‘Hitting on staple gifts:’ Inside Ace Hardware’s deal-driven holiday strategy
Ace Hardware is betting on a mix of practical gifts at various price points this holiday season, aiming to win over shoppers on a budget who are looking to give useful items.
“This year, our gift-giving strategy is more price-conscious than it’s ever been,” said Matt Flentge, Ace Hardware’s director of category marketing. “What’s changed for us this year is just making sure that we’re relevant to as many consumers out there as possible [and] that we can fit into any budget that [they] have.”
That assortment includes low-ticket giftable items, like a $35 Stanley tumbler, MukLuk accessories or $5.99 Craftsman hand tools. The retailer is also offering hundreds of dollars off on higher-ticket items like Ooni pizza ovens and Traeger or Weber grills. While these items aren’t necessarily new to Ace’s shelves, the company is positioning itself as a one-stop shop for gifting, looking to hit categories like college students, fathers-in-law or new homeowners.
Beyond the sale prices themselves, the company has upped its digital marketing budget and is producing more video spots to showcase the deals and compete. “We’ve done a better job of having gifts that hit every price point across all the main categories we carry,” Flentge said.
Ace is one of several national hardware and home goods retailers shifting their strategies to win over budget-conscious shoppers. The sector typically sees strong performance for products like grills, power tools and batteries. But this year, retailers are doing extra or earlier deals to get shoppers to spend. Lowe’s, which had its earnings last week, is leaning on its new MyLowe’s Rewards loyalty program for one of its Black Friday promotions. Those members will have exclusive online access to deals on Thanksgiving Day. It also offered earlier-than-usual deals on tool brands like Klein, Craftsman, DeWalt and Kobalt. And Home Depot is pushing freebies like power tools that come with the purchase of batteries or tool kits.
Shauna Bowen, svp of strategy and transformation at e-commerce fulfillment platform Radial, said retailers across sectors are fighting for a greater share of wallet this season. Shoppers are predicted to spend equivalent or slightly higher than last year on gifts, but as many as 62% will be trading down, according to research from Deloitte.
“Trends show that consumer spending appears to be a bit less, so the question is: How do I gain that share of wallet? What do I have to do to attract buyers?” Bowen said.
Beyond the price points themselves, Bowen said retailers could set themselves apart with strong loyalty programs, convenient fulfillment options and easy return policies. There’s also the strategy — like Lowe’s Thanksgiving Day online deals — of giving special discounts for certain days, times or channels. “When you fragment out offerings, you can price them more effectively than assuming a margin mix scenario,” she said.
At Ace, the holiday season comes at a moment when the company is particularly interested in driving digital sales. At its third-quarter earnings earlier this month, Ace reported a 34% year-over-year lift in visits to acehardware.com, plus a 6% revenue lift. And its mobile revenue was up 37%.
Overall, Ace saw revenues were $2.4 billion, a 2.8% increase from the prior year and its third-best quarter on record. And though its company’s net income was $99 million — a decrease of $31 million from the prior year — executives said during the earnings release that the decrease was due to planned expenses in its supply chain infrastructure plus increased digital marketing expenses to support future growth.
Those added expenses carry into the holiday season. Flentge didn’t share how much the company increased its marketing budget but confirmed the company taking more of a digital approach for seasonal marketing. Ace will be running ads on Instagram, Facebook, Pinterest and TikTok., including video spots. This year’s tagline, “Wrap it in Red,” is featured in cheeky 30-second ad spots highlighting what can be bought at Ace, like a Stanley cup a woman buckles up in a seat belt for the drive home.
“We’re focusing on videos, as well as doing a lot more social media to show more of what Ace has to offer,” Flentge said.
Flentge also said the company is pushing its e-commerce channel for the holidays. “I do think we have a value proposition there,” he said. “We’re putting a lot of focus on mobile shopping, making sure our payment process is seamless and providing free shipping options.”
Benefits for online shoppers include free shipping on orders over $50 for loyalty members, plus free delivery and assembly for purchases of big items like grills or snowblowers. And those who want it faster can pick it up in store, with a “Ready in 15” BOPIS option.
As far as types of gifts, Flentge said perennially popular items like power tools, grills, barbecue accessories and event hosting supplies are typically top sellers for the holidays. Some of this varies by region, he said, like with outdoor dining items more popular in warmer climates.
“It’s about hitting on staple gifts that resonate, are useful and that people would want because it fits into what they’re looking for,” Flentge said.