Ace Hardware's 2006 Annual Report - Home Page
Investing in Retail Initiatives

Ace is rewarding its retailers with $16.9 million in achievement awards to further drive retail enhancements.

In 2005, Ace offered a variety of funding options to retailers interested in enhancing their business, boosting sales and growing the Ace brand. Investment in retail initiatives is a win-win for both retailers and the corporation. Retailers were able to implement a host of sales-building offerings, from retrofitting their stores to upgrading their in-store computer systems to enhancing key departments within the store. These improvements have a direct impact on retail by boosting store traffic and, ultimately, sales.

Now in its second year, the Growth Strategy is the cornerstone of Ace's retail-focused initiatives. The long-term strategy is designed to help retailers focus on key elements of their business in order to present a more consistent image to consumers nationwide. The result is not only more efficient operations, but also more profitable stores. Those retailers who achieved each of the Growth Strategy initiatives in 2005 saw their retail sales increase on average by nearly 4.0 percent.

More than 2,200 retailers reached full Vision 21 achievement level in 2005, enabling them to reap the benefits of the 1 percent Achievement Award. The 2005 award amount totaled $16.9 million, clear indication of Ace's commitment to helping retailers grow their businesses and drive sales. With these dollars, retailers will be able to continue to improve their stores, investing in retail-centered enhancements such as technology, décor, lighting, one-to-one marketing and much more.

A primary means for retailers to improve their businesses is to upgrade their in-store computer systems with EagleVision or Eagle™ for Windows. Nearly 550 retailers added or upgraded their computer systems to the Eagle platform in 2005. By utilizing funds from the Achievement Award, more retailers were able to reap the benefits of this advanced technology solution.

Another key in-store enhancement many retailers made in 2005 was upgrading their Ace Paint color system. The Paint Division introduced the Colors for Your Life™ color system mid-year, featuring a new, consumer-friendly color palette. For those retailers who currently had the wood and stainless steel color display unit in their stores, the new system retrofit was entirely subsidized by the Ace Paint Division.

In combination with the new color palette, the Paint Division also introduced its Paint Pod™ Center. These sample-sized containers allow consumers to test colors on their walls prior to making a final paint selection. Retailers who committed to the Paint Pod Center at the fall convention were able to take advantage of a reduced cost as well as a 12-month payment plan.

Retailers interested in growing their business can choose from several financing programs available to them. The "Right Size, Right Place" program, initially launched in 2004, continued to help retailers upgrade their position in the marketplace, either through expanding their existing location to better meet the needs of their customers or by relocating to a more advantageous location. Nearly 40 qualified retailers have tapped into the funding program, which provides them with up to a $50,000 credit.

Another option for those retailers interested in financing a new store was the Equity Match Financing (EMF) program, which was unveiled in 2005. The financing program is designed to fuel new store growth while improving cash flow at new stores. Through the program, qualified retailers receive financing that matches their invested capital up to $300,000. The Equity Match Financing lets retailers obtain the necessary financing at a very attractive interest rate without impacting cash flow. On a yearly basis, the loan is repaid with the non-cash portion of the patronage rebate, with any remaining balance due at the end of 10 years.

In 2005, nearly 50 retailers took advantage of EMF, allowing them to reduce the amount of up-front cash needed to open a new store and utilize their dividend for other retail investments. An additional 100 projects are in process for 2006. The company has approved $50 million for total EMF funding.

Next: Growing the Ace Brand »

Investing in Retail Initiatives