Ace Hardware: The Perfect Positioning Case StudyJanuary 21, 2019
Does bigger mean better?
Big stores certainly have several advantages over smaller, independent retailers. Those include brand name recognition from a larger audience and more available funding for advertising and digital offerings like click and collect ordering.
That makes competing with big names like Amazon and chain stores challenging; however, with the right positioning, it’s possible to compete.
Positioning is how consumers “view competitive brands or types of products.” In other words, it’s how consumers think of a brand (or product) and how that brand/product is distinguished from its competitors.
Ace Hardware recently released a new advertising campaign that altered its positioning in a clever way. Before their new commercial launched, Ace was another home improvement retailer emphasizing helpful employees ready to help consumers tackle their DIY projects.
In this article, we will provide a brief overview of the home improvement market. We will then briefly summarize the biggest three players in this industry and overview their marketing. Finally, we will explore how Ace’s new commercial helps reposition it from where it was to how it better differentiates itself in the marketplace.
The home improvement market in the U.S. is strong. It’s poised for growth, but the two biggest players in the industry generate 80% of the industry’s total revenue.
Ace Hardware is competing with over 4,700 other home improvement retailers for the remaining 20% of the industry’s revenue.
Home Improvement stores are a $182.5 billion industry in the U.S. This industry experienced 2.2% growth from 2013 to 2018 and has an expected 1.0% annual growth from 2018 to 2023.
About 20% of home improvement store customers are DIY consumers and the remaining 80% are professionals. What products are they buying in this $182.5 billion industry?
- 33% Lumber/Building Materials
- 29% Household Appliances/Kitchen Goods/Housewares
- 23% Hardware/Tools/Plumbing/Electrical Supplies
- 15% Lawn/Garden/Farm Equipment
There are an estimated 4,705 home improvement stores in the U.S. The market leaders are The Home Depot, with about 45% of the market; Lowes, with about 36% of the market; and Menards, with about 6% of the market.
Consumers ranked Ace Hardware as their favorite hardware store in a 2018 consumer survey, beating its large competitors including The Home Depot and Lowe’s. Consumers ranked Ace first for price, store cleanliness, checkout speed, store layout and product availability.
The Home Depot
The Home Depot is focusing on finding ways to accommodate customers who want to communicate with them in multiple ways during one transaction. Their “buy online, pick up in-store” service is a major sales driver. Offering in-store pickup provides face-time with The Home Depot’s orange apron-clad employees, which is an opportunity for store staffers to help customers with their home improvement projects, Digiday pointed out in its “How Home Depot is Driving People Back Into Its Stores” article.
The Home Depot’s ads use the slogan, “More saving. More doing.” One of their 2018 ads shows the versatility and functionality of their storage solutions. The ad showcases individuals using their products as well as a helpful associate working with a customer one-on-one in the store.
The Home Depot is positioning itself as a helpful resource with low prices.
Lowes’ brand purpose is “helping people love where they live,” according to Lowes Chief Marketing Officer Jocelyn Wong. She also said that assisting customers is the company’s “true north star.”
Targeting individual customers is at the front and center in Lowes’ marketing efforts. They leverage their channels to learn what their customers’ interests are, then target their messaging to meet those needs.
Lowes’ marketing targets “customers whose relationships with their homes are as different as the places they live.” Lowes’ commercials in 2018 featured their blue-vested associates providing one-on-one customer assistance while customers deal with “the moment.” Their spring paint ad featured “the moment you realize it’s better to plan for spring than to pretend it’s spring.” Their painting project ad shows an associate empowering customers to tackle their projects.
Lowes’ ads use the slogan, “All projects have a starting point. Start with Lowe’s.” Like The Home Depot, Lowes is positioning itself as a helpful resource.
Menards is taking a different approach. It is expanding its store inventories. The goal is to carry more products in their stores so customers don’t have to wait for the products to make it from a Lowes distribution center.
It has a reputation for being the place to go to get low price home improvement goods. Menards focuses on getting low prices from its suppliers to provide customers with low prices.
Their jingle emphasizes savings. “Save big money at Menards.” It is played at the end of their commercials. Unlike their two chief competitors, their ads don’t feature their blue-vested employees assisting customers one-on-one. A 2018 winter ad focused on sale items. Its Racing with Sasquatch commercial showed Sasquatch racing professional racecar drivers. Sasquatch went to Menards to buy materials to make his pinewood derby vehicle in this ad. The ad ended with “build your dreams.”
Menards is positioning itself on price and selection.
Ace Hardware: New Ad, New Positioning
Both The Home depot and Lowes position themselves as helpful resources to their customers. But as Ace Senior Vice President and Chief Marketing Officer Kim Lefko said, “Ace is in a very different position than the large-box retailers. We are more about home preservation than big home renovation. This positioning lets us own the easy fix, replace, repair solutions and builds upon Ace’s very unique place as a community-focused store that is there with the right advice and products for our customers.”
Ace released a new commercial that replaced the helpful place with “a new kind of place.” The new Ace commercial, which debuted in October 2018, has an updated message. The narrator says, “Around the block. What you need in stock. With people who know their stuff. Welcome to the home convenience store.”
The ad also seizes upon a key differentiator between its store and its big box competitors—the narrator says that Ace is where you can find “the everyday things you need to take care of around the house” and that the place “wouldn’t be a warehouse.”
Unlike its competitors, Ace Hardware is a retail-owned cooperative. Most Ace stores are independently owned and operated by local entrepreneurs. They are ingrained in their local communities in a way unique from the big box competition. The ad spot makes a point of showing its smaller store size that is “around the block,” but doesn’t explicitly hit on the independently-owned angle.
This multi-channel campaign puts Ace in front of the Millennial customer, Lefko said. This campaign uses several digital channels to share the consumer’s point of view. This is new digital ground for Ace, although Lowes and The Home Depot are no strangers to deploying campaigns across multiple channels.
Lefko said she is working to position Ace as "the most convenient and helpful hardware stores on the planet." Using several digital channels to reach the target (Millennials) sets Ace up to deliver this message in an effective way.
Not only does Ace’s new positioning help differentiate one home improvement store from the others, but the company’s values shine through this reinvented messaging. In one campaign, Ace manages to set itself apart from its large competitors in a positive way, embracing its smaller store structure.
Whether a store is large or small, a big chain retailer or family owned, effective positioning will kick start results.
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