Ace took major strides to grow its market share in 2005 and further solidify its position as the leading retail hardware cooperative in the industry. During the past year, Ace was named the fourth largest franchise operation in the world, added a record number of new investors, attracted private equity groups and Ace retailers opened an unprecedented number of branch locations. All of these milestones, plus many other accomplishments, illustrate the growth momentum taking place throughout the country under the Ace banner.
Labeling itself as the "un-franchise of franchises", Ace made its debut on the 2005 Franchise Times rankings of the top franchise operations in the world, based on worldwide sales of the 200 leading franchise chains. With annual retail sales of $13 billion, Ace captured the fourth slot, ahead of other household names such as KFC, Burger King, Coldwell Banker, Blockbuster and Marriott. Ace is the only hardware/home improvement retailer on the list.
As Ace continues to make a name for itself in the franchise community, it is catching the attention of an unprecedented number of new investors who are attracted to Ace's Growth Strategy, strong brand name and the entrepreneurialism associated with owning an independent Ace Hardware business. In 2005, the number of new investors joining Ace increased 58 percent from the previous year.
And these entrepreneurs joining Ace are anything but ordinary. There's Michael Mott, who left his vice president post at the $800 million food retailer Acme Foods to open his first Ace store in Pennsburg, Pa. Even Ace's "Helpful Hardware Man" Lou Manfredini has gotten in on the action. After spending three years traveling the country doing media interviews and store appearances on behalf of Ace, in addition to being the national home improvement expert on "The Today Show", Lou believes so strongly in the Ace brand that he purchased an existing hardware store in Chicago and converted it to Ace in the fall of 2005. Since that time, the store's sales are up double digits over last year - and are the strongest sales trends in the 22-year history of the business.
While new retailers are joining Ace in droves, existing Ace retailers also continue to "branch out" and grow their business by adding multiple locations. In the past 12 months, Ace retailers added 87 branch stores, making 40 percent of Ace stores now owned by multi-store retailers and accounting for two-thirds of Ace's wholesale volume.
With an eye on expansion in an urban setting, the father-son team of Les and Jeremy Melnick opened their second Ace store in April several blocks from their first in the heart of Chicago to serve the very distinct needs of urbanites. Then there's Tom and Brenda Pitkin who added a third store to their chain of Ace stores in Virginia in the spring, as well as Guy Kamitaki, who in addition to owning stores in Hawaii has diversified and opened Ace stores in Las Vegas and now owns nine stores in the Seattle market previously owned by Ace Hardware. While these are just a few of the retailers who are branching out, they exemplify the wide spectrum of markets and formats that excel under the Ace banner.
What's causing all these retailers and new investors to grow with Ace? The independence and opportunities for entrepreneurship are fueling Ace's growth, coupled with no royalty or traditional franchise fees, a toolbox full of incentives to qualified individuals who open stores and additional financing options, such as Equity Match Financing. Owning an Ace store has never been more attainable, and with the Ace Way of Retailing, the complexity of operating an Ace store has been removed with proven best practices and a systemized approach to retail. The momentum is sure to continue. In 2006, Ace plans to open more than 160 new stores, exceeding 2.2 million square feet of new retail selling space.