MID-MISSOURI MARKET PRODUCES HARDWARE
Everyday projects require everyday tools. For small town residents, if you want to build something you might really have to go the distance. One hardware franchise is trying to help small town residents get hammers and nails with their groceries.
By Emil Lippe, Heng Li, Humera Lodhi, Jiayi Wang
The grocery business is hard – low profit margins and lots of competition. So Mark Thomas, the president of a small chain of rural Missouri supermarkets, looks for any advantage he can get.
Then he went to a food show – and found a booth for Ace Hardware. Two years later, the C&R Supermarket in Fayette is clearing space for an Ace Hardware mini-store.
“The exciting part is we're doing something different and we're kind of reinventing our business,” Thomas said. “It's tough out there, you know, it is, so if we can bring something in that adds profitability and increases traffic in our business, we get excited about that.”
Ace Hardware is a large corporation with stores across America and in other countries. However, gaining a foothold in smaller communities has been more difficult for them. These towns can prove to be quite profitable to Ace Hardware since many people in these areas tend to do projects requiring hardware equipment.
“I don't think that it is literally the size of the town that is a factor,” said Murali Mantrala, a marketing professor at the University of Missouri. “But it is a question of how central are the spots in the trading area of that region and do they attract enough consumer who come by, get familiar with Ace and become loyal to Ace.”
C&R will be the first company within the mid-Missouri area to open an Ace Hardware Express. However, this idea is not novel. Thomas has friends in the grocery industry who were already partnered with Ace Hardware when he was first approached with this idea.
“They actually have done this project, put the hardware store inside their grocery store,” Thomas said. “They kinda helped convince me it’s the right thing to do.”
Ace Hardware has been partnering with businesses in small towns for almost five years. Now, they have thousands of mini-stores across the United States. These express stores increase profits for local businesses like C&R Supermarkets. But they also benefit Ace Hardware. It takes time and money for national franchises to establish their brand in rural towns. Stores-within-stores allow big companies to develop a presence in multiple communities without much investment.
“There‘s a win-win for both,” Mantrala said. “I think that’s probably why they’re doing it, which is, to extend their penetration into rural area but without necessarily opening up new stores themselves.”
When Ace Hardware first introduced this concept, it offered incentives of up to $150,000 for businesses to open express stores. The stores proved beneficial for the company, and Ace Hardware continues to provide encouragement for businesses to open up express stores.
“Our goal is both to drive incremental store growth for Ace and to mirror the ‘best in class’ offerings available at our larger stores,” said Mike Berschauer, director of retail development at Ace Hardware.
Ace Hardware originally opened 400 express stores in seven large cities in America. Ace’s success encouraged them to open more of these stores.
“The consistent high performance of these stores proved we had an incredible opportunity to create a specialized, smaller-format Ace retail model,” Berschauer said.
C&R will open its first Ace Express store in Fayette, Missouri sometime in March. There are 12 C&R Supermarkets across mid-Missouri. Two cities already have stand-alone Ace Hardware stores, so express stores will not be opened there.
Thomas has already begun to think about expanding the express stores to other locations. But right now, he is focused on learning more about hardware. Opening up a hardware store in C&R Supermarkets will be a departure from their normal business.
“It'll probably take us at least a year to figure out the business because we’re learning a whole new business. Nuts and bolts and hardware sells at a different rate than maybe cans of vegetables and fresh meat and fresh produce,” Thomas said. “So there's a lot for us to learn about the turns and managing inventory and that sort of thing.”
In the meantime, Thomas is looking forward to what he thinks will be a successful new venture.
“I sound like a capitalist but when you can make more money you get excited about it,” Thomas said. “It gives you the opportunity to do something and take it to another community and learn and grow from it.”