Not long ago, the future of brick-and-mortar stores looked dicey. The rise of e-commerce, combined with COVID-19, threatened to gut Main Street business districts. Merchants were urged to prepare for a post-store future.
At Chicago’s McCormick Place last week, Ace Hardware didn’t seem worried at all. The Ace annual convention kicked off in a packed Wintrust Arena with a celebratory song-and-dance act incorporating buckets, mops and plungers. Founded in Chicago a century ago, the 6,000-store chain has done more than just survive the so-called retail apocalypse.
Throughout the pandemic, Ace never stopped opening traditional, brick-and-mortar stores. It’s adding 200 more this year and launching a new format, partly to meet demand from customers who are stopping in to pick up online orders at nearly quadruple the rate of five years ago.
For many retailers, the apocalypse never hit as hard as feared. Retail chains today are opening many more stores than they’re closing, while vacancy rates in shopping centers have hit the lowest levels in two decades. Online retailers such as Wayfair are getting in the act with showroom-style stores of their own.
Under pressure, retailers have innovated, showing once again how adaptability is among America’s greatest economic strengths. The U.S. consistently outshines other countries at making the changes necessary for businesses to thrive in the future.
No question, certain retail sectors continue to suffer. Witness the vacant storefronts in downtown Chicago and the empty indoor malls in the suburbs. Department stores remain mired in an identity crisis.
Some chains have failed to adapt to changing tastes, such as Express, a workplace apparel provider that missed the memo about working from home. Others such as downscale Family Dollar struggle to weed out hundreds of underperforming stores while continuing to open new outlets in better locations.
Retailing is a sensitive barometer for the economy at large. Consumers, weary of inflation, aren’t spending like they did in the first few post-pandemic years, and certain sectors such as fast food are feeling the belt-tightening more than others. But the consumer remains reasonably durable. Will they remain that way?
Amazon sent a chill through the retail industry earlier this month when it reported slowing online sales in the second quarter and pointed out that consumers are looking for bargains. That’s hardly surprising news, but investors took it as a warning of weakness ahead.
The U.S. economy could be at a tipping point, as uncertainty weighs on consumers and businesses. We’re in a period of significant uncertainty, as this page highlighted recently. Unemployment is ticking up, and markets are jittery after a bullish run.
As the economy slows, all eyes turn more than usual to the U.S. Federal Reserve. Has the Fed moved too late to make the cost of money cheaper? There’s more angst in the air that they’ve dithered too long, but time will tell, of course. The central bankers are widely expected to cut rates next month, and again in November.
As bellwether companies such as Walmart prepare to report financial results in the days to come, reasonable people can’t be blamed for worrying.
Given those concerns, it’s reassuring that at the Ace convention, the self-proclaimed “heroes in red vests” oozed confidence in themselves and in America’s future. On average, a mature Ace store is making a more-than-respectable $3.4 million in annual sales. Adopting the innovative new format showcased at McCormick Place last week can pump that up by an additional 11%, the company says.
Hardware stores can be a jumble, and Ace’s new layout puts popular brands such as Weber grills and Yeti coolers front and center where customers can’t miss them. The checkout area is more open, to accommodate shoppers picking up goods they ordered online. There’s also room for small, costly items such as rechargeable batteries that are being kept behind the counter to combat a spike in shoplifting that continues post-pandemic.
Showing off the new format, Ace executive Lisa Schmitt said she has no doubt brick-and-mortar stores will be around a hundred years from today. “I’m sure 100 years ago, no one thought a hardware store would look like this,” she said. “It just keeps changing and evolving. There will always be a place for an Ace Hardware.”
For any small merchant closely tied to its community, the key to success is the same as 100 years ago. As an owner of 32 Ace stores across the South told the convention crowd, “Be local. Build relationships. Do our best.” It worked in 1924. It also works in 2024.
Buy local seems to carry more resonance today than it has in recent times. That’s all to the good. But the intense woes of major retail thoroughfares, including Michigan Avenue, continue with no obvious answers in sight. A truly healthy retail sector will need both the local and the luxe.
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