News

Ace Hardware builds out its wholesale business beyond Ace stores

January 12, 2015 03:16 PM
http://www.internetretailer.com/static/uploads/thumbs/AceHardware_SanDiego_300-squared_jpg_78x78_crop_q95.jpg

Ace Hardware Corp. is branching out as an online wholesaler of merchandise to retail hardware stores, adding depth to its product lines and going beyond the network of Ace stores it launched 90 years ago.

And it’s doing it with some of the oldest names in hardware store distribution, doubling its number of retail store wholesale clients to more than 8,000.

Ace, based in the Chicago suburb of Oak Brook, IL, last week announced it had acquired for $32 million Jensen Distribution Services, a 131-year-old company based in Spokane, WA, that distributes hardware and related merchandise to more than 2,000 retail stores across 11 western states. The Jensen acquisition follows Ace’s 2014 purchase of Emery-Waterhouse, a 170-year-old company based in Portland, ME, that distributes products to some 2,000 retail stores across the Northeast and Mid-Atlantic regions. Both companies are now part of Ace’s wholesale division, known formally as Ace Wholesale Holdings.

Like Ace, Jensen and Emery-Waterhouse each conduct all of their transactions with stores through a private Internet network, or company intranet. The Ace network alone does about $4.2 billion in wholesale sales to its retail stores, the company says. With about $370 million in sales at Jensen and $160 million at Emery-Waterhouse, Ace’s corporate-wide wholesale sales now are over $4.7 billion.

Both Jensen and Emery-Waterhouse bring Ace new strength in particular product areas—housewares from the former, and power tools, lumber and other contractor supplies from the latter—which will increase Ace’s ability to provide each of the more than 8,000 independent retail stores with a more appropriate mix of products for their local markets, says John Surane, executive vice president of merchandising, marketing and sales for Ace Hardware Corp. “We can learn from them about selling housewares and other products,” he says.

But Surane adds that most important reason for acquiring the two distributors was the ability to greatly expand Ace’s reach as a wholesaler to independent retail stores. “We bought them more for Ace to venture into a true wholesale environment, where we can sell products now to any retailer in the market, not just Ace store owners.” Ace Hardware operates the cooperative network of more than 4,900 independently owned Ace-branded stores. With Jensen and Emery-Waterhouse, it is now a wholesaler to another 4,000 independently owned retail hardware stores that operate under a variety of names.

Ace stores purchase merchandise through the AceNet private Internet network, or intranet. Ace makes buying decisions based on data from those purchases as well as from point-of-sale systems in Ace stores. About 3,100 Ace stores operate on an Epicor Software POS system that provides such data; many other Ace stores operate on the RockSolid POS system from ECI Software Solutions or POS technology from Paladin Data Corp., each of which also provide product demand data that Ace uses to plan new orders from suppliers, Surane says.

Ace has a staff of about 40 to 50 who analyze data from the POS systems and AceNet to process orders for new supplies through electronic data interchange, or EDI, a system of electronically exchanging purchase orders, order confirmations and related documents with suppliers. Ace also works with supply chain management software from JDA Software Group Inc.

Jensen and Emery-Waterhouse operate with separate systems for managing supply and demand, Surane says.

The total value of the expanded company’s retail sales are about $10 million in the United States and $12 million worldwide, though only a tiny percentage of retail sales are online. Ace is No. 628 in the Internet Retailer Top 1000, which ranks companies on their annual web sales, with $13.33 million in 2013 web sales.

Ace is working to boost online sales is through its TheSupplyPlace.com, a B2B e-commerce site it launched last year to let building contractors place orders for materials and supplies for pickup at their local Ace store. So far, 600 Ace stores are participating with the B2B portal, Surane says.

Along with the acquisition of Jensen, Ace also announced last week that it had appointed Hoyoung Pak as president of Ace Wholesale Holdings, reporting to Surane. Pak comes to Ace from SymphonyIRI Group, a provider of market demand data for retail, health care and other industries, where he was executive vice president of global operations and data sciences.

Sign up for a free subscription to B2BecNews, a weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web Media LLC, which also publishes the monthly trade magazine Internet Retailer.

 

Back

 

Top Solution Providers

close