Ace offers store owners a helping hand: The co-op reaches out to retailers opening a store or expanding to new locations

Andy Carlson spent 10 years in manufacturing and another 10 in marketing for a software company, and he was ready for a change. “My wife and I decided we wanted to do something on our own, something the kids could grow up in,” he said.

The Carlsons—residents of Denver—looked at several different franchise opportunities. Finally, in 2004, they logged onto Ace’s Web site, clicked on the option that said, “Own an Ace Store,” and started filling out forms.

Carlson is one of the new faces Oak Brook, Ill.-based Ace Hardware is bringing into the family through a program called “Branching Out.” Ace is offering grants of up to $195,000 to individuals opening their first store and $215,000 to current store owners opening additional locations.

“We were surprised when we got a call from an Ace rep, and then we went to an Ace convention and really liked the atmosphere there,” he said. “It seemed like a solid business.”

And there was the added incentive of Ace’s “Branching Out” credit, which for Carlson was about $175,000, as well as “equity match financing,” which is a loan against Ace’s patronage dividend. “Every year we get a rebate: half is cash, half is Ace stock. In lieu of the stock, we are repaying the loan,” Carlson said.

By 2005, Carlson had zeroed in on an area about a mile south of the heart of downtown Denver where, he said, there wasn’t a single hardware store. Ace didn’t have an urban format at the time (they have since developed one), so Carlson worked with the regional development staff to come up with a store that would appeal to condo dwellers in the area.

It took a year to put things together, but Ace Hardware–Alameda Station finally opened in July 2006, part of Ace’s citywide expansion effort. Carlson was lucky enough to find a location in a fairly traditional shopping center, which he said is rare in this part of Denver.

The store, with 13,000 square feet of retail selling space, is considered a “super format” Ace store, Carlson said. In addition to core categories, he offers a large lawn and garden selection, patio furniture, an outdoor garden center with house plants for condo balconies, and barbecues and smokers.

“We’re also right off the Light Rail Station, and we do a lot of deliveries to condos in the area—a barbecue for a deck, that sort of thing.”

Carlson’s goal is to eventually have two, three or even four stores in Denver and/or the surrounding suburbs. “We want to do one as soon as possible and continue to look in urban areas,” he said. “There’s the rent equation to consider: You can’t go and buy a prime corner because you don’t make as much per square foot as, say, a Walgreens. We’re looking for an 8,000- to 12,000-square-foot space in the urban corridor. Maybe by next spring.”

“Branching Out” also applies to Ace veterans. Pasquale Musto and his wife Patricia had 25 years experience running Trish Home Center in Little Egg Harbor, N.J., when they began thinking about retiring in 2003. But their daughters Suzanne Musto-Carrara and Samantha Colandrea—long gone from the nest and then living in Connecticut and California, respectively—intervened to keep the family business going.

“Suzanne was seven months old when they opened the store, so they put a nursery upstairs,” said Colandrea, 28, who is two years younger than her sister. “As soon as we were old enough, they gave us feather dusters to clean the bottom shelves, and eventually we were working the cash registers. It was a family business, and we didn’t want to see it go.”

But the family also realized that being successful in today’s market meant they had to grow. So last year—with the help of Ace’s “Branching Out” money—they opened a new 15,500-square-foot store in Clementon, N.J. They are also in the process of expanding the Little Egg Harbor store from 9,500 to 18,000 square feet, including the executive offices. The long-term goal is to have at least five stores in the fold within a five-year period.

“We really just came back to work in one store, and then Ace started talking about ‘Branching Out,’” Colandrea said. “We had a family meeting and discussed where we wanted to be in five years, and it led us to make the decision to do the expansion.”

“It’s a management thing,” Pasquale Musto added. “It allows you to build an infrastructure and have someone coordinate training, buying, advertising—instead of being the guy on the floor selling as well as managing the business.”

The Musto family stores are somewhat different in makeup and product mix. The Little Egg Harbor store is near the ocean and caters primarily to Jersey shore summer homeowners, while the Clementon store–about 50 miles inland–features a traditional DIY product offering.

About 80 percent to 85 percent of the products are the same, but the Little Egg Harbor store has more boating-related items and petite outdoor furniture for smaller yards, while Clementon has more leisure and backyard items because people live there year-round.

“You start with the premise of having basic hardware, but then you appeal to the needs of the local population,” Musto said.

And not only have Musto-Carrara and Colandrea taken on major roles in the business, but Musto-Carrara recently gave birth to a boy named Nicholas, so there’s a third generation waiting in the wings. “He’ll grow up around the business, just like Suzanne and I did,” Colandrea said.

As for putting off dad’s retirement, she added, “He’s happy; he didn’t want to retire, anyway.”