How Ace Hardware, America’s neighborhood hardware store for 100 years, is beating its big-box rivals

Ace Hardware’s Neighborhood Appeal

The 100-year-old Oak Brook, Illinois-based hardware chain, with over 5,000 locations in America's smaller neighborhoods, is drawing in shoppers even as its big-box rivals Home Depot and Lowe’s struggle. Ace Hardware's frequent customer visits indicate its popularity, with monthly traffic increasing this year compared to declining traffic at Home Depot and Lowe’s, according to Placer.ai’s location data from mobile devices.

Traffic and Sales Performance

Recent quarterly sales reports highlight a challenging period for the industry giants. Home Depot's US same-store sales fell 3.2% in the latest quarter, as consumers pulled back on renovations and discretionary purchases, leading to a 5% drop in its stock price for 2024. Lowe's faced similar issues, with a 4.1% decline in same-store sales and a 7% dip in its stock price over the past month. Retail analyst Neil Saunders noted that Home Depot's strong market position faces increased competition from smaller players in specific categories.

Ace Hardware’s Strategic Setup

Ace Hardware’s smaller stores, averaging 7,000 to 10,000 square feet and located within communities, offer a diverse range of products beyond typical hardware. Each store carries about 25,000 to 30,000 unique items, catering to today’s hurried consumers looking for quick, local solutions. This localized and intimate shopping experience, as noted by Michael Brown of Kearney’s consumer products and retail practice, meets the small project needs of customers efficiently.

Meeting Local Needs and Preferences

Ace Hardware’s approach contrasts with Home Depot and Lowe’s, which target contractors and large home renovation projects. As these larger projects have slowed, Ace benefits from the shift towards smaller fix-it tasks. The local flavor and customized service at Ace stores resonate well with consumers, creating a unique niche in the market. For example, Breed & Co Ace Hardware in Austin, Texas, offers a boutique atmosphere with unexpected items like wedding registries and high-end housewares, catering to the preferences of its upper-income clientele.

Diversified Product Offerings

Ace Hardware’s hybrid model of hardware, home goods, and unique products sets it apart from competitors. Items like Le Creuset cookware, Nest candles, baby products, and truffle chocolates attract a diverse customer base. This model fills the void left by the disappearance of stores like Bed Bath & Beyond and Linens 'n Things. Michael Brown highlights that consumers seek new places to shop for smaller home needs, and Ace Hardware’s diversified offerings and local relevance fulfill this demand.

Conclusion

Ace Hardware’s success lies in its ability to adapt to changing consumer needs with a local, personalized shopping experience and a diverse product range. As big-box rivals face challenges, Ace’s strategic positioning and unique offerings ensure its continued appeal and growth in the competitive hardware market.