Newsroom: ACE HARDWARE CEO: I’d never say we’re Amazon proof, but here are 3 ways we can survive the retail apocalypse

August 16, 2017

Retail is in peril, and Amazon is a big reason why.

But home improvement stores have enjoyed some protection from Amazon’s encroachment into virtually every sector. They’re sometimes described as being Amazon-proof in the media.

“I would never use the word ‘proof,'” said John Venhuizen, the CEO of Ace Hardware.

Amazon is “quite arguably the most disruptive company in the history of business and they impact everybody without question,” Venhuizen told Business Insider.

That Amazon can lose money to help its customers and still hold Wall Street’s support is “terrifying,” he said. Amazon last month forecast its first quarterly loss in two years.

Investors have sent Amazon’s stock up 31% this year, compared to a 10% gain for the S&P 500. The US iShares home construction exchange-traded fund, which includes major players like Home Depot and Lowe’s, is also surging, up 26% year-to-date.

But home-improvement retailers won’t enjoy endless favor from Wall Street. Take Home Depot, for example, which fell 3% on Tuesday even after smashing analysts’ expectations and raising its guidance for the second time this year. Ace Hardware is privately held and run as thousands of independent stores.

Home Depot shares also fell after Sears announced it planned to start selling its Kenmore-branded appliances on Amazon, and was launching a line of appliances that can be voice controlled with Amazon Alexa.

Longer-term, however, stores like Home Depot and Ace Hardware have three key attributes that can protect their market share from e-commerce giants: what they sell, service, and location.

The nature of the products they sell lends itself to human interaction. Buyers still want to ask a person how things work, or how to mix paint, or which colors to select in the first place.

And the more exceptional the service, the better. “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.”

Although free shipping is convenient, having thousands of stores near the neighborhoods that customers live in is also a big advantage, Venhuizen said.

Ace Hardware, like other hardware retailers, has billions of dollars worth of inventory sitting in its stores across the country. One way to exploit that is by promoting online pick-ups (online orders that are picked up at a store), essentially blending online and offline strategies.

Venhuizen said Ace Hardware’s online sales grew 61% in the second quarter. 93% of those transactions were picked up in the store. The company is starting to experiment with home delivery, he added.

“Many people like to still physically see and touch and have the five senses,” Venhuizen said. “We had a big 5,000-store celebration [this weekend]. Many of them were out there smoking meat on a grill. You can’t smell that on Amazon.”

Featured Stories

Ace Hardware Reports Fourth Quarter and Full Year 2018 Results

• Record fourth quarter revenues of $1.4 billion, an increase of 5.7 percent from last year • U.S. same-store-sales up 1.3 percent during the quarter and 2.3 percent for the…
Read More

Read More

Ace Hardware Honors 2019 ‘Coolest Hardware Stores’

Ace Hardware Corporation is proud to recognize two local Ace Hardware stores with the company’s eighth-annual “Coolest Hardware Store” awards. Ace Hardware, the world’s largest hardware cooperative, selects only a…
Read More

Read More

Ace Hardware Corporation Named one of the Best and Brightest Companies to Work For in the Nation

Out of 2,400 nominations, Ace Hardware recognized as one of the top 101 companies in the country Ace Hardware Corporation has been recognized as one of the Best and Brightest…
Read More

Read More

Archived Stories

Ace Hardware reports second quarter 2017 results

– Record revenues of $1.5 billion, an increase of 4.6 percent from last year – Net income, including one-time pre-tax charges of $7.8 million for our warehouse reconfiguration to support…
Read More

Read More

Backed by Visa, Ace steps up its rewards

October 3, 2010 | By Ken Clark The ability to bring instant credit to the sales floor of Ace Hardware stores is seen as a powerful new sales tool for…
Read More

Read More

Boulder’s McGuckin dropping ties to True Value for Ace

McGuckin Hardware is ending its 30-year partnership with the True Value co-op as of Dec. 31, 2016, and will start buying from the Ace Hardware co-op as of Jan. 1,…
Read More

Read More