When brothers Kirby and Nick Kuklenski opened an Ace Hardware store a month ago in Colorado Springs’ Uintah Gardens shopping center, they counted on the first few weeks being slow.
They chose what is known as a “soft opening,” with little fanfare, so the new staff could get on-the-job training without being swamped with customers.
But the brothers Kuklenski, 26 and 23, didn’t count on Colorado’s Ace Hardware boom.
“The doors blew open and it’s been that way ever since. It’s awesome,” Kirby Kuklenski said. “None of our customers treated it like a soft opening.”
Ace, the private Illinois-based hardware store cooperative, has targeted Colorado as a “focus area” for expanding its national presence. In the metro area, Ace has opened five stores in the past three years and expects four more to open by early 2008. Ace officials say more are in the planning stages throughout the state.
Now might not seem like the best time to open new home-improvement stores; the industry in general has been marred by a sluggish housing market.
Home Depot Inc. cut its earnings forecast last week, saying it would earn 15 to 18 percent less per share than last year. The home improvement retailer also said sales would drop 1 percent to 2 percent for the year, after subtracting the sales from its recently sold contractor-supplies business.
Lowe’s, the second-largest home improvement retailer after Home Depot, has posted drops in same-store sales in the most recent quarters.
But Ace’s national same-store sales for 2006 were up 2.3 percent, and the company is pushing growth, said Tom Knox, the company’s business development manager.
Ace is confident in its business model – a national cooperative that shares end-of-year profits with its retail stores and doesn’t charge franchise fees for new owners. Ace also is playing up its image as the “helpful hardware place,” a dig at big-box stores that are known for lower prices and lower attention to personal customer service.
A J.D. Power and Associates survey of more than 16,000 shoppers in May bolstered Ace’s claims. Ace ranked No. 1 in customer satisfaction out of 10 home-improvement stores. Menards and Lowe’s rounded out the top three, with Home Depot tied for sixth with Target.
“We like to say that Ace is a minute store and Home Depot is an hour store,” Knox said.
Customers at an Ace on South Broadway knew what the pithy phrase meant.
Ralph Thompson, 79, said he prefers independent hardware stores. But when he needs a bigger inventory selection, he chooses Ace over the Home Depot literally across the tracks from the Alameda Station-area store.
“(Home Depot) is just so big,” Thompson said. “It takes 15 minutes to get in and another 15 minutes to get out.”
Britt Beemer , chairman of strategic marketing company America’s Research Group, said another advantage is that Ace is more female-friendly than the big boxes because of its design and attention to service.
Female shoppers such as Jill Flaherty of Denver agreed, noting that Ace’s more prominent placement of houseware and gardening items was appealing.
Ace began a strong push toward growth in 2005, Knox said. The co-op formed a field team to study U.S. regions for available locations, interest from potential owners and sales in existing stores in the area.
Denver was added to the list of focus areas in 2006. Since then, an estimated 67jobs have been created by the expansion.
To help growth, Ace has experimented with incentive programs to lure in new owners.
The average Ace store costs between $850,000 to $1 million to open, Knox said. Loyal Ace vendors, such as Danco and Hillman, contribute credits – essentially, free inventory – to help a store get on its feet.
Andy Carlson, a first-time Ace owner who opened the South Broadway location in July 2006, said about 80 percent of Ace vendors participated when he opened his store. The credits added up to $175,000, or about a fifth of the opening cost.
Carlson attended both Ace and True Value conventions aimed at attracting owners. He chose Ace because he said it offered him the greatest likelihood of success.
True Value, another hardware store co-op, hasn’t done as well as Ace historically. Many Aces in Colorado were previously True Values, but were later converted. There are 101 Aces in Colorado, with 31 in the seven-county metro area, company officials said.
Kuklenski said he plans to break ground on another Ace by September in Federal Heights. His Colorado Springs store has its grand opening planned for this weekend.
Staff writer Zach Fox contributed to this report.
Staff writer A.J. Miranda can be reached at 303-954-1381 or amiranda@denverpost.com.
—————————————-
$12
BILLION
Ace Hardware’s
annual sales
2.34%
Increase in Ace’s same-store sales in 2006
1.85%
Decrease in same-store sales in 2006 for the
combined “big-box”
retail industry
0
Home-improvement store warehouses
in China before Ace put one there
Source: Ace Hardware
