represent all thestores,” Griffith says. Everyone involved spent the nextthree days discussing all facets of the company and what

was most important to them. “What came out of the talks ended up sup-

porting what we already knew,” Griffith says.“Retailers said we needed to improve salesand profits, we need to take money and costsout of our processes and we need to workcloser together – and leverage the strengthof the entire organization. They wanted tobring us together, as an Ace team.”

The idea that generated the most discus-sion was the importance of customer satis-faction. In almost every breakout group orroundtable discussion, the company dis-

cussed ways in which it could improve processes where thestores deal with customers; for example, finding the bestway for customers to return merchandise. “We looked atthe business profile of where we thought we should begoing and how to get there,” Griffith says.

Ace Hardwarewww.acehardware.comProjected 2002 sales: $13 billionHeadquarters: Oak Brook, Ill.Employees: 5,000Specialty: Hardware retailingRay Griffith, executive VP,retail: “We believe that by allof us joining hands and mov-ing forward together, whiletaking costs out, we will be-come even more successful.”

PROFILE

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In an effort to develop its retail operations as a means to deliv-er “ultimate customer satisfaction,” Ace worked with its retailersto develop the company’s strategic plan, Vision 21. The companydescribes this as a new way of thinking for all involved; it is a sys-tem where all members of the Ace team – retailers, associates,retail support and vendors – work together and focus on provid-ing the best service in the industry. Currently, 2,000 retailers areparticipating in the Vision 21 program.

“This is part of our effort to transition from a world-class distri-bution company to a world-class retail organization,” Griffith says.“For years we thought of ourselves – we were – a world-class whole-sale company. We want to become a world-class retail organization.”

In an effort to move from a focus on wholesaling to a focuson the consumer, the Vision 21 strategy is concentrating onseven key areas: retail consistency, people, culture, customers,differentiation, success and the Ace brand and image. The com-pany has already started integrating changes to display its newfocus. For example, Ace is developing a new computer technol-ogy platform that will provide accurate, consistent and timelyreports from the entire Ace organization, and has developed anew Vision 21 membership agreement that holds its memberretailers to higher standards, such as actively participating in

the Helpful Hardware Club, Ace’s preferred customer loyaltyprogram, and implementing category management for opti-mized product selections. In addition, the company has createda more consistent look and feel to Ace stores all over the coun-try, including a core mix of products, and has developed newprograms to attract, train and retain employees who embodythis new vision at both the store and retail support levels.

“The 2,000 retailers represent 58 percent of our volume,”Griffith says. “Vision 21 retailers, year-to-date, have purchasesthrough Ace up 13.2 percent. Our partners, the others, are rela-tively flat. This shows there is value in the Vision 21 equation.

“As we look into the future, we need to be more retail orient-

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Ace Hardware has approximately5,000 stores around the world,offering more than 65,000 products,including 8,500 products under itsown brand.

3MCreating innovative products and services that respond to customer needs hasalways been a way of life at 3M. For more than a century, 3M’s culture has fosteredcreativity and given employees the freedom to take risks and try new ideas. This cul-ture has led to a steady stream of products. With no boundaries to imagination andno barriers to cooperation, one good idea swiftly leads to another. So far there havebeen more than 50,000 innovative products that help make people’s lives easier.Products such as Filtrete Filters give consumers affordable, high-efficiency air fil-ters for cleaner indoor air. 3M™ SandBlaster™ High Performance Abrasives cutthree times faster, last three times longer and are project oriented to make the jobof sanding easier. Scotch Brand Painters Masking Tapes, specially designed for spe-cific painting situations and surfaces, make a wide range of painting projects easier.The list goes on, driven by the perseverance, ingenuity and creativity that have made3M’s first 100 years a century of success.

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ed, like our competitors, the big box retailers,” he continues. “Byworking together, we can achieve efficiencies that have neverbeen leveraged.

“We believe that by all of us joining hands and moving for-ward together, while taking costs out, we will become more suc-cessful,” he continues. Part of Vision 21 is the development ofthe new “Ace way of retailing,” according to the company. Allstores should operate through best practices, and should meetbenchmarks to achieve the highest level of performance, whichthe company believes represents the preeminent retailers wholive the vision and mission of Vision 21. Ace believes the plat-inum status will show a level of commitment that sets thoseretailers apart from all others in the company’s network.

“Some of our retailers do not like the idea of us telling them

what they need to do to compete,” Griffith says. “It has to dowith their independence, how they value independence. Vision21 is not a mandatory program, and right now we’re busy ful-filling our commitment with the 2,000 stores already enrolled.If we show value in Vision 21, more and more will want to join.If they value the brand strategy, they will join.”

The company believes, however, that because of the historybehind the Ace name, and the value of the brand, those whoparticipate will have an easier time succeeding. Through Vision21, the company believes it is simply enhancing an already well-known brand. “We’re focused on enhancing the brand, makingourselves more helpful,” Griffith says. “Our company brandpromise is to become the most helpful hardware store on theplanet – this goes beyond just location and convenience.”

Ace is also focused on training to meet its new goals, andbuilding its work force to improve operations and better serveits customers. “We see a correlation between the number ofemployees in store and the quality of service we provide,”Griffith says. In addition to more training, however, the compa-

ny also has supported its work force with its newly formed “NextGeneration” store concepts. Griffith explains this is simply “tak-ing a great hardware store and making it more helpful.” In this,Ace is placing a greater emphasis on training and recruiting, butalso has incorporated more planning techniques, instruction onpoint-of-purchase materials and greater use of technology. Forexample, the stores now use a personal digital assistant calledthe HDA, which stands for helpful digital assistant. This allowsemployees to scan merchandise to gain more information on agiven item, and then provide that to customers.

“We are actively engaged in making stores more helpful,”Griffith says.

“We have worked on this for three years and it has evolved,” hecontinues. “Those owners who embrace the direction we are tak-

ing, our vision and understand the vision, sign a consent form say-ing they are committed to the process and agree to do functionalthings in unison. We recognize that some stores are unique andmight not fit the vision, [such as] stores that serve more of anindustrial client base. These are stores that elect not to participate.”

EagleVisionONE OF THE MAIN FACETS OF IMPROVEMENT DISCUSSED INthe original planning of Vision 21 was that to become a world-class retail organization, the company must implement the useof a common computer system. With EagleVision, now the cor-

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24 US BUSINESS REVIEW OCTOBER 2002

retail

RUBBERMAIDBeginning with its first patent for a rubber dustpan in 1933, Rubbermaid leads theindustry in trends for innovation and product design. With categories spanning fromhome and garage organization to food storage and refuse removal to closet organi-zation and outdoor storage, the research and development team at Rubbermaid cre-ates innovative ways to organize life, while its marketing team energizes consumer-focused merchandising and advertising. Rubbermaid partners with Ace Hardware tobring innovative solutions to consumers and to remain at the forefront of the hard-ware industry. As only one of a hundred companies named a “Brand of the Century”by BrandMarketing magazine, this distinction is a testament to the impact thatRubbermaid has made on Ace Hardware customers.

Tagging itself as the place for “helpful hardwarefolks,” Ace is using its Vision 21 program to unify the

brand to be more helpful. So far, approximately 2,000of Ace’s retailers are on board with the program, and

their purchases through Ace are up 13 percent.

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porate office, for example, can send electronic enhancementsdirectly to each store or supply information as to what is sellingby region. “That’s an advantage the big box stores have rightnow,” Griffith says.

Through the activities of a number of breakthrough actionteams (BAT) at the Las Vegas meeting, the company developeda variety of ideas on how to improve customer satisfaction.Griffith explains that the group of retailers at the conferencecame up with the idea of the single computer system, whichthe company has named “EagleVision.” They then “sell” it toother Ace retailers by describing its functions in terms of howit relates to the end user. He cites an example of how check-out times are much faster with EagleVision than with thestores’ current system.

“When a customer goes to the counter with a bottle of wind-shield wiper fluid and pays with a credit card, we have a stop-watch to time the old and new system just to show retailers howmuch faster the new system is. The information can be used bythe retailer, the retail business manager and also the companyheadquarters to get the right assortment of products in ware-houses and then turn product much faster.”

He explains that the new system provides a number of other

enhancements. For example, in the past the company wouldsend each store an upgrade disc related to the HelpfulHardware Club. Now someone at the corporate headquarterscan simply send any upgrades electronically and each store getsthe same enhancements at the same time.

Another challenge was that many stores already were usingimproved information technology systems, but are not offi-cially part of the EagleVision program; they will need to beupgraded to be compatible with the other members. Ace isDELTA®Scott Brennan, Delta® National Account Manager based at Delta headquarters inIndianapolis, says he enjoys working with the people at Ace Hardware, calling theirrelationship a collaborative partnership. “They know the Ace consumer,” he says,“and they rely on Delta for recommendations to meet the Ace customer’s faucetneeds. The buyers are experienced and knowledgeable. They take an interest ingrowing the faucet category, both for Ace and Ace Retailers. And they aren’t afraid totake chances with new products.” Brennan points out that Ace was among the firstto carry the new Delta Victorian™ bath faucets. Being Ace’s leading faucet vendorgives Delta the opportunity to get involved in special programs. For example, Deltarecently introduced a pallet program with Ace in mind. Pallets hold a maximum ofsix pieces (instead of the typical 48 or 96), making it easier for small and largestores to buy and promote. “We sit down together frequently to discuss promotional,display and advertising ideas to help Ace move more products,” Brennan says. Inaddition, he works closely with Ace to help new Ace Retailers get off to a good startwith their faucet business. Brennan gives Ace high marks for supporting the AceRetailers. “They are constantly looking for ways to break out of the mold and helpdealers increase profits with a designer faucet. I’ve been in this business for 22years, and it’s refreshing to call on people that really care about their business.”

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optimistic that most retailers will embrace the program, how-ever. The company plans to get most of its retailer memberson board with this new system through its retailer conven-tions. There are two national shows each year, and in its recentshow in Philadelphia, nearly 470 retailers signed up forEagleVision at its official launch. “We want to put in 300 sys-tems in our stores in 2003. That’s almost one per day in ourinitial phase , but we definitely believewe’re headed to having it in 3,000 to4,000 stores by 2005,” Griffith says.

Though the main focus of the currentimprovements is to create a better meansof delivering information to its memberstores and then ultimately the customers,Ace is working toward other continuedimprovements to reach world-class status.

“The BAT team that was focused on acommon computer system is still func-tional,” Griffith says. “They’re developingfunctions that the system needs for retail-ers. We haven’t disbanded the otherBATs, but we have communicated to

them that we have plenty of ideas – that they supplied – andnow we’re concentrating on implementing them.”

The company’s improvements through Vision 21 havealready garnered some industry attention. This year, CIO mag-azine named Ace as a winner of its CIO-100 award for tech-nology and process integration. Each year this award honorsthe top 100 companies around the world that demonstrate a

certain aspect of business or organiza-tional excellence. A panel of experts andCIO staff chose Ace after an examina-tion of companies that synthesize tech-nologies and procedures to improveproducts, services and relationshipswith partners and clients.

“Now, more than ever, companies relyon integrated applications that freelyshare information,” says Abbie Lundberg,editor in chief of CIO magazine. “Thisyear’s CIO-100 award recipients are beinghonored because their companies devel-oped an integrated enterprise to enhancetheir business, from improving relation-

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ships with customers to creating a seamless value chain.”The selection of CIO-100 award recipients was a three-step

process. Companies either applied via CIO’s Web site, or themagazine’s staff and its expert panel nominated possible recip-ients who fit the criteria. After CIO editors and writers reviewedthe submissions, they voted on the final 100.

“We’re able to deliver positive business performances toour retailers and consumers through an ever-increasing useof technology that streamlines our processes and garnersadditional efficiencies throughout the organization,” saidPaula Erickson, Ace corporate communications and pub-lic relations manager, at the time of the award. “Being rec-ognized as a leader in this arena by CIO magazine is atremendous honor.”

Vendor CollaborationTHE COMPANY BELIEVES ITS LEADING MARKET POSITION ISmostly due to its strength in distribution worldwide. Acecredits its ability to do this, however, with its relations withits vendors.

Using collaborative planning, forecasting and replenish-ment, the company has partnered with its vendors to replen-ish inventory and, in turn, the vendors use Ace’s system todetermine its needs.

“We are forerunners in collaborating with vendors to drive

Ace Hardware operates 15 retail support centersacross the country, which distribute products to

meet regional needs.

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efficiencies at Ace and for our vendors,” says Lori Bossmann,vice president of merchandising. “We only pick up the topvendors, and those we work with closely.” The company hasused its supply chain management system with vendors forapproximately 10 years, but beforethat it relied on inventory managedthrough the vendors’ own systems.Now vendors go into Ace’s systemto replenish needed inventory.

“We have approximately 40 ven-dors on it now, handling 20 percentof our volume,” Bossmann says. “Ourservice levels are up 1.5 percent andour inventory turns about one fullturn better. We are trying to get themajority of our volume managed inthis fashion.”

The company hopes that by 2003,the EagleVision computer systemwill help with this by linking toAce’s centralized inventory manage-ment systems. “It is the last step toconnect the supply chain complete-ly,” she says. “It is one of our bigstrategies. We will drive costs out of the supply chain, increasesales and we can monitor sales from the consumer all the waythrough.”

A History of HelpfulnessALTHOUGH ACE CURRENTLY PLACES MUCH IMPORTANCE ONthe issue of service, it has worked to be known as the place forthe “helpful hardware folks” for much of its history. FourChicago-area retailers – Richard Hesse, Oscar Fisher, GernLindquist and William Stauber – founded the company in 1924.Hesse was operating a hardware store on Chicago’s Clark Streetand realized that buying from a middleman was cutting into hisprofits.

One day a peddler came to Hesse’s store to sell sponges, andpointed out that Hesse could realize large savings if he boughtby the bale, rather than individually. Although he could notafford to buy that many sponges, he contacted the other three

retailers to see if they would split thebale with him. Their decision to do sostarted the Ace business. After thisfirst cooperative purchase, Hessesought out more merchandise to buyin bulk. This established Ace’s mis-sion of buying at the lowest possibleprice, which allowed small stores tocompete equally with larger stores inthe same market. Ace started as a privately owned

organization, using the Ace nameand the concept of cooperative buy-ing. Although the owners liked thepositive connotations associated withthe Ace name, it was chosen becausean Ace Laundry truck drove by dur-ing a meeting, and Hesse realized thename would be near the front of thetelephone book.

The company was incorporated as Ace Stores Inc. in 1928,with a five-member board of directors and Frank Burke as pres-ident. The next year Burke stepped down, at which time Hessetook the position and held it until his retirement in 1973. Hesseled the company to realize more than $650,000 in sales by 1934,with 41 dealers in operation. The company believes that muchof its growth during these early times was due to an emphasison its low-cost program and the growing selection of merchan-dise offered to its members.

Under Hesse’s leadership, the company also grew through itsretailer conventions. “These allowed retailers to meet in onecommon marketplace and see all of the national products andpromotions available to them,” the company says. “Today con-

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While “helpful” is the word Ace uses todescribe its people, “generous” mightapply just as well.

For the past 10 years, the Ace HardwareFoundation has been a corporate sponsorof the Children’s Miracle Network (CMN)and natural disaster relief through theAmerican Red Cross. Through the chari-table contributions of Ace stores, employ-ees, vendors and consumers, Ace hasraised more than $25 million for the RedCross and more than 12 million sick orinjured children have been cared for byCMN’s 170 member hospitals across thecountry.

In 2001 alone, Ace donated nearly $4million to CMN .

This past August, the company added toits CMN donations by hosting the 11th-

annual golf outing in suburbanChicago, raising more than $500,000for children’s hospitals across thecountry. This event has become thelargest of its kind in the Chicagoarea, both in terms of golfers whoparticipate and dollars raised.

“We continue to be overwhelmed bythe support and generosity of ourvendor partners for this worthycause,” says Jimmy Alexander, vicepresident of human resources, whooversees Ace’s charitable contribu-tions made through the company’s foun-dation. “For more than a decade now, wehave proudly supported CMN hospitals asthey continue to provide inspiring care tothis country’s children.”

The event took place at five Chicago-area golf courses. This year’s celebrityparticipant was CMN’s “Miracle Child,”

Mallory Code, who ranks 14th in theGolfweek/Titleist world junior rankings,despite her cystic fibrosis, diabetes andasthma. “She is a real inspiration for allthe golfers around her,” Alexander says.NFL Hall of Fame player Franco Harrisalso participated in the outing. –Michael San Filippo and Staci Davidson

Ace is using its Vision 21 program and Eagle Vision computersystem to improve its operations in ways such as increasingthe speed of check outs.

Corporate Giving

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ventions remain an integral part of the basic activities Aceoffers its retailer-owners.”

Ace’s sales and strength continued during the years. By 1958,it had realized $25 million in national sales and in 1974 itopened its fourth distribution center in Toledo, Ohio. This wasalso the year that the company moved its expanded corporateheadquarters to Oak Brook, a suburb west of Chicago. Twoyears later the company became a retailer-owned cooperativeand reached $382 million in sales.

Selling its own private-label paintsince 1932, the company began man-ufacturing the paint in 1984, with theaddition of a plant in Matteson, Ill.,that produces a variety of solvent-based and latex paints. The paintfacility grew by 100,000 square feetin 1991, for paint production andstorage, and an additional 5,000square feet for extra laboratory andoffice space, now taking up 355,000square feet. In 1995, the companybought another paint plant inChicago Heights, Ill., which was thenrenovated with the addition of newtechnology. The two facilities com-bined have an annual productioncapacity of 20 million gallons.

The company started a push foraggressive brand building in 1987, when a new logo was creat-ed and John Madden became the spokesperson. Ace notes thatin a recent Gallup poll, Madden is now associated with AceHardware by more than 80 percent of consumers.

The company opened its largest retail support center in 1993;this facility, located in Princeton, Ill., spans 1.1 million square feetand is almost a quarter of mile long and has more than 120 dock

doors, housing more than $65 million in inventory. The mostrecent support center was opened in September 2001 in PrinceGeorge, Va., encompassing 778,000 square feet. The companyexplains that each retail support facility serves approximately 325Ace retailers and holds about $40 million in inventory.

In late 1999, the company opened its first Solutions ConceptStore in Longview, Wash., and a second one in 2000 inHighlands Ranch, Colo. “Designed to accommodate the rapidly

shifting demographics in hardwareand home center retailing, the inno-vative new retail concept stores pro-vide the customer with a total homesolutions environment,” Griffith says.“From in-store signage to enhancedcustomer service via interlinkedradio headsets, Ace’s SolutionsConcept stores are another exampleof Ace’s progressive approach tohome improvement retailing.” Thecompany plans to open two more ofthese stores in 2003 in the Denvermarket.

The Big To-DoANY SMART BUSINESS WORKS HARDto understand its customers, and AceHardware Corp. has taken the boldstep of surveying 1,000 homeowners

nationwide to learn details about their home repair priorities.Released earlier this year, “America’s To-Do List” provides somesurprises about the people who shop at and use the products ofthe retailer-owned cooperative’s more-than 5,000 stores.

Among the findings: Most American homeowners considerthemselves “do-it-yourselfers.” Their top priority is reorganizinghome storage areas. And, they are not reluctant to ask for help

1929: Ace Hardware’s first warehouse wasopened in Chicago.1932: The company begins carrying itsown private label with Ace Paint.1946: Ace’s first Super Ace store is openedin Minot, N.D.1951: Ace has more than $9 million insales.

1968: Ace expands internationally with itsfirst stores in Guam.1969: Ace’s first distribution centers areopened in California and Atlanta.1971: The company achieves more than$500 million in sales.1979: Ace adds dealers in New York,Pennsylvania, Maryland and New Jersey.

1984: Ace begins to manufacture its ownpaint.1985: Ace reaches $1 billion in sales.1987: Ace’s 5,000th store is opened.1995: Ace buys its second paint manufac-turing facility.1998: Ace achieves sales of more than$3.1 billion.

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Ace estimates its stores are within five miles of 70 percent ofconsumers in the United States. The company expects to seesales of $13 billion this year.

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– either from a friend or hardware store – if they are stumpedon how to perform a certain task.

“Most people think of their homes as both an asset and acomfort zone,” Erickson says. “They want to ensure every homeproduct works, so they plan ahead to either head off potentialproblems or complete the projects that will enhance the enjoy-ment of their homes.”

One of the study’s more-interesting findings calls into ques-tion whether society should finally retire the term “handyman.”“The hardware store has typically been a man’s domain, butthat has changed,” Erickson notes. “Today, women not only shopfor materials, but they also do the hands-on work.”

Ace found 62 percent of homeowners report the woman ofthe house is at least partially responsible for performing homerepairs and improvement projects. Women also appear more

likely to be responsible for compiling the all-important to-dolist; scratching off completed projects, however, seems to bemore of a shared role.

In a finding that is likely to create some debate around thehousehold, Ace discovered that women appear less likely to pro-crastinate in the completion of projects. “Women, by nature, aremore likely to ask for help or hire someone if they don’t knowhow to get something done,” Erickson explains. “Men, on theother hand, tend to avoid seeking directions, whether they aredriving a car or driving a nail. As a result, they can get frustrat-ed and end up putting things off.”

Other stereotypical behavior came to light when Ace askedsurvey respondents to prioritize projects. Women are more like-ly to rank highly such decorative tasks as painting and hangingart, the company found. Men see mechanical tasks such asreplacing a faucet or showerhead as more important. Men andwomen alike, however, view reorganizing storage areas and per-forming yard improvements as high priorities.

Make a ListACE HARDWARE, OF COURSE, SELLS SCREWDRIVERS, FIXTURESand other products that do-it-yourselfers need. But its surveyfound one of the most important tools for consumers is a simpleto-do list. About 75 percent of homeowners maintain this sort oflist, and 10 percent have lists containing 10 or more tasks.

Households of young families were likely to maintain thelongest lists. “It seems that preparing a home for the arrival ofa first or additional child often causes a flurry of home improve-ment activity,” Erickson says. “Painting and furnishing a nurs-ery, child-proofing a home or building bunk beds are just a fewof the many tasks that young families find on their to-do lists.”

A vast majority of respondents told Ace they feel gratifiedwhen projects are completed. This is particularly true of peopleunder age 55.

“Using a to-do list breaks down what could be viewed asoverwhelming projects into doable parts,” explains Dr. MartinSteigman, a clinical psychologist, psychotherapist and professorat Chicago’s Northeastern Illinois University. “And, as the per-son completes each task, he or she feels good about it because itprovides relief from the overwhelmed feeling and, therefore, isencouraged to try the next one.”

However, it can take a while for projects to be scratched off thelist. Ace found 33 percent of people have kept an item on theirlists for more than one year. “Human beings are born procrasti-nators,” Steigman says. “We just need to discipline ourselves tofocus on and complete tasks in a timely manner.”

Ace found certain projects tend to dominate the to-do lists:■ Reorganizing storage areas, which was on 63 percent of lists.■ Improving the yard, 62 percent.■ Hanging pictures or art, 52 percent.■ Painting the house’s interior, 51 percent.■ Fixing an item with glue or epoxy, 39 percent.

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Approximately 500 of Ace’s prod-ucts are part of its own brand. Itstarted selling its own private-labelpaint in 1932 and began manufac-turing its own paint in 1984, addinga second paint facility in 1995.Combined, the two facilities have anannual production capacity of 20million gallons.

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■ Replacing an electrical switch, outlet or light, 36 percent.■ Changing or replacing a faucet or showerhead, 36 percent.■ Repairing walls or millwork, 34 percent.■ Repairing windows and screens, 30 percent.■ Painting the house’s exterior, 28 percent.■ Changing or replacing a plumbing fixture, 26 percent.■ Enhancing the house’s safety and security, 25 percent.

Most of the people Ace surveyed will askfor help if they don’t know how to performa task. Most often, they’ll consult with afriend or relative, or seek help from ahardware store or home center. More thanhalf will also consult how-to books.

“Because a home repair can be a criticalactivity, people are relying on personalcontact from trusted advisors, whetherit’s someone they know or the knowl-edgeable hardware store manager locateddown the street,” Erickson says.

Men were more likely to try to figureout a problem on their own, but,Erickson adds, “While some elements of

macho pride may still exist in this area, it is encouraging to notethat many homeowners – 72 percent – no matter the gender,will conduct research or ask for help if a home repair task chal-lenges them.”

Part of the ClubIN AN EFFORT TO CONTINUE TO BE KNOWN AMONG CONSUMERS

as the “helpful hardware folks,” Ace hasused a number of initiatives to betterconvey the service aspect of its business.In 1997, the company launched theHelpful Hardware Club (HHC), a pre-ferred customer program, and now morethan 1,200 retailers offer it to approxi-mately 4 million customers. Membershave the opportunity to receive discountson merchandise, advanced notification ofsales, a subscription to the company’sHomeplace magazine, and can be enteredin a number of contests. In addition, ifmembers lose their keys but have theHelpful Hardware tag on their key

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chains, the keys can be mailed, postage guaranteed to Ace head-quarters, where they will be overnighted to the member’s localstore.

“Helpful Hardware Club is designed to increase customer vis-its and transaction sizes while improving retention and reward-ing Ace’s best customers for their loyalty,” Griffith says. “In fact,these customers’ shopping frequency is 16.6 percent and theirsales are up 15.7 percent. Any way you look at it, these are out-standing results.”

Even if a person is not a frequent customer at hardwarestores, Ace still aims to provide him or her with the best serv-ice. The company has used its Web site as an extension of itsstores, where customers can go to research “Answers @ Ace.”Consumers are able to search for a product through the fea-tures they need, browse a list of common hardware and homeimprovement questions and answers or examine the “solutionsource,” which provides the definition of certain products orhardware-related words. Ace has also catalogued an extensivelist of projects with simple-to-follow instructions that take anovice step-by-step through a particular job.

Famous FacesIN 2002, ACE ADDED TO ITS SERVICE ROSTER BY NAMINGnational home improvement expert Lou Manfredini as the com-pany’s official “Helpful Hardware Man.” Manfredini beganworking at a local Ace store in his hometown of Chicago as ateenager, continued this path by working as a carpenter’sapprentice while in college, and by 1985, he had opened hisown construction company in Chicago. While he still runs hisconstruction company and enjoys building and renovatinghomes, he currently acts as the company’s editorial mediaspokesperson. Customers are invited to submit questions toManfredini via Ace’s Web site; he responds to hundreds of con-sumer inquiries each week. He also makes appearances at Acestores across the country. In addition to being a familiar faceamong Ace customers, Manfredini is the official home improve-

ment expert for NBC-TV’s “Today Show,” and writes a bi-month-ly column for USA Weekend magazine.

“Lou’s professional work is devoted to helping others getexpert, easy-to-use advice about how to repair and improvetheir homes, a mission that our retailers embrace daily,” saidErickson at this year’s National Hardware Show, where the com-pany made the announcement. “He is a perfect extension of ourHelpful Hardware brand.

“We see Lou’s media spokesperson role with Ace as an idealcomplement to that of the company’s popular advertisingspokesperson, former football coach and football commentator,John Madden,” she said. “While John generates awareness forAce through national advertising, Lou will further extend theAce brand through his helpful home improvement expertiseand advice.”

Although Ace’s Vision 21 process focuses on strengtheningthe brand, the company has added to the visibility of its namesince 1988, when famed football coach John Madden becamethe company’s spokesperson. The company explains that

More than 1,200 of Ace’s retailers offer the Helpful Hardware Club program toapproximately 4 million customers. Members of the club receive merchandisediscounts, advanced notification of sales and a number of other perks. Ace hasfound that these members’ sales are up 15.7 percent.

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although Madden readily admits that he knows more aboutfootball than hardware, he often “likens Ace retailers to footballgreats in that both are tough, aggressive, knowledgeable, deter-mined to be the best and have pride in their work.”

The company felt that Madden would appeal to its customersbecause of his strong football career, which includes being theyoungest National Football League coach in league history. Hiscareer was extended in 1979 when hebecame a broadcaster, and he has won 11Emmy awards as television’s “OutstandingSports Personality Analyst.”

Madden appears in Ace’s national tele-vision and radio advertisements and hislikeness is used in the company’s circularsand on signage in Ace stores. Each year hepacks up his “Madden cruiser” and travelsto one of the Ace conventions to meetwith Ace store owners and guests.

“Ace’s national television, radio andprint campaigns, along with spokesper-son John Madden, work together towardincreasing individual Ace retailers’ sales,”

Griffith says. “Other retailer services offered, including opti-mized merchandise planograms, retail training, store planningand décor, serve to drive more sales success for all Ace retailers.”

National DistributionACE’S RETAIL SUPPORT CENTERS (RSC) ARE EXACTLY WHATtheir name claims them to be, and although they have not been

part of the company since its inception,they have been an integral part of Ace’sgrowth strategy. The company operatedfor almost 50 years with just one distri-bution center, but decided in 1969 that akey factor in its future growth was toexpand nationally. The first retail supportcenters were opened near Atlanta andSan Francisco, and the company nowoperates 15 such centers across the coun-try to meet regional needs.

The largest RSC is in Princeton, Ill.; at1.1 million square feet, it is one of thelargest of its kind in the entire homeimprovement industry. The newest cen-

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ter is in Prince George, Va., which is about 25 miles south ofRichmond. Spanning 778,000 square feet, the center could hold16 football fields and serves approximately 325 Ace retailers inVirginia and in neighboring states.

Each center operates seven days a week, 362 days a year, andcombined, the centers employ about 75 percent of the compa-ny’s work force. The centers also have access to approximately65,000 items, which provides the individual retailers with awidely varied selection. To ensure low-cost distribution, the cen-ters use advanced information technology that performs func-tions such as offload scanning, bar code scanning, radio fre-quency, a quick response program with vendors and ACENET.“Introduced in 1997, ACENET is an Internet-based privateintranet for use by Ace retailers,” Griffith says. “More than 4,800stores are actively using the system for item and invoiceinquiries, stock reservation, defective goods processing andmore.”

State of the IndustryACE CREDITS THE VISION 21 INITIATIVES AS BEING INSTRU-mental to its growth in recent years. In the past five years, thecompany has shown an annual compound average growth of

8.5 percent, with annual retail sales exceeding $13 billion. It hasalso built market share with the addition of 220 new Ace storesin 2001.

“Even in the downturn, we’ve had a good year and businesscontinued to grow,” Bossmann says. “Our core categories ofpaint and lawn and garden were up about 8 percent and dou-ble-digit, respectively. We also saw strong sales growth. Wewere up compared to most big box competitors, outpacingthem.”

Much of the industry is surviving the downturn withgrowth, mostly due to the fact that the new, single-familyhome market remains strong, boosted by record low mortgageinterest rates. Some smaller, independent retailers are havinga hard time competing against the big box retailers, which ismuch of the reason Ace is putting so much focus on its Vision21 program. The National Retail Hardware Association’s

MTDFor more than 25 years, MTD and Ace Hardware have worked closely together todevelop power equipment programs tailored to the specific needs of Ace retailersthroughout the country. Ace supports the many brands in the MTD family of prod-ucts, including Yard-Man, Troy-Bilt, Ryobi and Yard Machines Gold, a brand devel-oped specifically for the independent hardware retailer. MTD continues to supply afull line of products geared toward the specific needs of today’s consumer at a supe-rior value.

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Each of Ace’s retail support centers operate sevendays a week and 362 days a year; combined, thecenters account for 75 percent of the company’swork force.

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(NHRA) estimation that sales for the industry will continue torise in the next few years is mostly due to the strength of thehousing market and homeowners’ focus on do-it-yourself(DIY) projects. Also, leaders of the hardware industry believethat in a slow market such as this, consumers are more likelyto focus on making their own projects and gifts instead ofspending money on something pre-made, which will also con-tinue to help the industry.

During a speech at this year’s National Hardware Show, AcePresident and CEO David Hodnik explained that the compa-ny’s research found nearly 75 percent of customers maintaina DIY project list. To benefit from this, Ace is stressing itsstores focus on outdoor enhancement products and items forpainting and decorating to complement their core hardwarebusiness.

Also discussed in this year’s National Hardware Show was theindustry’s trend toward embracing technology as a means toincrease its business. Ace is demonstrating this through thecomputer systems integration of its Vision 21 program. In addi-tion, Hodnik announced at the show that the company plans toexpand its Web site in the near future to allow consumers topurchase products online.

Growth from an Improved VisionIN ADDITION TO OPENING NEW STORES FROM THE GROUNDup, the company has also expanded in a number of otherways. Ace will often convert competitors’ stores for a newowner, but it will also work aggressively with existing retailersto open branch stores for owners who want multiple stores intheir market. Currently, the company’s largest retailer owns 75stores.

“To gain more market share in the United States, Ace offers8,500 Ace label products in every major hardware category,” thecompany says. “All Ace products carry Ace’s satisfaction guar-antee with a no-hassle return policy and are priced competi-tively to comparable products, providing an exceptional value.Ace label packaging is designed to inform and educate con-sumers in their buying decisions, enabling consumers to matchproducts to their specific hardware needs.”

The company is growing internationally, as well. Currently

ACE HARDWARE retail

MUELLER/B&K INDUSTRIES INC.Mueller/B&K Industries Inc. has been a leading supplier of residential plumbingproducts to the hardware and home center industry since 1970. Mueller/B&K hasproudly partnered with Ace Hardware for more than 20 years to supply reliable,quality products that provide solutions to its customers’ do-it-yourself challenges.Together the companies continue to make “Ace the Place” for valves, malleable ironfittings, and plumbing specialty products.

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Ace has a presence in 72 countries on six continents. InNovember 2000, Ace signed a licensing agreement withSunstar Engineering, an Osaka, Japan-based global manufac-turer. Through this agreement, Sunstar will build and devel-op more than 200 Ace stores throughout Japan in the next 10

years, making Ace the firstnon-Japanese hardlines re-

tailer to enter this mar-ket. The partnership’sfirst store opened in

the fall of 2001 under

the name Ace Home Place.Although the company aims to grow ever larger, it is com-

fortable with its current place in the marketplace and confidentthat it can continue to compete against “big box” retailers.Griffith notes that recently Home Depot had opened four storeson the East Coast named Villager Hardware, a concept similarto Ace stores, but he says it did not pursue expansion of them.

Griffith adds, however, that although the Villager Hardwarestores are not popping up throughout the country, the merepresence of them got the attention of Ace, making the companymore focused and eager to get its retailers together on the samepage.

“When a consumer tells us customer service is No. 1, that fitsour model better than any big box in the market today,” Griffithsays. “At Ace, you don’t have to park a mile away. Big boxes arenot fast-in, fast-out stores. They don’t offer the knowledge, per-sonalized service and advice that we do. Ace retailers are inde-pendent business entrepreneurs with their life invested in thebusiness and in the store. That’s a competitive advantage inhow you treat the customer.” ■

John Krukowski and Michael San Filippo contributed to this article.

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