If you‘re a homeowner, DIY enthusiast, or professional contractor, chances are you‘ve visited a Lowe‘s or Ace Hardware store at some point. These two companies are among the biggest players in the hardware retail industry, offering a wide range of products and services to help customers tackle projects big and small.
But have you ever wondered about the relationship between Lowe‘s and Ace Hardware? Are they owned by the same company? Do they compete with each other? And what does the future hold for these two iconic brands?
In this article, we‘ll take a deep dive into the world of Lowe‘s and Ace Hardware, exploring their histories, business models, and competitive strategies. We‘ll also examine the impact of the COVID-19 pandemic on the industry and what it could mean for the future of these two companies.
The Ownership Question: Does Lowe‘s Own Ace Hardware?
Let‘s start with the most common question people have about Lowe‘s and Ace Hardware: does one company own the other?
The short answer is no. Lowe‘s and Ace Hardware are two separate companies with different ownership structures.
Lowe‘s is a publicly traded company that was founded in 1946 in North Carolina by Carl Buchan. Buchan started the company as a single store in North Wilkesboro, but it quickly grew into a regional chain and eventually went public in 1961. Today, Lowe‘s operates more than 2,200 stores across the United States and Canada, making it the second-largest hardware chain in the world behind Home Depot.
Ace Hardware, on the other hand, is a retailer-owned cooperative that was founded in 1924 in Chicago by a group of independent hardware store owners who wanted to compete with larger chains. The company has since grown to include more than 5,000 stores around the world, most of which are independently owned and operated by local entrepreneurs.
While both companies have expanded through acquisitions over the years, they have remained separate entities. In fact, Ace Hardware has explicitly stated that it is not for sale and has no plans to merge with or be acquired by another company.
The Business Model Comparison: How Lowe‘s and Ace Hardware Operate
Despite their different ownership structures, Lowe‘s and Ace Hardware have some similarities in their business models. Both companies sell a wide range of hardware, home improvement, and lawn and garden products, including tools, appliances, building materials, and outdoor equipment.
However, there are also some key differences in how the two companies operate.
Lowe‘s is a traditional big-box retailer that owns and operates all of its stores directly. The company has a centralized management structure and a standardized store format that emphasizes large, warehouse-style layouts and a wide selection of products at competitive prices.
Ace Hardware, on the other hand, operates as a cooperative, with each store owned and operated by an independent retailer who has invested in the Ace brand. These retailers pay a membership fee to join the cooperative and share in its profits, but they maintain a high degree of autonomy in how they run their stores.
This decentralized model allows Ace Hardware stores to tailor their product selection and services to the specific needs of their local communities. Many Ace Hardware stores are smaller than Lowe‘s and focus more on personal service, expert advice, and community involvement.
According to a 2021 report by the National Retail Federation, the average Ace Hardware store is about 12,000 square feet, compared to about 112,000 square feet for the average Lowe‘s store. This smaller footprint allows Ace Hardware stores to be located in more urban and suburban areas where space is at a premium.
The Financial Performance: How Lowe‘s and Ace Hardware Stack Up
Both Lowe‘s and Ace Hardware have seen strong financial performance in recent years, despite the challenges posed by the COVID-19 pandemic.
In fiscal year 2021, Lowe‘s reported net sales of $89.6 billion, up 24.2% from the previous year. The company‘s comparable store sales, which measure sales growth at stores open for at least one year, increased by 26.8% in the fourth quarter of 2021 compared to the same period in 2020.
Lowe‘s also reported strong growth in its online sales, which increased by 121% in fiscal year 2021 compared to the previous year. The company has invested heavily in its e-commerce capabilities in recent years, including the launch of a new website and mobile app, as well as the expansion of its curbside pickup and delivery options.
Ace Hardware, meanwhile, reported record revenue of $7.8 billion in fiscal year 2020, up 27.9% from the previous year. The company‘s comparable store sales increased by 12.6% in the fourth quarter of 2020 compared to the same period in 2019.
Ace Hardware has also seen strong growth in its online sales, which increased by more than 500% in fiscal year 2020 compared to the previous year. The company has invested in its e-commerce capabilities through its "Buy Online, Deliver from Store" program, which allows customers to order products online and have them delivered from their local Ace Hardware store.
While both companies have reported strong financial results, there are some differences in their profitability and market share.
According to data from research firm IBISWorld, Lowe‘s has a market share of about 18% in the US home improvement retail industry, second only to Home Depot‘s 29%. Ace Hardware, meanwhile, has a market share of about 4%, making it the fourth-largest player in the industry behind Menards.
Lowe‘s also tends to have higher profit margins than Ace Hardware, due in part to its larger scale and more efficient supply chain. In fiscal year 2021, Lowe‘s reported a gross margin of 33.7%, compared to about 30% for Ace Hardware in fiscal year 2020.
The COVID-19 Impact: How the Pandemic Has Reshaped the Industry
The COVID-19 pandemic has had a significant impact on the hardware retail industry, as it has on many other sectors of the economy.
On the one hand, the pandemic has driven increased demand for home improvement products as people spend more time at home and take on DIY projects. According to a survey by the Home Improvement Research Institute, 81% of homeowners reported doing some type of home improvement project during the pandemic, with the most popular projects being painting, landscaping, and minor repairs.
This surge in demand has been a boon for companies like Lowe‘s and Ace Hardware, which have seen strong sales growth despite the economic downturn. In fact, the hardware retail industry as a whole has been one of the few bright spots in an otherwise challenging retail environment.
However, the pandemic has also created new challenges for hardware retailers, from supply chain disruptions to staffing shortages to increased competition from online sellers.
To adapt to these challenges, Lowe‘s and Ace Hardware have had to innovate and evolve their business models. Lowe‘s has invested heavily in its e-commerce capabilities, offering curbside pickup and delivery options to customers who prefer to shop online. The company has also launched a new loyalty program called "Lowe‘s for Pros" to better serve professional contractors and builders.
Ace Hardware, meanwhile, has focused on supporting its network of locally owned stores and helping them navigate the challenges of the pandemic. The company has provided financial assistance and resources to its retailers, as well as expanded its "Buy Online, Deliver from Store" program to meet the growing demand for online shopping and delivery.
The Future Outlook: Opportunities and Challenges for Lowe‘s and Ace Hardware
Looking ahead, the future of the hardware retail industry is likely to be shaped by a number of trends and challenges.
One major trend is the continued growth of e-commerce, which is expected to account for an increasing share of total retail sales in the coming years. According to a report by eMarketer, e-commerce sales in the US are projected to reach $1.2 trillion by 2024, up from $794 billion in 2020.
For companies like Lowe‘s and Ace Hardware, this trend presents both opportunities and challenges. On the one hand, e-commerce can help them reach new customers and expand their market share beyond their physical store footprint. On the other hand, it also means increased competition from online-only retailers like Amazon and Wayfair.
To succeed in this environment, hardware retailers will need to continue to invest in their e-commerce capabilities and find ways to differentiate themselves through unique products, services, and customer experiences.
Another trend that is likely to shape the industry is the growing focus on sustainability and eco-friendly products. According to a survey by the National Retail Federation, 70% of consumers say that sustainability is important to them when making purchasing decisions.
For hardware retailers, this trend presents an opportunity to offer more environmentally friendly products and services, such as energy-efficient appliances, low-VOC paints, and sustainable building materials. It also means finding ways to reduce waste and minimize their environmental footprint through initiatives like recycling programs and sustainable packaging.
At the same time, the industry is likely to face ongoing challenges from supply chain disruptions, labor shortages, and increased competition from both traditional and online retailers.
To navigate these challenges, companies like Lowe‘s and Ace Hardware will need to be agile and adaptable, finding new ways to streamline their operations, attract and retain talent, and differentiate themselves in a crowded marketplace.
Conclusion: The Bottom Line for Consumers
So, what does all of this mean for consumers who are trying to decide between Lowe‘s and Ace Hardware for their home improvement needs?
Ultimately, the choice between the two companies will depend on a variety of factors, including price, selection, service, and convenience.
If you‘re looking for a wide selection of products at competitive prices, Lowe‘s may be the better choice. With its large, warehouse-style stores and efficient supply chain, Lowe‘s is able to offer a vast array of products at prices that are often lower than its competitors.
However, if you value personalized service and expert advice, Ace Hardware may be the way to go. With its network of locally owned and operated stores, Ace Hardware is known for its knowledgeable staff and community involvement. Many Ace Hardware stores also offer services like key cutting, screen repair, and blade sharpening that you may not find at larger retailers.
Ultimately, the best choice for you will depend on your specific needs and preferences as a consumer. By understanding the strengths and weaknesses of each company, as well as the broader trends shaping the industry, you can make informed decisions about where to shop and how to get the most value for your money.
As a picky shopper and retail industry expert, my advice would be to do your research, compare prices and selection, and don‘t be afraid to shop around. While Lowe‘s and Ace Hardware are both great options for many home improvement projects, there may be other retailers or specialty stores that offer better deals or more specialized expertise depending on your needs.
By staying informed and being a savvy shopper, you can navigate the complex world of hardware retail and find the products and services that best meet your needs and budget.
