- The Washington Times - Friday, March 12, 2004

Ace Hardware, celebrating its 80th year, is still a hammering force in an industry dominated by giant home-improvement retailers Home Depot and Lowe’s.

The Oak Brook, Ill., company, owned and operated by its 3,700 retailers, is coming off a record year and has no plans to slow down.

“There’s money to be made in hardware,” said David Hodnik, president and chief executive.

Ace, and the home-improvement industry in general, benefited from strong sales of new and existing homes, an influx of do-it-yourself projects and a better economy last year.

The company reported $100.7 million in 2003 net income — a 22.7 percent increase from the previous year. Retail sales are projected to hit $13 billion, and Mr. Hodnik says sales at stores open at least a year are up about 6 percent over 2002. Consolidated wholesale sales, which are the sales from the manufacturer to the retailers, were about $3.16 billion — a 4.3 percent increase from 2002.

This year, the company’s big push will be to open 150 to 200 new stores, adding to its 4,800 existing locations. It will be the most aggressive expansion in company history.

“The timing is right,” Mr. Hodnik said. “There’s a lot of opportunity.”

Mr. Hodnik, decked out in Ace apparel right down to his watch, is in the District this week for the company’s four-day spring convention, which ends tomorrow. The Washington Convention Center has been transformed into a giant hardware store hosting about 14,000 Ace retailers, manufacturers of home-improvement products and hardware executives.

The exhibit floor, dominated with red — Ace’s signature color — holds thousands of hardware and home products from the Ace brand to top-of-the-line manufacturers.

Among other objectives, Ace uses its convention to introduce new merchandise to the retailers in hopes that they will carry it in their stores. As a retail cooperative, Ace retailers are independent so they do not have to carry certain products or have their stores look a particular way.

This year the focus is on “Builder’s Hardware,” which is a full line of Ace-branded home-building products and the company’s new line of paint called Ace Sensations, which is specially formulated with 3M’s Scotchgard for stain resistance.

During an Ace Sensations demonstration, home-improvement specialist and Ace’s “Helpful Hardware Man” Lou Manfredini tried to convince the store owners that the paint is an ideal product for them.

He took grease, a marker and a highlighter and drew on a wall that had been painted with Ace Sensations. He then showed how easily the marks came off.

“I don’t want to oversell it to you, but I love it,” Mr. Manfredini told a handful of people in the audience. “I just think it makes a lot of sense.”

Mr. Hodnik said the company has done much over the past several years to help differentiate itself from its competitors, including improving its own product lines, adding a customer-loyalty program and continuing to focus on customer service.

“We want to be the most helpful hardware place in the neighborhood,” Mr. Hodnik said.

The focus within the company has changed with customers’ needs.

In the past three years, Ace has emphasized lawn and outdoor living, and paint and redecorating.

“There’s much more of an upscale product mix,” Mr. Hodnik said. “It’s above and beyond the core hardware line.”

The average store is about 10,000 square feet. Newer stores are closer to 14,000 square feet.

Because the stores are run independently, they vary from place to place.

“It isn’t cookie cutter by any means,” Mr. Hodnik said.

Mr. Hodnik says Ace has tried in the past several years to get its owners to follow certain Ace guidelines so there is some consistency from one store to another, while maintaining their own identities.

“There’s more value in consistency and fulfilling the brand promise,” Mr. Hodnik said.

Ace makes up about 22 percent of the $50 billion to $60 billion smaller, neighborhood hardware business, which includes other cooperatives, he said.

That doesn’t include Home Depot, which raked in $65 billion last year, or Lowe’s, which had $31 billion in sales.

Total retail sales at home-improvement retailers hit about $210 billion last year, according to the National Retail Hardware Association.

Mr. Hodnik is well aware of the home-improvement Goliaths that have invaded the United States over the past 20 years.

“They open in the same marketplace and we clearly have shoppers who think that is the place to be,” he said.

But Ace has loyal customers who don’t want to shop at a big-box retailer and prefer the smaller stores and personal attention.

“We lose some business but our stores weather through that and get back on track,” Mr. Hodnik said. “Competition is good. We just have to be sharper.”

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