“I’ve been on Amazon a lot and never smelled a pork loin.”
Such is the advantage that Ace Hardware brings to the marketplace in a world where commerce is increasingly decamping to digital shores. According to CEO John Venhuizen, a tactile experience of the goods on offer and what those goods can do is something a digital experience really can’t do, no matter how well designed.
It is not enough to render a business “Amazon-proof,” because, according to Venhuizen, there is no magical solution that will make any business safe from Amazon, and businesses that fancy themselves undisruptable run the distinct risk of a rude awakening at the hands of a firm that is “quite possibly the most disruptive company in the history of business.” The effects of a seismic shift that large are going to influence every firm.
Acknowledging the Amazon effect and knowing it’s a factor that always must be planned for is not the same as sanguinely allowing that effect to overawe it. Ace Hardware is committed to the idea, not that its business model is necessarily immune to Amazon, but that it can fend the eCommerce giant off by capitalizing on retail experiences it is uniquely suited to offer.
Retail, he noted in an interview, will not save itself from its current difficulties by continuing to do the same things in the same ways and expecting new results to magically generate themselves. That doesn’t mean firms should burn down their legacies entirely, but it does mean that retail organizations are called to be more flexible — and creative — than ever before.
“We’ve got winnable weapons,” Venhuizen said. “Let our minds be open to change while our feet are planted on the bedrock of this company.”
Acquiring New Strength
Ace Hardware occupies an interesting position in the hardware sales field, as it’s smaller than competitors like Home Depot or Lowe’s. The stores are, in some sense, truly mom and pop shops, since Ace stores are franchises owned by local owners. Small is its selling point, as customers embarking on home improvement tasks can be intimidated by wandering around a warehouse-sized store.
“When a local business provides an irrational level of service to their local neighbors, that’s hard to compete with on a big-box or a dotcom national scale,” Venhuizen said. “Every small business can do that.”
But what Ace can do that not every small business can is expand its offering through acquisitions and expansions, so that it can buttress its local services with ongoing digital efforts. Last fall, that translated to picking up a majority stake in The Grommet, an online showcase that inventors, entrepreneurs and small businesses (SMBs) use to launch a wide range of brands that might not otherwise see the light of day.
Fitbit, IdeaPaint, OtterBox and SodaStream are among the items that got their start by appearing on The Grommet.
“We both stand as strong advocates for the underdog. From the very beginning, we have appreciated our alignment in support for and advancement of the independent maker,” Venhuizen said of the acquisition at the time, “Under Ace’s ownership, I believe The Grommet can offer our customers more of that which fuels global economies and makes America special — the unbridled creativity of the local entrepreneur.”
Ace also snapped up some headlines just as 2018 was getting underway, with rumors that it would soon be pairing with Kroger — to finally make the dream of being able to buy a bunch of bananas and a power drill all in one location a reality. Mini-stores are not totally new ground for Ace. Paint chain Benjamin Moore has just such a partnership with Ace and operates 400 express stores, according to the latest data available. A partnership with the nation’s largest grocery chain, however, would be Ace Hardware’s largest-scale and most expansive partnership to date.
The Physical Experience
Digital retail offers consumers all kinds of opportunities, and retail needs to respect that consumers have opted for convenience and ease of digital channels over other more traditional retail routes. But as Ace has seen its sales rise sharply (61 percent in the last reported quarter), 93 percent are still happening in their physical locations.
“Many people like to still physically see and touch and have the five senses,” Venhuizen said.
Offering that full tactile experience — buttressed by service and strong digital channels — has been how Ace Hardware has stayed strong, even as bigger competition has circled the waters. With a focus on quality, convenience and service — and a consistency to deliver on all three — Ace aims to be in it for the long haul.
“These are the three battles we have to win,” Venhuizen told Ace retailers in a recent company meeting. “You need to differentiate, or you die.”