Ace Hardware is linked to Lowe’s pending purchase of Canadian home improvement company RONA, and the U.S. co-op plans to partner with Lowe’s as the big box expands in Canada.
When Lowe’s closes a $2.3 billion deal to buy RONA this year, Lowe’s will acquire a licensing agreement that Ace Canada and RONA entered into in 2014. RONA is a retailer and distributor with about 500 corporate and independent affiliate stores, and currently owns the licensing rights to use the Ace Canada brand.
Jay Heubner, president of Ace International, took questions from Hardware Retailing about what Ace Canada’s relationship with Lowe’s will look like going forward.
Hardware Retailing: Why has Ace decided to keep the Ace Canada licensing agreement, even though one of your biggest competitors in the home improvement industry is acquiring it?
Jay Heubner: Beyond the obvious contractual commitments we both have, the U.S. market is a case that clearly demonstrates there is a place in home improvement for both the big box retailer and the high-touch, high-service, locally owned convenience retailer.
The passion of the Ace organization around the world is the support of the local entrepreneur—we believe they are the heartbeat of global economies. And just like our agreement with RONA, Lowe’s will now be the big-box retailer—and Ace is a great place for the local, independent entrepreneur.
HR: How will the licensing agreement work, once the Lowe’s-RONA deal goes through?
JH: Exactly the same way it works today, only with the renewed passion and investment from an incredibly healthy, well capitalized company. The Ace Canada organization, under RONA, has been operating since July of 2014 under the guidance of Bill Morrison, president of Ace Canada.
We are very proud of the stores Bill and the Ace Canada team are signing and converting to Ace. The objective of Ace in Canada is threefold for the independent hardline retailers: 1. Higher top line; 2. Fatter bottom line; and 3. To improve the return on the hard work and investment they have in their stores.
HR: Do you still see the licensing agreement as an important part of Ace’s growth?
JH: Absolutely, yes. We fully recognize that independent retailers in Canada and all over the globe have choices. They can willingly choose which supplier, which brand and which company they believe to be the best partner for their future.
Our chief aim is to provide independent hardware retailers with the best products, services and operating methods so that Ace is their choice to fuel growth, build wealth and sustain generational opportunities for decades to come.
HR: When will the agreement expire?
JH: Current term runs through 2024.
HR: How many stores use the Ace Canada branding?
JH: We have been very pleased with the level and degree of interest from independent Canadian retailers. As of mid-March 2016, the Ace Canada team has converted 55 stores in just over a year and a half in a very competitive wholesaling environment. Our goal is to have more than 100 stores total by the end of the year and continue to grow the store count in the future.
HR: How does maintaining the licensing agreement, once Lowe’s acquires it, align with Ace’s overall goals as a company?
JH: Ace’s overall goals remain consistent. We intend to provide Ace’s independent retailers with a world-class brand to grow their business, along with operating methods and training to help them compete in an ever-evolving, complex retail marketplace.
Growth within Ace’s subsidiaries, like Ace International Holdings, adds fuel to the entire enterprise so that Ace can further the power of the Ace brand domestically and across the globe.