Closing Company Case

Ace Hardware

With annual sales of more than $400 billion in the United States, the home improvement market has no shortage of eager shoppers. While Home Depot and Lowe’s dominate the market in terms of sales, Ace Hardware dominates by number of locations and customer satisfaction.⁴⁹

What started in 1924 as a way for the independent hardware retailer to buy inventory like the “big guys,” saving money based on volume, has grown into one of the largest and most well-known retailer-owned cooperatives. Founded by a group of Chicago hardware store owners who wanted to save money and enable the smaller hardware store to compete, is now a worldwide leader in home improvement.

Ace prides itself on being the local neighborhood hardware store. Its major niche in the market is to provide the best service to customers. To this end, Ace has always hired knowledgeable staff to help answer questions, locate products, and provide advice. Ace buys inventory according to the needs and wants of its local consumers, but its real niche is in customer service. Generally, a customer isn’t in the store for more than five minutes before a friendly, red-shirted Ace employee is asking if they need help.

Early on, Ace wanted to set itself apart based on its helpful and friendly service. Playing on this value proposition and looking to build brand awareness, Ace crafted a very catchy ad campaign, which has solidified the Ace brand. Back in the 1970s and 1980s, Ace became known by its famous jingle, “Ace is the place with the helpful hardware man.” This jingle is still being used today, and you can see it here.

Because retailers must execute well on all the marketing mix variables, for a retailer like Ace to be successful, it needs to understand its customers in the local market. In doing so, it can also identify the best location for the store in order to meet the needs of those customers and how they travel around town. Ace knows the customers well, so it is able to set prices and provide products according to local needs.

One of the founding principles of Ace is that each store should be locally owned and operated. Because of this, Ace is embedded in the communities they serve. You will often find the local Ace team stepping in to help with community projects or sponsor local sports teams. The stores work with independent producers to stock locally made products.

Over the past decade, retailing has seen significant changes in how consumers shop. Amazon has swiftly transformed and dominated retailing. Many independent brick-and-mortar retailers have been unable to compete with the convenience of online ordering and at-home delivery.

And with the onset of the COVID-19 pandemic in 2020, retailers everywhere were scrambling to adapt. Ace quickly transformed into an online as well as in-store retailer. Through a quick revamp of its website, Ace was able to offer its customers the ability to order and pay online with options to either pick up at the store or have the product(s) delivered to their home. Home delivery was fulfilled by the local Ace Hardware employees.

Another advantage to Ace Hardware is the services it provides. Making keys, sharpening lawn mower blades and chains for chain saws, repairing screens, and mixing customer paint have allowed Ace to go the extra mile for items customers must come to the store for.⁵⁰

Case Questions