Growth and expansion

Executive leadership to Ace retailers: Despite changes, foundation set for a bright future

John Surane, Ace Executive Vice President of Marketing, Merchandising and  Sales: “In three years, wholesale sales have increased to $1.2 billion, bottom line profit has increased to $65 million and retail  sales are at $2 billion. Find another retailer growing at that rate.”

John Surane, Ace executive vice president of Marketing, Merchandising and Sales: “In three years, wholesale sales have increased to $1.2 billion, bottom line profit has increased to $65 million and retail sales are at $2 billion. Find another retailer growing at that rate.”

A lot can change in just a few short years, and for Ace Hardware, the change has all been for the better — particularly since the company’s 2012 Fall Show in Chicago. That’s the message Ace’s executive leadership delivered to the crowd of retailers during the 2015 General Session.

John Surane, Ace executive vice president of Marketing, Merchandising and Sales, took the crowd on a short trip down memory lane, pointing out changes in the world and in the industry over the last three years. Spotlighting everything from world leaders to cars that drive themselves, Surane touched on the good and not-so-good changes that affect Ace retailers today. For example, drones, Surane said playfully, could be the downfall of brick and mortar retail as we know it. Yet, despite these changes, Surane delivered a number of positive Ace statistics that set the foundation for a bright future.

“In three years, wholesale sales have increased to $1.2 billion, bottom line profit has increased to $65 million and retail sales are at $2 billion. Find another retailer growing at that rate,” Surane said. “Even the Ace jingle was named No. 9 among the Top 30 Most Influential U.S. jingles since 1948, according to Brand Strategy Insider.”

Surane extended the good news by announcing record-shattering statistics like a 4.6 percent increase in retail transactions to $15 million, an 11 percent increase in average ticket growth and the opening of 514 new Ace stores in the U.S. in the last three years. Surane attributed much of the growth to 20/20 Vision, Ace’s seven-year, retail growth strategy.

Surane also told retailers what the company believes is working, which includes Ace’s bigger, bolder, national events, its media spending and the Ace Rewards program. Retailers should celebrate this growth, he said, but not get complacent. There are still challenges facing retailers, like the big box store competition, margin rate pressure, rising expenses (labor, health care and taxes) and high print/distribution costs.

“We’ve come a long way. You see it in the stats. But we need to keep climbing the mountain,” he said. “We must evolve and spend smarter.”

After giving a nod to Ace advertising spokesman and professional golfer Hunter Mahan, who was sitting in the General Session audience, Surane discussed the decline of print media and the rising interest in digital content, prompting Ace to adjust its media spending.

“People spend more than seven hours a day on their handheld devices, consuming digital content,” Surane said. “We need to adapt.”

As such, Ace is boosting its TV and digital exposure by 25 percent, a contribution of $150,000 more per market since 2013. Meanwhile, Ace will produce fewer standalone preprint ads, moving from 21 to 16 preprints in 2016. Surane encouraged retailers to reinvest that savings in data mining through Ace Rewards, which delivers a greater reach, predictive analytics and personalized offers.

Ace retailers also will benefit from the addition of four, new national events in 2016 and a focus on “deeper versus wider” promotional assortments. Specifically, Surane said Ace will have 30 percent fewer offers per ad event, more full-priced product, less post-promotional hang-over, and higher margins on promoted items — an announcement that elicited applause from retailers.

“What’s in it for you?” Surane said. “We know you’re feeling margin rate pressure. Our approach will give you more profit.”

After an impressive start to the General Session, Surane continued the momentum by handing the microphone off to Ace Chairman of the Board Jim Ackroyd.  Ackroyd, who discussed the power of the Ace co-op and what it means to retailers, said everyone benefits from the uniqueness of the co-op model. It enables the Ace family to bring together programs, education, products and brands, resets, world-class wholesale and even charitable giving.

“It makes us far better together than we could be going it alone,” Ackroyd said. “For example, we have access to world-class learning and development resources through Ace Learning Place, we have access to more premium brands than ever before, and loan programs and incentives are helping existing businesses improve their stores, while making new Ace stores become a reality.”

Ackroyd told retailers that new store inventory incentive credits in 2014 were $47.6 million — $39 million from vendors and $8.6 million from Ace.  This resulted in increased sales of $116.6 million.

“Together, we have financial strength and resources we could never have without the co-op,” Ackroyd said.

Ace President and CEO John Venhuizen: “I'm so honored and proud to work for store owners who are filled with active optimism.”

Ace President and CEO John Venhuizen: “I’m so honored and proud to work for store owners who are filled with active optimism.”

The Ace General Session was peppered with a number of exciting videos. But the one video that struck an emotional chord was one set to the pop song, “Brave.” It featured a number of Ace retailers around the world doing exciting, notable things — from a Hungarian immigrant working her way up from cashier to gardening manager, to two Ace truckers pulling a person from a burning car just before their last delivery of the day. The video set the tone for the introduction of Ace President and CEO John Venhuizen.

Venhuizen addressed the difference between someone who is truly brave and someone who is a “passive critic.” He illustrated his point with a look at this year’s clash between Baltimore citizens and the police, turning the spotlight on Toya Graham, the mother who disciplined her son during the riots to keep him safe and respectful of authority.

“She was the only one who wasn’t a passive critic during this time,” Venhuizen said. “This is someone who is truly brave.”

He also noted the bravery of Ace Hardware Manager Jerry Grafton in Sapulpa, Oklahoma. Grafton was hailed in his local community for helping a young boy with a severe physical and intellectual disability get the parts he needed to repair his second-hand wheelchair. Grafton, who Venhuizen called “a red-vested hero,” not only helped the boy find the parts, he helped the family rebuild the wheelchair.

A call to bravery is something Venhuizen encouraged all retailers to do in terms of facing future business challenges.

“We have improved customer and store atrophy. We have a group of active optimists here, and we’ve made lots of progress,” he said. “Now, we’ve come to a fork in the road, and the question is, will we just rest or will we stay after it and continue up the mountain?”

Venhuizen offered his tips for helping retailers be successful in their store operations, which included a focus on product, promotion, price, place, process and people — “our weapon in the world,” he said.

“I’m so honored and proud to work for store owners who are filled with active optimism,” he said. “Everybody wants to grow. But do you have the fortitude to do what it takes to actively grow?”

Venhuizen closed with his own personal concerns for the future of Ace retailers.

“People often ask me if I lose sleep at night because of Ace Hardware. And actually, I don’t,” he said. “But there are two groups I’m concerned about. I’m concerned about the group of retailers who are doing well, have grown comfortable and think they can just coast. But my even bigger concern is the group of retailers who have made progress, but are tired. Perhaps they are suffering from Level 3 reset fatigue. Will they have the fortitude to continue on up the mountain?”

August 21, 2015
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