A hardware chain that adds more than 100 stores in a single year changes the retail map for construction materials. Ace Hardware opened 105 new stores in 2022 and planned at least 60 more before the year ended, pushing past 5,600 locally owned stores across all 50 states and 70 countries, with global sales above $20 billion. The expansion is a case study in how a retail network grows: co-op ownership, neighborhood-scale stores, and a distribution system sized to feed them.
Independent retailers face the same big-box pressure everywhere, and the strategies that let independent lumberyards survive and thrive against big-box stores apply to hardware retail as well: local knowledge, service, and inventory that fits the community. This article looks at how a co-op chain plans growth, picks sites, blends online and in-store sales, and builds the warehouses that make it all work.
Where New Stores Come From: Site Selection and Real Estate
New hardware stores come from three paths: new construction, lease of an existing building, and conversion of a vacant retail space. The third path is increasingly common as other retail segments shrink, because the shells left behind are often the right size for a neighborhood store.
Build, Lease, or Convert
Converting a vacant building saves time and money when the structure fits, but it usually costs more to retrofit than a clean shell. The movement to convert vacant big-box stores into transitional housing shows how far adaptive reuse can go; hardware retailers convert the same buildings into selling space when the location and parking work.
What Makes a Good Store Site
Population, Traffic, and Trade Area
- Population density and household growth within a ten-minute drive
- Vehicle traffic counts and visibility from the main road
- Parking capacity for contractor pickup trucks and trailers
- Proximity to home construction and remodeling activity
Because most hardware purchases happen within a short drive of home, a chain can open many small stores instead of a few giant ones. The neighborhood footprint is the point: the store has to be convenient enough that a homeowner will drive there for a single box of screws.
Store size varies with the trade area. A small-town store might run 10,000 square feet with one aisle of lumber and a strong paint department, while a suburban location carries 30,000 square feet or more with a full lumberyard, rental counter, and contractor desk. The chain adjusts the store format to the market instead of forcing one template everywhere.
The Co-op Model Behind the Growth
How Retail Co-ops Work
A retail co-op is owned by its store operators. The stores buy through the co-op’s distribution network, and profits flow back to the owners as dividends. Ace disbursed $314 million in dividends in 2021, a 42.7 percent return for shareholders, while opening more than 840 stores in five years. The dividend is the engine: store owners who see a strong return reinvest in their buildings, staff, and inventory.
Neighborhood Stores and the Local Retail Mix
Hardware stores compete with every other neighborhood retailer for the same customers, including the resale channel. Knowing what thrift stores will not accept is a reminder that every retail channel filters merchandise on its own rules; hardware stores filter too, stocking what local builders and homeowners actually buy and turning the rest over quickly.
Membership comes with obligations as well as benefits. Store owners invest in the co-op, commit to buying through its distribution network, and take part in its governance; in return they get private-label products, marketing support, and a share of the profits. The structure works because the people who own the stores are the same people who run them.
The Dividend Feedback Loop
A co-op’s growth is self-reinforcing: more stores mean more buying volume, which improves prices, which lifts store profits, which funds the next dividend. That loop lets the network add stores at a pace that publicly traded chains would struggle to justify.
Expansion Against the Retail Shutdown Wave
Why Chains Close While Others Grow
Retail closures and expansions happen in the same economy. The real reasons behind the 2024 retail shutdown wave include why stores are closing across America: overexpansion, debt, and shifts in what people buy. Hardware retail runs against that current because the category is hard to replace online: lumber, paint, and fasteners are heavy, urgent, and often need advice.
Homeowners also buy hardware on tight timelines: a leaking faucet or a missing fastener cannot wait for a delivery window. That immediacy is a structural advantage that no website can match, which is why the category keeps adding square footage while apparel and electronics retailers consolidate.
Categories That Defy the Trend
Categories with high urgency, high weight, or high service needs keep physical stores relevant. Hardware has all three. The stores closing are usually in categories where the online experience replaced the in-store one; the stores opening are where the physical experience still wins.
Store counts also respond to ownership structure. A co-op answers to its member owners, who live in the communities where the stores sit; a chain answering to quarterly earnings cuts locations that do not hit targets. That difference in incentives shows up in the pace of openings and closings.
Geography also favors hardware expansion. Population growth in suburbs and exurbs creates new trade areas almost every year, and a co-op with a strong balance sheet can open stores where rooftops are going up, before the big-box chains finish their site studies. Timing the market this way keeps the new-store pipeline full.
Omnichannel Retail: Online Orders, In-Store Pickup
The Buy Online, Pick Up In Store Model
Digital and physical retail are converging at the neighborhood store. Seventy percent of Acehardware.com orders were picked up in store, and 20 percent were delivered by the company’s own drivers. The store becomes the fulfillment center, and the website becomes a second aisle.
The own-delivery share matters because it keeps the transaction inside the network. When the store’s own drivers handle 20 percent of online orders, the retailer controls the delivery experience, the vehicle, and the customer relationship end to end. Third-party delivery would trade that control for convenience.
Online sellers changed how homeowners buy in other categories too. The way online mattress stores changed how homeowners buy beds shows what happens when a category moves fully digital; hardware keeps the store central because pickup, returns, and advice are part of the product.
- The customer orders online and chooses a nearby store for pickup
- The store picks the order from its own inventory
- The customer picks it up at the service desk or drive-up lane
- The store records the pickup, keeping the sale local
Distribution Networks: The Backbone of Expansion
Adding Warehouse Capacity
Every new store needs a warehouse within practical trucking distance. Ace planned to add 4.4 million square feet of distribution capacity by opening three new warehouses over five years, on top of more than 2.5 million square feet added in the previous four years. The math is direct: stores cannot grow faster than the network that feeds them.
Distribution warehouses for hardware hold thousands of SKUs across lumber, paint, tools, electrical, plumbing, and seasonal goods. Replenishment logic matters: fast-moving items sit near the shipping docks, slow movers go high in the racks, and contractor lines get dedicated staging areas so morning pickups do not wait.
Warehouse expansion also shortens the distance goods travel. Inventory that sits closer to the stores restocks faster and carries less freight cost, and the 4.4 million square feet of planned capacity gives the network room to grow store count without stretching delivery times. Distribution is the constraint that expansion has to solve first.
| Metric | Figure |
|---|---|
| New stores opened in 2022 | 105 |
| Additional stores planned | 60-plus |
| New distribution capacity planned | 4.4 million sq ft |
| Capacity added in prior four years | 2.5 million sq ft |
| Total locally owned stores | 5,600-plus |
| 2021 dividends to shareholders | $314 million |
Purchasing Channels and Supply
Distribution also shapes what contractors pay for tools and equipment. The rise of brand-direct tool stores changed how construction firms buy equipment, bypassing traditional retail entirely; co-op hardware stores answer by stocking the same brands with local pickup and service. Warehouse location decides which answer wins in a given town.
The warehouse network also sets the service promise: stores within a day’s drive of a distribution center can restock overnight, while remote stores run leaner inventories and lean harder on seasonal forecasts. That is why the warehouse count and the store count have to rise together.
A store network that grows this fast has to keep safety in the building too. Retailers and shoppers share the responsibility, and the guidance on tool safety in home improvement stores covers what retailers and shoppers need to know, from aisle layout to product storage. Stores that open at the rate of one every few days stay healthy only when the basics, including safety and staffing, keep pace with the square footage.