Ace Hardware 2005 Annual Report Download - page 6

2005 ANNUAL REPORT NEW FRONTIERS. NEW OPPORTUNITIES.
Ace is rewarding
its retailers with
$16.9 million in
achievement
awards to
further drive retail
enhancements.
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In 2005, Ace offered a variety of
funding options to retailers interested
in enhancing their business, boosting
sales and growing the Ace brand.
Investment in retail initiatives is a
win-win for both retailers and the
corporation. Retailers were able
to implement a host of sales-building
offerings, from retrofitting their
stores to upgrading their in-store
computer systems to enhancing key
departments within the store. These
improvements have a direct impact
on retail by boosting store traffic and,
ultimately, sales.
Now in its second year, the Growth Strategy
is the cornerstone of Ace’s retail-focused
initiatives. The long-term strategy is designed to
help retailers focus on key elements of their
business in order to present a more consistent
image to consumers nationwide. The result
is not only more efficient operations, but
also more profitable stores. Those retailers
who achieved each of the Growth Strategy
initiatives in 2005 saw their retail sales increase
on average by nearly 4.0 percent.
More than 2,200 retailers reached full
Vision 21 achievement level in 2005, enabling
them to reap the benefits of the 1 percent
Achievement Award. The 2005 award amount
totaled $16.9 million, a clear indication of Ace’s
commitment to helping retailers grow their
businesses and drive sales. With these dollars,
retailers will be able to continue to improve
their stores, investing in retail-centered
enhancements such as technology, décor,
lighting, one-to-one marketing and much more.
A primary means for retailers to improve
their businesses is to upgrade their in-store
computer systems with EagleVision or
EagleTM for Windows. Nearly 550 retailers
added or upgraded their computer systems
to the Eagle platform in 2005. By utilizing funds
from the Achievement Award, more retailers
were able to reap the benefits of this advanced
technology solution.
Another key in-store enhancement many
retailers made in 2005 was upgrading
their Ace Paint color system. The Paint
Division introduced the Colors for Your LifeTM
color system mid-year, featuring a new,
consumer-friendly color palette. For those
retailers who currently had the wood and
stainless steel color display unit in their stores,
the new system retrofit was entirely subsidized
by the Ace Paint Division.
In combination with the new
color palette, the Paint Division
also introduced its Paint PodTM
Center. These sample-sized
containers allow consumers to
test colors on their walls prior
to making a final paint selection.
Retailers who committed to the
Paint Pod Center at the fall
convention were able to take
advantage of a reduced cost as
well as a 12-month payment plan.
Retailers interested in growing
their business can choose from
several financing programs
available to them. The “Right
Size, Right Place” program,
initially launched in 2004,
continued to help retailers
upgrade their position in the
marketplace, either through
expanding their existing location
to better meet the needs of their customers or
by relocating to a more advantageous location.
Nearly 40 qualified retailers have tapped into
the funding program, which provides them with
up to a $50,000 credit.
Another option for those retailers interested
in financing a new store was the Equity Match
Financing (EMF) program, which was unveiled
in 2005. The financing program is designed to
fuel new store growth while improving cash flow
at new stores. Through the program, qualified
retailers receive financing that matches their
invested capital up to $300,000. The Equity
Match Financing lets retailers obtain the
necessary financing at a very attractive interest
rate without impacting cash flow. On a yearly
basis, the loan is repaid with the non-cash
portion of the patronage rebate, with any
remaining balance due at the end of 10 years.
In 2005, nearly 50 retailers took advantage
of EMF, allowing them to reduce the amount
of up-front cash needed to open a new store
and utilize their dividend for other retail
investments. An additional 100 projects are in
process for 2006. The company has approved
$50 million for total EMF funding.