Venhuizen's rule: no standing still
Orlando, Fla. -- Ace Hardware CEO John Venhuizen took the stage in Orlando during the co-op’s Fall Convention and energetically spelled out reasons for Ace stores to be optimistic. He also declared: “We lack the luxury to stand still.”
Venhuizen went on to detail some of the major themes emanating from the Oak Brook, Ill.-based hardware co-op, including the idea of investing in its people and its infrastructure.
Venhuizen, who earlier this year succeeded Ray Griffith as Ace CEO, described Ace as a co-op on solid ground while investing in its future.
Wholesale revenues year to date are about $2.4 billion, up 3.2%. More impressive, he said, are the numbers at retail – 4.1% same store sales growth. With that momentum, he said the co-op has a chance to stem the nine-consecutive-year declines in transactions.
The co-op’s debt to equity ratio improved dramatically as the co-op reduced external debt by more than a hundred million in the past year. And record-high service levels appear to be rising – from fill rates of 97.1% a year ago to 97.3% today.
He also pointed to seven consecutive J.D. Power & Associations awards as signs of customer engagement.
“Are things perfect? Far from it,” Venhuizen said. "There is a long list of things about which we should be productively paranoid. But on balance, you’re company is solid.”
Surveying the retail industry shows causes of competitive concern amid consolidation. Venhuizen pointed to two developments on this front. One is the bankruptcy and subsequent purchase of Orchard Supply Hardware by Lowe’s that brings a “50 billion retailer that owns 72 hardware stores in California.” Another is the growth of Nashville-based Central Network Retail Group (CNRG), that “went from zero to 44 stores in a little more than two years” mostly through acquisition.
“Around us each day you can almost feel the changing landscape in our industry,” he said.
Against that backdrop, Venhuizen pointed to investments in retail and wholesale. More than $100 million in retail profits has been spent on the co-op’s 2020 Vision strategy.
Included in that are investments in the brand. Sales are being boosted by $3 million this year and another $7 million to $10 million next year in national advertising. Ace Rewards and Ace instant savings and Ace Supply Place programs are also being expanded.
In distribution centers, a project to bring pick to voice technology across the enterprise is in the works, and the co-op is rolling out to distribution centers software to help optimize productivity.
“You either change and grow, or you die,” Venhuizen said. “Growth is a requirement and growth requires capital.”
He added: “We are investing today's assets to secure tomorrow's future.”