Ace Hardware 2005 Annual Report Download - page 8

2005 ANNUAL REPORT NEW FRONTIERS. NEW OPPORTUNITIES. 7
Ace took major strides to grow its
market share in 2005 and further
solidify its position as the leading retail
hardware cooperative in the industry.
During the past year, Ace was named
the fourth largest franchise operation
in the world, added a record number
of new investors, attracted private
equity groups and Ace retailers opened
an unprecedented number of branch
locations. All of these milestones, plus
many other accomplishments, illustrate
the growth momentum taking place
throughout the country under the
Ace banner.
Labeling itself as the “un-franchise of
franchises,” Ace made its debut on the 2005
Franchise Times rankings of the top franchise
operations in the world, based on worldwide
sales of the 200 leading franchise chains. With
annual retail sales of $13 billion, Ace captured
the fourth slot, ahead of other household names
such as KFC, Burger King, Coldwell Banker,
Blockbuster and Marriott. Ace is the only
hardware/home improvement retailer on
the list.
As Ace continues to make a name for itself
in the franchise community, it is catching
the attention of an unprecedented number
of new investors who are attracted to Ace’s
Growth Strategy, strong brand name and the
entrepreneurialism associated with owning an
independent Ace Hardware business. In 2005,
the number of new investors joining Ace
increased 58 percent from the previous year.
And these entrepreneurs joining Ace are
anything but ordinary. There’s Michael Mott,
who left his vice president post at the $800
million food retailer Acme Foods to open his
first Ace store in Pennsburg, Pa.
Even Ace’s “Helpful Hardware Man” Lou
Manfredini has gotten in on the action. After
spending three years traveling the country doing
media interviews and store appearances on
behalf of Ace, in addition to being the national
home improvement expert on “The Today
Show,” Lou believes so strongly in the Ace
brand that he purchased an existing hardware
store in Chicago and converted it to Ace in the
fall of 2005. Since that time, the store’s sales are
up double digits over last year – and are the
strongest sales trends in the 22-year history of
the business.
While new retailers are joining Ace in droves,
existing Ace retailers also continue to “branch
out” and grow their business by adding multiple
locations. In the past 12 months,
Ace retailers added 87 branch
stores, making 40 percent of Ace
stores now owned by multi-store
retailers and accounting for two-
thirds of Ace’s wholesale volume.
With an eye on expansion in an
urban setting, the father-son team
of Les and Jeremy Melnick opened
their second Ace store in April
several blocks from their first in
the heart of Chicago to serve the
very distinct needs of urbanites.
Then there’s Tom and Brenda
Pitkin who added a third store to
their chain of Ace stores in
Virginia in the spring, as well as
Guy Kamitaki, who in addition to owning stores
in Hawaii has diversified and opened Ace stores
in Las Vegas and now owns nine stores in the
Seattle market previously owned by Ace
Hardware. While these are just a few of the
retailers who are branching out, they exemplify
the wide spectrum of markets and formats that
excel under the Ace banner.
What’s causing all these retailers and new
investors to grow with Ace? The independence
and opportunities for entrepreneurship are
fueling Ace’s growth, coupled with no royalty
or traditional franchise fees, a toolbox full of
incentives to qualified individuals who open
stores and additional financing options, such as
Equity Match Financing. Owning an Ace store
has never been more attainable, and with the
Ace Way of Retailing, the complexity of
operating an Ace store has been removed with
proven best practices and a systemized approach
to retail. The momentum is sure to continue. In
2006, Ace plans to open more than 160 new
stores, exceeding 2.2 million square feet of new
retail selling space.
Ace opened 131
new stores
in 2005, many by
new investors and
branch stores,
with significant
progress in ramping
up new store
openings in 2006 to
exceed 2.2 million
retail square feet.