Ace Hardware delivers proven cost savings to independent store owners through SAVINGSource
Innovative concept leverages scale of world’s largest hardware cooperative to reduce operating expenses and drive profits
As the world’s largest retailer-owned hardware cooperative, Ace Hardware has more than 92 years of experience leveraging its wholesale purchasing power to generate significant merchandise savings for its independently-owned retail stores. And now, through its SAVINGSource initiative, Ace is using the combined purchasing power of the Ace stores to reduce store operating expenses.
Through SAVINGSource, Ace stores have access to pre-negotiated pricing for products and services within 40 operational categories across five functional areas, including: technology and communication; supplies and replenishment; professional services; facilities services; and, capital projects and construction. Specific examples include insurance, 401(k) administration, computer hardware and software, phones, office products, waste and recycling and HVAC.
First launched in early 2015, Ace’s SAVINGSource has already delivered meaningful results by securing reduced costs for Ace stores, improved contract terms with vendors and alignment with providers to ensure Ace stores receive the maximum benefits offered through each vendor’s service level agreement. Ace estimates that its SAVINGSource initiative can impact $120 million in store operating spend, delivering significant cost savings per store.
“In today’s ever-changing retail environment, Ace’s small business owners face an incredible amount of challenges, including fierce competition and more complexities than ever before,” said Fadi S. Abu Manneh, Senior Manager of Retail Procurement for Ace Hardware Corporation. “We are proud that SAVINGSource saves store owners time and money on these fundamental areas of their business so that they can focus their energy and investments on driving their businesses and communities forward.”
To identify cost-saving opportunities, members of Ace’s corporate Retail Indirect Procurement department analyze data across the enterprise to identify Ace stores that collectively use the same service or provider. They then leverage that scale to negotiate improved rates and service terms on behalf of Ace stores.
Ace’s SAVINGSource generates purchasing power through three different pathways. First, in many instances, the existing corporate spend that Ace has with select service providers is leveraged to extend preferred pricing and contract terms to Ace store owners. In some cases, Ace conducts a sourcing event, working with a Retailer Input Team to contract with providers directly. In highly commoditized areas, Ace teams up with group purchasing organizations (GPOs), who combine the spending power of their multi-billion dollar members. One such example is Ace’s relationship with Corporate United, the nation’s largest GPO. Corporate United has chosen to work exclusively with Ace Hardware in the convenience hardware channel.
Staying true to the importance of “local,” Ace leverages a broker model in many categories to ensure service is still awarded to local service providers, but at a price point that would reflect Ace’s national volume.
“I am extremely impressed with the amazing work Ace has done to identify opportunities across the organization to further take advantage of our co-op’s scale, strength and reputation,” said Kirby Kuklenski, owner of five Ace Hardware stores throughout Denver and Colorado Springs. “Aligning with SAVINGSource has saved us a meaningful amount of money in a short period of time. The savings potential here truly is exponential and speaks to the power and strength of the Ace Hardware cooperative.”
Ace’s SAVINGSource team not only negotiates pricing, but also secures preferred contract terms for its stores on all service offerings. “As a store owner, I wear many hats, sometimes too many. It’s extremely reassuring that my co-op has a dedicated team of corporate professionals reviewing contract terms and negotiating on my behalf. I sleep a little easier knowing our hard-earned profits aren’t being spent on unnecessary expenses,” said Kuklenski.
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For more than 90 years, Ace Hardware has been known as the place with the helpful hardware folks in thousands of neighborhoods across America, providing customers with a more personal kind of helpful. In 2016, Ace ranked "Highest in Customer Satisfaction with Home Improvement Retail Stores, Ten Years in a Row," according to J.D. Power. With more than 4,900 hardware stores locally owned and operated across the globe, Ace is the largest retailer-owned hardware cooperative in the world. Headquartered in Oak Brook, Ill., Ace and its subsidiaries currently operate 17 distribution centers in the U.S. and also have distribution capabilities in Ningbo, China; Colon, Panama; and Dubai, United Arab Emirates. Its retailers' stores are located in all 50 states, the District of Columbia and approximately 60 countries. For more information on Ace, visit www.acehardware.com.