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Ace's Aggressive Merchandising and Growth Activities

Since 1994, Ace has experienced an annual compound average growth of 5 percent, with annual retail sales exceeding $13 billion. Market share also continues to grow, with more than 1.8 million square feet of new Ace retail space added in 2005. In total, Ace operates 4,600 stores in all 50 states and 70 countries on six continents worldwide.

Instrumental to Ace's growth is its Vision 21 strategic plan that details a program for making Ace the dominant hardlines retailer in the convenience market. In cooperation with each independent retailer, the strategy utilizes advanced technology, improved store design and top-notch managerial and retail programs for its retailers.

To help Ace retailers increase their sales and profits, Ace offers an abundance of support services and programs, including optimized merchandise planograms, retail training, store planning and decor, as well as access to 65,000 products stocked in the retail support centers.

Included in this inventory selection are 9,000 Ace label products in every major hardware category. Ace products carry Ace's Satisfaction Guarantee with a "no hassle return policy" and are priced competitively to comparable products, providing an exceptional value. Ace packaging is designed to inform and educate consumers in their buying decisions, enabling consumers to match products to their specific hardware needs.

Ace's national television, radio and print campaigns, along with spokesperson John Madden, work together to promote the “Ace – The Helpful Place” brand. To further leverage Ace's helpful brand positioning in the marketplace, in the fall of 2002, Ace signed national home improvement expert Lou Manfredini as its “Helpful Hardware Man.” Manfredini serves as spokesperson in broadcast and print media opportunities and makes store appearances throughout the country offering consumers helpful do-it-yourself project advice.

To reach new customers and a younger demographic, in March 2006, Ace announced a partnership with the hit NBC show, "The Apprentice." In addition to using its appearance on the April 10th episode to give back to the community - the first company to use its time on the show to launch a national charitable outreach program as a result - Ace signed season one winner Bill Rancic for a year-long community involvement campaign.

One-on-one consumer marketing is also pivotal at Ace. Ace's preferred customer program, the Helpful Hardware Club (HHC), was launched in 1997. Nearly 2,200 retailers currently offer the program to more than 10 million customers nationwide. HHC is designed to increase customer visits and transaction sizes while improving retention and rewarding Ace's best customers for their loyalty. Customer awards include a free subscription to Ace's quarterly magazine, Ace Homeplace, advanced notification of sales or special promotions and special item level discounts on select products.

Ace's informative and fun Web site — www.acehardware.com — exemplifies the company's commitment to being the most helpful hardware store on the planet. It is the source for do-it-yourselfers searching for everything from quick project advice and special promotions to a directory of store locations. Among features on the site are Lou Manfredini's “Ask Lou” interactive Q&A section and “Answers@Ace,” where consumers can research product information and retrieve step-by-step, illustrated directions for home improvement projects. In spring 2003, Ace launched e-commerce capabilities on the Web site that will allow customers to conveniently purchase more than 40,000 home improvement products for delivery to their home or place of business – or directly to their Ace store for pick-up.