Kroger may have an Ace (Hardware) up its sleeve

Discussion
Photo: Ace Hardware
Jan 03, 2018
George Anderson

Is Ace Hardware’s friendly service coming to a Kroger near you?

According to a report by TheStreet, the two companies are in the early stages of discussing adding Ace store-within-a-store concepts to Kroger locations. Kroger, which is the largest operator of supermarkets in the U.S., has about 2,800 stores across the country.

Kroger, which saw its stock take a hit last year when Amazon.com acquired Whole Foods Market, has been focused on building its ClickList online business, which includes in-store pickup as well as delivery using third-party vendors such as Instacart and Uber. The grocer managed a 1.1 increase in same-store sales during the third quarter as more of its shoppers placed their orders online.

Ace, TheStreet reports, sees store-within-a-store as a path to growth for members of the retail cooperative. The company has offered up to $150,000 for up to 5,000-square-feet of space within grocery and paint stores. Ace has shops set up inside 400 Benjamin Moore Express stores around the U.S.

The Ace brand is very well respected by consumers. A survey of 7,800 consumers last year by Market Force Information found Ace was the favorite place for them to shop for home improvement projects. Ace got the highest marks from consumers for easy to shop stores, customer service and associate knowledge, and fast checkouts.

Bringing Ace inside its stores would certainly not be Kroger’s first break from its traditional grocery roots. The retailer is rolling out its own “Our Brands” private label clothing this year. The initial rollout will be in 300 Fred Meyer and Kroger Marketplace supercenter locations. The company has not provided details on plans for future expansion should the initial launch go well.

DISCUSSION QUESTIONS: Do you think Ace stores inside of Kroger would work? How might it affect store traffic and demographic draw? Are there other store-within-a-store concepts that you think Kroger should pursue?

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31 Comments on "Kroger may have an Ace (Hardware) up its sleeve"


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Mark Ryski
BrainTrust

This is an interesting play for both Ace and Kroger that I think could be successful. While I don’t think you would see a significant traffic lift, an Ace presence in Kroger stores would likely have a measurable lift in average sales values.

Richard Layman
Guest
14 days 5 hours ago
Previous discussion of Kroger on this site has made me realize that they have tons of what we might call “stranded best practices,” lots of great individual best practices examples that aren’t harvested and improved at the corporate level and then spread out through the company’s divisions in a systematic way, with the exception of the Marketplace format/Fred Meyer. (E.g., compare their independent convenience stores to Wawa or Sheetz or the GetGo division of Giant Eagle.) However, increasingly supermarkets probably are going to need to focus on strengthening their “convenience” bona fides and adding other convenience goods and services to increase store visits, average purchase, etc. (E.g., why not have a dry cleaner drop off or a post office, just like some banks have branches, pharmacies, etc.) Kroger could develop a renewed Marketplace format with a focused hardware assortment –especially with the falloff in the success of Sears, and it probably makes sense. However, it would likely put them in competition with existing Ace stores if they were to begin to systematically roll out such… Read more »
Bob Phibbs
BrainTrust

The more you blur the lines of which store is which, the more you lose your point of differentiation. Synergy this isn’t.

Ian Percy
BrainTrust

I was reading other comments before making my own, Bob. Now that I’ve read yours, mine become redundant. Not that that will stop me. You hit it exactly.

Bob Phibbs
BrainTrust

You da best Ian! and Happy New Year!

Brandon Boston
Guest

I completely agree. Is there a value add—potentially? Will this move the needle? In my opinion, no. Kroger’s opportunity is to become a nimble home delivery distributor while creating an amazing test-and-try marketplace in-store. Surely they can find a more dynamic partnership that fits within their current product offering.

Al McClain
Staff

I like it. When you need one or two quick hardware items, knowing there is a mini-Ace at Kroger makes this a great option. It also increases the odds that you’ll make a fill-in trip at Kroger while you are there. It also presumably brings more men into the supermarket, and provides a great use for some of the center store space that is no longer needed.

Ken Lonyai
BrainTrust

I don’t see it. There’s an argument that while grocery shopping a consumer can get that little repair item or some paint, but the cost of running a store for those incidentals cannot be profitable. Plus, these are limited inventory stores. What happens when a customer needs the next size screw and it’s not in the mini shop?

I think this is a stretch for both parties. When a brand has to get so far from its core that it is grasping at straws, the fundamentals aren’t working. And when the fundamentals aren’t good, no amount of chewing gum and duct tape is going to hold them together, especially if Amazon is their concern. Compete where your strengths are, up the level of customer delight, and execute on CX flawlessly.

In the future when brand valuations tank, it will be these kinds of decisions that will be considered the beginning of the end.

Bob Amster
BrainTrust

It’s a stretch. I don’t see buying hardware in a grocery store nor groceries in a hardware store. Prove me wrong …

Phil Masiello
BrainTrust

There is a difference between a store-within-a-store that relates to the overall brand vs. putting everything in the pot and cluttering up the brand.

I don’t see this benefiting either brand. Ace cannot show their entire offering and Kroger is a grocer who is cluttering up their offering with something that does not relate to food.

Dr. Stephen Needel
BrainTrust

I think it will be all about the Ace assortment. Every grocery store has a hardware aisle, or half aisle, that is barely merchandised. Turn that space over to Ace and you get cachet from the Ace name and, potentially, a dramatic lift in prices. To Bob A., I agree with you but, would I buy light bulbs, some screws and a couple of other small items while grocery shopping? Probably yes. Am I going to buy my paint there? Probably not.

Carol Spieckerman
BrainTrust

The great brand migration marches on. First, Sears allows Ace to be yet another place where Craftsman products can be purchased, now Ace is cozying up to Kroger. This is a great hardware plug-and-play for Kroger (heaven forbid it attempt to grow a brand brain and develop its own comprehensive assortments). Ace gains an expansion and visibility play that would be hard to achieve otherwise. Makes all kinds of sense.

Neil Saunders
BrainTrust

This would be an interesting addition and would no doubt generate some incremental sales, especially on basic home improvement products.

However, I cannot see it being a revolutionary play. Most home improvement shoppers expect and want wide ranges, which this store-within-a-store is unlikely to deliver on. Even in a category like paint, the potential number of SKUs are enormous and only a fraction could be offered here.

Moreover, many home improvement visits are mission-driven which means people deliberately go to a big DIY store for specific items. Impulse buying is relatively low, which acts against this kind of concept.

In short, as great as Ace is, I can think of better things Kroger could do with its space!

Art Suriano
BrainTrust

We continue to see many store-within-a-store concepts being successful. I like this idea for Kroger and I think it would be very fruitful. Supermarkets typically offer a small selection of hardware items but having an Ace inside of Kroger could provide customers with excellent conveniences. Customers visit their supermarket about once a week so knowing that Ace is now inside the store, they will become accustomed to purchasing things they need as part of their weekly grocery shopping. I see no downside to this and see it as only a win for Kroger, Ace and, most importantly, the customer.

Ian Percy
BrainTrust

I’ve learned in my landscaping efforts that there are certain plants that simply cannot be dug up and successfully transplanted. No matter the best of intentions and care, it simply goes against nature.

Yesterday at my local Ace a guy showed me how to get past a 20-year irritation of how to fix an irrigation line. I won’t even try to explain the irritation of irrigation to non-Arizonians. He says to me, “Have you ever tried this?” handing me a totally new a way to connect two ends of a water line. I would look much younger if I’d met him 20 years ago! You will NOT get that help in Kroger’s!

All three segment of today’s RetailWire seem to be about desperate attempts at blending different entities. Desperation rarely leads to sustainable synergy.

Ace is not Ace if it’s not an Ace. Sure if you’re shopping in Kroger and you need a door hinge or Robertson screwdriver, an Ace-branded kiosk might help you find it. Big deal.

Tony Orlando
BrainTrust

What you just said got me thinking how many small rural towns are losing their local supermarkets and being replaced with an Aldi, a Walmart and a million Dollar General stores. That for me is sad, as the sense of community is being replaced by big business and it isn’t going to come back. Hardware stores were on every Main Street, along with supermarkets and a host of other local merchants. You could get great advice from these folks, and generally left feeling pretty good about seeing familiar faces of store owners who took pride in their work.

I’m not sure if I’m making a point, rather I see an opportunity for small supermarkets perhaps joining forces with Ace and maybe hiring a handyman who would spread the knowledge to the customers, making this a successful venture.

Who knows, it could work and bring folks back to the old days of local butchers and hardware gurus all under one roof. Happy New Year!

Richard Layman
Guest
14 days 1 hour ago

_Hardware Retailing_ magazine regularly features stories about grocery-hardware combinations. They tend to be in small and rural communities. Maybe you should subscribe! (I get it, because I used to be on the board of a building materials reuse nonprofit.)

Adrian Weidmann
BrainTrust

This store-within-a-store concept makes great sense. The challenge will be to make certain the “correct” select inventory is on hand to successfully cater to the local community. Given Kroger’s tremendous data insights, I would imagine that getting it right at each store location should be possible. Whether Ace translates that insight into accurate inventory remains to be seen.

Lee Peterson
BrainTrust

It feels like grasping at straws. As if your local Kroger isn’t junked up enough. One near us has furniture and art work (!?) next to a pizza shop next to the book section. Yikes. In my opinion it would behoove them to focus on fundamentals, like better food, especially produce.

Ian Percy
BrainTrust

Gosh I wish we had the Thumbs Up button! Consider this an IOU.

Shep Hyken
BrainTrust

One of the big Ace Hardware strategies is about convenience. That’s what helps differentiates them from their big-box store competitors. Putting hardware merchandise inside a grocery store is a move that is congruent with their helpful and convenient operation. If this goes through, it’s a good move for both Ace and Kroger.

Gene Detroyer
BrainTrust

I think the biggest mistake retailers have made over the last decade vis-a-vis online retailing is that they assumed that the reason people bought online was price or availability. The real reason is behavior. Ignoring behavior led them down a path that focused on different ways to bring people to the stores when, in fact, not going to a store was the object of the behavior.

This is another example of “How can we get more customers into the store?” “Gee, if they come to buy some screws they need, maybe they will buy a loaf of bread?” This is small thinking. This is wrong thinking. It avoids the real challenge retailers have.

Joy Chen
BrainTrust

The Ace stores would not be the most effective offering to increase traffic. Rather than offering more products, I would like to see Kroger improve on their services that provide convenience and customization to their consumers. Focusing on improving their current offerings with a local neighborhood positioning maybe a better option than Ace.

Bob Hilarides
Guest
14 days 5 hours ago

What makes a good hardware store a preferred destination is 1.) excellent service/counsel/problem solving and 2.) a long assortment of just the right part/tool to solve the problem.

I can’t imagine Kroger/Ace staffing a home repair expert in grocery stores, nor dedicating sufficient space to having just the right washer and nut to solve my problem. If they’re just upgrading their selection of flashlights, smoke detectors and multi-purpose tools, I’m not sure Ace adds that much to the equation.

Rich Kizer
Guest

Actually I’m kind of disappointed. In Chicago, I don’t have the opportunity to shop Kroger stores. I would love to experience their “Scan, Bag and Go” program. They strike me as very customer centric in all I read and hear. And yes, convenience is critical to shoppers. And yes, I think Ace is number one on minor home improvements and repairs, and I believe that the helpful, knowledgeable Ace associate is the key to that value proposition.

I think Kroger customers will see the Ace “pop-up” and have a revelation of their need for a screw and washer. Hopefully, they’ll buy the right product in the absence of of Ace’s “indispensable hardware person.” I commend Kroger in their product and services expansion. When you stop trying things … you’re going nowhere fast in today’s ever changing marketplace.

Richard Layman
Guest
14 days 1 hour ago

The Chicago supermarket chain Mariano’s is owned by Kroger. I can’t shop in a “Kroger” either living in DC, but I can and do shop in Harris-Teeter which is owned by them (I don’t think they’ve unified the loyalty card system of H-T with Kroger generally though).

Liz Crawford
BrainTrust

While there may be some store-within-a-store synergies (mostly rural), but I don’t see that as the driver behind the move. Instead, my hunch is that Kroger is diversifying its portfolio. The margins on grocery are razor thin, and when Amazon bought Whole Foods, Kroger may see its profitability getting thinner still. I suspect this is an investment strategy rather than a retail strategy.

Craig Sundstrom
Guest

The answers are all over the place on this one, which I think reflects my ambivalence as well: “could work … but only if they do it right.” And by “do it right” we really mean will it be a viable hardware store or just an odd lot assortment? Having what’s needed in stock is important in hardware — more important than most stores I think, given the urgency that engaging in repair/remodeling work entails — so the issue is whether or not 5K gsf is enough space. I guess we’ll find out.

Georganne Bender
Guest

You can buy groceries and hardware at Target, Walmart, Meijer and a host of other big box retailers, so why not Kroger?

Ace positions itself as a convenience hardware store and you can’t get more convenient than picking up what you need while grocery shopping. The bonus for Kroger is the Ace brand and the Helpful Hardware Folks. In 2017, J.D. Power ranked Ace the “Highest in Customer Satisfaction among Home Improvement Retail Stores” for the eleventh year in a row. Another bonus is the locally-owned, independent retailer aspect that Ace will bring to the table. I’m anxious to see how this goes.

James Nichols
Guest

This sort of innovation in grocery is exciting because it speaks to a streak of creativity that can help the category compete with the mass merchandiser leaders. Experimentation like this is critical for the channel to anticipate new ways that people will shop.

Dan Stiel
Guest
9 days 20 hours ago

An Ace Store inside my neighborhood Kroger would have saved me a trip to Walmart this morning.

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