Inside Ace Hardware’s bet on home services

100-year-old Ace Hardware in 2023 made a unique acquisition: A group of 12 HVAC, plumbing, and electrical companies based in Pennsylvania. 

Since then, the company has acquired additional businesses in the eastern part of the U.S., forming what’s now known as Ace Home Services. To understand the story, and why a hardware retailer that sells everything from paint to grills is betting on HVAC, I spoke with Ace Home Services’ Graham Lucard and Paul Gouge. Below is our conversation, lightly edited for clarity. 

At first, it seemed surprising that Ace, as a retail company, was entering the contracting business. Simply speaking, what was the core logic?

We recognized an opportunity to provide additional community-focused home services to our retail customers — and improve the ‘Pro’ model offered by Lowe’s, Home Depot, and Tractor Supply. In addition, we could capitalize on cost savings by supplying materials directly from our warehouse division. 

So what was the first step?

A decade ago, Ace acquired a small handyman franchise — a loose association of 26 different handyman businesses — as a proof of concept. It was a small investment, but they scaled it through Covid and eventually hit 250 locations. Seeing that it was creating value for franchise owners and customers, they said, ‘Let’s make a greater investment.’

Got it. So when did HVAC come into play?

Ace bought a small plumbing company in Frisco, Texas, and then purchased the Unique Indoor Comfort platform — which consisted of 12 businesses — 24 months later, in 2023. That solidified the vision of an ecosystem between hardware and home services — and it was also a way to capture a customer base that wasn’t necessarily coming into stores but needed work done. 

There are around 5,000 Ace stores nationwide, which is almost one and a half times more than our Wall Street competitors combined, and there’s a community feel to the local hardware store that aligns with the footprint of local service providers. So you begin to connect the dots between community stores and our home service providers. 

How are you guys leveraging Ace’s footprint from a supply perspective for contractors you partner with? 

For the unitary type product, we have a select number of agreed-upon partners, and we’re standardizing the distribution through Ace’s regional supply centers. No one has to use those brands, but the buying power is such that it’s advantageous. 

Ace negotiates in the billions, especially on things like copper, PVC, and fittings, so there’s real significance on the parts side due to volume. 

Can you give me any color on the M&A strategy? 

Our goal is to provide HVAC, plumbing, and electrical services that complement our existing retail footprint from a hardware store perspective. At this point, we want to stay predominantly east of the Mississippi and form some regional density to create a ‘hub and spoke.’ And at some point, we’ll start greenfielding new locations and moving west. 

Elaborating on what you mentioned earlier, where do home services fit into Ace’s plan at large? 

They integrate with the broader retail strategy. There’s a great opportunity to provide customers with in-store offerings, handyman, and HVAC, plumbing, and electrical services. And there’s a lead gen component. 

Stores have existing customer bases, so we think about how we can sync our home services memberships with their rewards — and vice versa — to build a sole brand promise. That’s the broad notion: Putting retail and home services together.