Brick by Brick

Ace Hardware had quite a year last year. For one thing, it posted its largest revenue gain since 1998 — wholesale sales rose by 6.5% to $3.77 billion. And it opened 188 stores last year, which led to the jump.

But it wasn’t easy. For one thing, it’s tough delivering a cohesive marketing message when the brand consists of 4,600 independently owned retail stores.

To find out how it did it, PROMO spoke with Paula Erickson, who heads up advertising, branding and promotion.

PROMO: How did you develop a national promotion strategy?

ERICKSON: We did a gut check during the first quarter of last year. We said: “Let’s validate what we think our brand stands for.” So we hired BrandTrust to find out. Their research confirmed that the way consumers perceive our brand is at the local level. It’s the people in the local store who they trust and who provide them with helpful service. That’s one of our differentiators, and everything we’re doing from a national standpoint is trying to drive that local message.

PROMO: How do you do that?

ERICKSON: We’ll never have an ad budget like the big-box retailers. We’re just trying to be really smart with our money to do promotions that make sense and really make those dollars stretch in every single vehicle that we can.

PROMO: Where do the ad dollars come from?

ERICKSON: Our retailers pay an annual brand assessment. Those dollars are coupled with dollars from vendor partners to fund all marketing and advertising.

PROMO: But you still have a fraction of the budget that competitors like Home Depot and Lowes have. How do you overcome that?

ERICKSON: One way is to try to come up with promotions that are so unique that no one can touch them. We did that with the recent Dream Ace contest. It offered a great platform to tell consumers that we’re thriving in spite of the big-box retailers. The second thing is to ensure that there is really true integration between advertising, marketing and merchandising to create one seamless promotional plan at the retail level.

PROMO: The contest awarded one winner ownership of an Ace store, and more than 5,400 people entered. To what do you attribute that success?

ERICKSON: No company has given away a prize of such a magnitude. You could win a million dollar lottery, but winning the store valued at $1 million is a life-changing opportunity that will have an impact for future generations to come.

PROMO: How did you draw the average consumer into this contest?

ERICKSON: We tried to broaden elements of it so we could share the promotion with all consumers regardless of whether they were aspiring entrepreneurs. On the front end, we engaged people with our first mobile tour, which stopped at 40 stores. The first 200 customers who came to the store would get a $10 Ace Hardware gift card. We also ran local advertising that included a coupon offer that they could redeem at any Ace store.

PROMO: What was the ROI from the contest and supporting promotions?

ERICKSON: The promotion drove sales at each stop by an average of 30.8%, and transactions by 20.5% and regional sales by 6%.

PROMO: Will you tie any promotions to the store’s opening?

ERICKSON: Oh, yes. When Gower Talley opens the Dream Store in Houston we will celebrate nationwide on June 29 and 30. Consumers, regardless of which market they’re in, can go into any Ace store on those days and get 20 items for free after rebate.

PROMO: What are you promoting in-store for spring?

ERICKSON: Our two biggest categories are paint and lawn and garden. This year, we decided to cross-promote both with the message: As spring is in bloom, get your inspiration for inside your house with the beauty on the outside. We will promote that all month with TV, radio and interactive. And everything we do will backed with strong point-of-purchase.