Ace Hardware gives Multichannel Marketer an in-depth look into its new experiential store format dubbed Elevate Ace. The stores showcase Ace’s anchor brands that drive incremental growth for the hardware cooperative.
Ace Hardware unveiled a new store format that aims to elevate the merchandising of its most sought-after brands, enhance customer service and create a more immersive shopping experience with its core categories — paint, power, backyards and barbecue, and home preservation.
One of the goals for the new format, dubbed Elevate Ace, is to have shoppers feel like they are shopping in a brand showroom, said Lisa Schmitt, director of category management and retail development at the hardware retailer. The merchandising strategy brings all of a brand’s products together in one section of the store, eliminates SKUs in several categories and reduces the number of product models the store has assembled on the floor.
This makes space for bigger signage and a focus on Ace’s “best brands,” including Weber, Traeger, Big Green Egg, Craftsman, DeWalt, Milwaukee, Ego and Stihl. Ace decided to focus on these brands as they are the “anchor” brands that shoppers seek out and drive sales growth for Ace Hardware, Schmitt said.
“These are the brands that represent 36% of the incremental growth that we’ve experienced over the past couple of years,” Schmitt said. “So, you’re talking about a small number of brands driving a really significant amount of volume that it just so happens that customers really want.”
Ace’s pilot store results
Ace piloted the Elevate floorplan with six stores in January 2024 to prove the concept. And it did: Sales at the pilot stores grew 11% year over year and profit increased 5% year over year compared with a control group over a seven month period, Schmitt said. Plus, basket sizes grew for the featured brands, she said said.
“In our pilot stores we learned customers were really wowed,” Schmitt said. “We created the level of inspiration we were hoping for, and we got really great feedback on the leveled-up decor.”
Part of the sales increase comes from giving the shopper fewer choices, or as Schmitt said, “simplifying the consumer shopping experience.” For example, Ace will now showcase one to three Weber grills from three different price point models, instead of having 20 different grills on display and letting the shopper determine the nuances between each one. The new signs will help shoppers and associates compare products and understand the features, she said.
“That was a hypothesis: we think we could sell more by just making it easier for the customer to choose. Giving them some tools and showing them a more feature-forward grill,” she said. “Your result of that is selling higher price point items and then continuing to sell the extensions of those grills, but just doing that through a special order online versus selling it right in the store.”
Ace also launched a digital selling assistant on an associate’s mobile device. The associate inputs a product and features, and the screen will display options and related products to suggest to the shopper.
New merchandising drives increased basket size
In addition, Ace relocated upsell products close to the main product, such as tongs next to the grill. The close proximity drives more sales. The strategy also helps in categories like barbecue and power tools, in which brand is the top consideration in the consumer’s decision tree, Schmitt said.
“One of the big things that we learned from our pilots, and both through the tools and then through the merchandising strategy, is we were able to build the basket. So attach rate was up significantly in our pilot stores,” she said.
For barbecue, the attach rates increased 800 basis points, and within power brands, such as Milwaukee, DeWalt and Ego, transactions increased 24% within that brand on average per customer, Schmitt said.
All of these improvements together contributes to the lift in sales and profit, she said.
Ace store owners to finance remodel
Ace Hardware is a cooperative, and the majority of its 5,000-plus stores are independently owned by the local store owner. The retailer will continue to deploy the new store models in 2024, with a full-scale launch in January, Schmitt said. The goal is to have 1,900 Ace stores in this format over five years. Anytime Ace opens a store it will have this format and anytime a store remodels — which Ace recommends every eight years — it will be this Elevate format. Each remodel takes four to six weeks, and the store remains open thought the remodel, Schmitt said.
The sales increase a store will have depends on where it is starting from, she said. For example, if a store hasn’t remodeled in eight years, it can expect a bigger lift than 11%, she said.
Store owners have to finance the remodel, although Ace provides some incentives and some of the featured brands help offset the investment costs, Schmitt said.
“[The brands] see the value in their brand getting this elevated decor and the placement, and all of the benefit. They see the value in that, so they’re willing to help the retailers offset some of the investment,” Schmitt said.
While Ace showcases its best brands, it still highlights other emerging brands, such as Ooni pizza ovens.
“The first and foremost factor for us is going to be, ‘What is going to make our stores the most profitable? What’s going to drive them the most growth?’ And a good chunk of that comes from our best brands, but there are other brands that we want to make sure are part of the experience because they’re also good for our stores,” she said.
Ace evaluated the productivity of each department and product to determine which SKUs to cut in order to make space for the new concept. Ace will always carry repair and replace products, as it has to remain credible as a hardware store, but it “shored up” other categories, such as light fixtures and cabinet hardware, to only offer a core assortment.
Challenging times for hardware retailers
Ace started working on its Elevate concept two years ago. The goal is to continue to provide its stores with a model that will help them grow, even in a challenging environment for the home improvement category, Schmitt said.
Ace recently reported its financial earnings for its fiscal Q2 2024 for the three months ended June 29. Revenue grew 3.1% year over year, reaching $2.71 billion. Same-store sales, however, decreased 1.7%, and its net income decreased 9.7% year over year to $11.4 million.
Home improvement giants Lowe’s and Home Depot also recently reported muted earnings. Total sales at Lowe’s decreased 5.6% year over year to $23.6 billion for its fiscal Q2, and its comparable sales decreased 5.1% year over year. At Home Depot, total sales increased 0.6% to $43.2 billion for its fiscal Q2, and its comparable sales decreased 3.3% year over year.
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