Ace Adds To Its Control Over Westlake
Just over a year ago some big news came down the pike. Leading hardware cooperative Ace Hardware had actually acquired a retailer. In fact said retailer was not only one of Ace’s members, it was the co-op’s largest and likely most prominent member.
Westlake Hardware is an 85 store regional chain. The retailer has often been able to draw reporters looking for good stories. Stories have included a staged promotion involving ‘zombies’, predictions on the industry’s current financial plight with estimates on its future and heading panels at prominent trade shows to demonstrate the advantages of being a regional player.
When Ace announced its purchase of Westlake, a greater understanding of Ace in particular and industry co-ops in general immediately emerged. For years casual industry players and observers referred to retailers contracting with co-ops as franchises and often as co-op owned stores. Through the years I encountered these misnomers surprisingly all too often, at times from industry veterans.
What makes this type of misunderstanding all the more regrettable is that many who thought member stores were actually owned by companies like Ace, True Value and Do It Best, assumed that the only way to approach the stores is through the parent, such as Ace. Those who thought member stores were actually franchises, often assumed that to approach a store, one would encounter a maze of restrictions on product specifications as is often found in the world of restaurant franchising.
In fact nothing could be further from the truth. Go to an Ace dealer show and one comes upon essentially a regional trade show. Here many manufacturers man booths to promote and demonstrate their latest and traditional wares. Additionally some booths are manned by dealers of assorted minor, generally low-priced goods, which can often be classified as tchotchkes. Through the years I have met with several of these merchants who proudly boasted of the comfortable living they have made selling these wares directly to very welcoming, individual Ace retailer members, by visiting their individual stores.
When Ace announced its acquisition of Westlake Hardware, most reports noted that Westlake was its single actual retailer possession. This came as a surprise to many. As I wrote at the time, Ace did own and operate a chain of stores between 1998 and 2006. Chain Store Guide listed them as Ace Company Owned Stores. These stores were begun as a project, a laboratory in effect, through which the co-op could closely observe customers in a controlled environment. Here Ace determined to try new concepts, grade them and finally demonstrate them to their vast network of members.
When Ace felt that these stores had completed their mission, the project was abandoned. At its peak there were a total of 27 Ace Company Owned Stores.
After Ace completed its purchase of its number one member- Westlake- there was speculation as to the possible changing nature of the co-op. Would Ace now be scooping up retailers? Would they change the enviable stature of Westlake or its autonomy?
During the ensuing year virtually nothing has changed regarding these questions. Ace has not acquired an additional retailer. As Ace stated at the time of the purchase, Westlake remained autonomous. In fact, at the time of the purchase, Ace stated that Westlake would retain its management team to run the business essentially as usual.
Now comes a significant change to Westlake’s management. It was just announced that Tom Know, Ace’s Director of Retail Business Development is moving to Westlake headquarters in Lenexa, KS and has been named CEO of Westlake Hardware. He replaces the departing George Smith who was the CEO of Westlake prior to Ace’s acquisition and remained in that position for over a year as Westlake was integrated into the Ace structure.
Now the question becomes, will the new CEO, a prominent Ace corporate product, change Westlake. Will the strong regional culture change?
Mr. Knox comes from a place in Ace which was pure Ace retail planning and design. His position pretty much descended from the Ace Company Owned Stores experiment which ceased existence nearly a decade ago. Thus one would think that Mr. Knox comes to Westlake with at least somewhat of an agenda for change.
The Westlake management team has always been seen as a strong unified force, who choose to maintain close ties to the communities they serve. They have long confirmed that knowledge of customers and interaction with them is what has long made Westlake a much admired success. It is unlikely that Mr. Knox being both an Ace retailer insider, while technically a Westlake outsider will attempt to change much of Westlake’s culture or its long time humor and success.