It is said that there is strength in numbers – in 1924, four Chicago businessmen put their faith and efforts into proving that adage. Four men – each of whom had established retail hardware stores – believed their business would benefit by joining forces. Their plan was simple – combine each individual store’s buying power as leverage to negotiate lower cost of goods and favorable advertising rates.
The strategy worked so well that within four years the four men incorporated under a single name. They formed a small sales force to recruit additional retail partners and by the end of that year, 1928, they numbered fifteen. The very next year they opened their first warehouse and transformed themselves into wholesalers – eliminating that layer of middlemen and further increasing their margins.
The strength in numbers adage had proven successful. However, since each store operated as an independent, inconsistencies existed in store level operations such as merchandising, customer service, ordering and bookkeeping. To address this, the newly incorporated entity established a ‘creed’ in 1930, stressing a commitment to the company and its principles. Growth continued throughout the next two decades in spite of the Great Depression and World War II.
The end of the war spawned the ‘do-it-yourself’ (DIY) revolution – a true boon for the hardware industry. in 1949, the company was supplying 133 stores in seven states with wholesale sales reaching $7.25 million. By the end of the next decade, the number of stores had more than doubled and sales had grown to $24.5 million. It was in that decade that the company developed a ‘Perpetuation Fund’ – created to ensure the corporate structure would survive after the last of the original four owners passed away.
The company became a retailer-owned cooperative in the ’70’s when the last of the original owners sold the company to its members. By the end of that decade there were 4,000 members ordering via computer, the company was truly national and had even opened its first international store – in Guam – ten years earlier. The company was wonderfully successful – by the mid 1980’s sales growth was astronomical and the advertising budget topped $10 million – the future was bright.
The adage of strength in numbers was proving its merit. In the 1990’s competition was proving the voracity of another adage – size matters – enter the era of the big box store, in particular Home Depot and Lowe’s. Stores of this type were frequently called category killers – using their sheer size to be all things to all people and to sell at exceptionally low prices. Suddenly the continued success of the cooperative of 5,000 small neighborhood stores seemed to be in jeopardy.
Instead, the company re-focused on its strengths – leveraging its buying power, their strong neighborhood presence and creating strategic. forward-thinking plans. One such plan was called ‘Encore Growth’ aimed at increasing their dealers’ gross margins. Another, called Vision 21, focused on making the company the dominant player in the ‘non-big box’ market. Once again, the company achieved incredible results. In 2003, sales broke the $3 billion mark – 2006 marked the fourth consecutive year net profit surpassed $100 million. As of this year, the company has finished first in J.D. Power’s customer satisfaction ratings for the eighth consecutive year. There are over 4,000 stores in the U.S. and nearly another 1,000 international outlets.
The continuous success over the past ninety years, the sales, the profits and the awards aren’t what make the company a fearless brand. Rather, the success is the result of Ace Hardware being built as a fearless brand, beginning day one.
Fearless Brands remain true to their purpose but react and adapt to changing circumstances.
Ace Hardware was the vision of four local Chicago businessmen. That vision has resulted in a company comprised of thousands of successful neighborhood businesses. Their success is because they have understood their value proposition and have remained relevant to their market. For over ninety years Ace has been forward thinking – planning and incorporating changes as needed.
Early on they transitioned to buying as a wholesaler vs from wholesalers to further capitalize on the strength of their numbers. Recently they changed their well-known jingle to reference the ‘helpful hardware folks’ (vs hardware man) primarily due to the significant percentage of females now working in their stores. In between, Ace continually looked to the future and created strategies to further grow their success.
There is much to learn from Ace Hardware when it comes to building a fearless brand – concepts which will apply to your business as well as your personal brand.
There is strength in numbers – Believing in this simple adage has led to Ace Hardware’s astronomical success. Strength in numbers also applies to your company’s workforce, your team or your support group. There is great power in effectively combining the individual talents of a group – yet another adage is ‘the sum of the total is greater than its parts’.
Consistency is critical – One of the challenges in leveraging strength of numbers is the risk of having a splintered brand message. Ace has nearly 5,000 stores – each of them effectively independent retailers. Building a fearless brand is virtually impossible if each store were to merchandise in their own way, carry a significantly different product mix and/or deliver different marketing messages. It is imperative to balance the uniqueness of the individual with the singleness of purpose of the group.
Continuous strategic planning – Building a brand – branding – is a process. There is the need to remain committed to your basic purpose – to not deviate for the sake of change. However, it is critical to be aware of changing conditions and factors, determine if they will possibly impact to your brand and adapt your strategy accordingly.
When building a fearless brand it’s important to realize that basic principles remain the same across all brands – companies, products, individuals, characters. The factors that have led to the success of Ace Hardware will definitely relate to the brand you’re building. The key is to recognize the factors and how to apply them effectively.
Your brand is your most important asset. Treat it as such – invest the time, money and expertise needed to build a fearless brand. Make your own brand an ‘ace’.