Ace Hardware's New Venture Could Point the Way to How You Should Plot Your Future
Ace Hardware has decided it wants to be known for more than just being helpful at the store. The company announced Sept. 6 that it has launched a subsidiary to provide people to do repair and remodeling jobs for Ace customers.
The acquisition accelerates a Do It For Me trend for which dealers are both ahead of and behind the curve--sometimes simultaneously. But the direction is clear: For most LBM operators, the days of making money solely by selling stuff are growing short.
Ace is capitalizing on the movement by acquiring Handyman Matters, a Denver-based franchisor of home repair, maintenance and improvement services. Handyman Matters has 57 franchisees who together have 250 handymen and women. This company will be renamed as Ace Handyman Services. Ace plans to recruit aggressively and create many more franchises..
Ace's plan resembles many dealers' longtime practice of recommending pros when a customer requests help. Sometimes the relationship is much more formal; for instance, the Winnetka, Ill.-based handyman company Get Dwell has a deal with local hardware stores in which it will buy all its materials from the hardware stores in exchange for referrals.
Some dealers already surpass Ace in that they have people on staff who provide installation services. I'm hearing evidence that an ever-growing number of dealers across the country may start offering such services. There's also no shortage of dealers who say they have become the de facto project manager on customers' jobsites, and all those dealer-owned component manufacturing and millwork facilities nationwide make it easy to forget that construction companies no longer feel as need to build doors, windows, and trusses onsite.
All yet for all those activities by some LBM dealers, a huge number of operations--particularly the small, independent ones--don't offer any services (aside from delivery) that go beyond their companies' front doors. I fear for many of these dealers, because they aren't keeping up with the times. E-commerce deliveries to customers' homes makes people less likely to go to the local hardware or building supply. (It's one reason why so many buying groups are pushing paint sales these days. Paint remains a product that most customers want to buy in a store.) Most homeowners are more interested in getting a chore done than they are for walking the aisles and delving into the nuances between products. Thus, if your local Ace store can provide someone to do the work, lots of people will regard that as a better deal than shopping for stuff at your place and then having to find an installer.
Then there are the margins. CEOs at the big dealers tell stock analysts they're emphasizing custom-created products like trusses and millwork because the profits are at least 10 points higher. Gross margins on installed sales can be even fatter. And the prices of those services are less volatile than for commodities.
Ace's plan is yet another example of changing times that makes asking "Why Do I Exist?" a never-ending but necessary question for dealers to regularly ask themselves. The DIY Generation is dying, and Do It For Me attitudes are on the rise. It's time to adapt.