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Business: Ace CEO sees local store advantages over big boxes

By Jason Lesley
Coastal Observer

Don’t call an Ace Hardware store a franchise in front of CEO John Venhuizen.

“We call that the ‘F’ word,” Venhuizen said during a visit to the Palmetto Ace hardware store in Pawleys Island for a gathering of 40 to 50 regional store owners. “We don’t say that. They own the company, and they own the stores.”

Palmetto Ace owner Charles Biddix played host to representatives from two regional groups under a big tent in the store’s yard last week. Venhuizen said he tries to attend as many of these meetings as possible to listen and learn. “We’ve got to be the most bottoms-up company in the world,” he said. “They own their stores and they own us, so most of our ideas come from the stores.”

Ace is the largest cooperative in the hardware industry with more than 4,700 stores worldwide. J.D. Power has ranked it first in customer satisfaction among home improvement retail stores for eight years in a row. Venhuizen said he likes the fact that Biddix knows his customers better than executives at corporate headquarters in Oak Brook, Ill. “Fifteen to 20 percent of the stuff he stocks in his store,” Venhuizen said, “he doesn’t even get from us.”

Ace is celebrating its 90th anniversary this year. “It was truly started by a couple of guys with hardware stores who wanted to buy sponges better,” Venhuizen said. “It’s turned in the last 25 years to leverage scale, not to just buy stuff but to be better operators, better on the floor and the back office. We strip out costs so local owners can be entrepreneurs and not bookkeepers. The scale started with buying and spread to everything.”

Though the Ace hardware store in Pawleys Island is 18,000 square feet, Venhuizen said it carries almost 30,000 items. “That’s about what you would find in a Home Depot,” he said. “Plus we’ve got 80,000 items we stock that he can get once or twice a week and vendor relationships where he can get another 800,000 items directly from manufacturers. If there’s a local product that he wants to sell, he has the freedom to say yes.”

Venhuizen said relinquishing inventory control makes big box store management nervous. “We like the control here,” he said, pointing to the store aisles. “We’ll never think of beach gear in Chicago when there’s a polar vortex in February, but he’s buying. The bloom has come off the big box rose a little bit, and local ownership is resonating in the U.S., which is great for us.”

Biddix, who opened the Pawleys Island store in 2007, told Venhuizen he’s preparing for the store’s annual run on electric fans next month. “Walmart will start putting in heaters in August,” he said, “and my fan sales will go up 20 to 25 percent. Here in August, it’s hot. They will come down the aisle and buy fans all day long.”

Venhuizen had a similar story of Ace competitors who stopped selling salt, shovels and snow blowers before the big winter storms subsided. “Local Ace owners said no way, we’re going to serve our neighbors until it stops snowing,” he said.

Biddix said he sold out of chainsaws in February after the ice storm and got a delivery from Stihl. “That’s one of those things that if you own it versus being the manager,” Venhuizen said. “It’s a different way of thinking. We love it. It’s a huge advantage.”

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