Ace walks tall in Dallas
John Venhuizen, president and CEO of Ace Hardware strided on stage at the company’s spring show 2024 in Dallas with a message: “Always play to win, it channels intensity.”
A couple thousand attendees packed an auditorium next to the show floor to hear the keynote, where part of his message was, “to celebrate 100 years of leadership and be poised for more.”
The CEO interjected some business news: Brett Stephenson is stepping down from his position as chair of the Ace board of directors and Steve Burggraf, owner of Burggraf’s Ace Hardware and a board member since 2019, will take over in May.
After applause from the standing room only crowd in the arena, he went right back to his message of playing to win.
“Don’t be complacent,” he said and flashed some numbers while he talked.
The average Ace store’s yearly revenue in 2019 was $2.5 million, today it’s $3.6 million. The goal is to increase the average store to $4 million in sales.
“Our same stores are flat, or slightly down, our profits are weakening – we must play to win,” said the CEO.
“Our B2C market share is 30%. That’s strong. Any business would kill for that. But we must do more with the B2B segment, he said. “There is a multi-family opportunity out there; our market share right now is only 2%.”
Venhuizen said the third component is B2P.
“The pro segment is growing faster than ever. Paint and plumbing are two examples,” he said.
“Ace is working on, and testing, having Ace stores fulfill pro product needs,” he said.
“There's a massive opportunity here. We’re not ready yet with this model. But we’re testing in Texas, with plumbing, and in Colorado, with paint.”
Ace has 100 years of expertise in Business-to-Consumer, he said, “but our next jolt forward is a combo of all three: B2C, B2B, and B2P.”
Retail strategy
Consumer spending in the U.S. is about $19 trillion per year, said Andy Enright, SVP of retail strategy and operations. “That averages about $57,000 for each person,” he said.
“The amount that Ace gets is about $19 billion, a very small fraction, which comes out to about $57 out of that average $57,000,” said Enright. “There’s so much room to grow – so much money flying around out there.”
Ace owners sell to their local communities, he said, many of which are blue collar and rural.
As just one example, he said, “in some towns there are more cows than people. Take for instance, Broken Bow, Nebraska. A small town with great people.”
The Ace store there wasn’t doing too well, he pointed out, earning $186 per square foot, far under the Ace average store output of $356 per square foot.
Joe and Liz Franssen bought it in 2021 so the town wouldn’t be without a hardware store, he said, “and they turned it around. They invested in a wider product mix; started the Ace Rewards program at the store; started training employees; and went after B2B.”
Their store now generates $368 per square foot today, he said. “They ran the playbook and reached our Pinnacle status for Ace.”
Every customer interaction matters, said the EVP. These owners are about to open their second store in Gothenburg, Nebraska in a few weeks.
This particular town has no hardware store, he said, and there’s the opportunity. “There are thousands of open development areas for new stores,” said Enright.
He also added that the typical home in the U.S. is three times larger than 50 years ago and has about 100,000 items, on average, in each home.
“Growth opportunities are enormous,” said Enright. “You just have to go get it.”
