Ace Hardware: How a Co-op of Rivals Beat the Big Boxes

Part of Retailer Playbooks — history-first profiles of every company on the NRF Top 100 Retailers list.

Ace Hardware lands at #19 on the NRF Top 100 Retailers 2026 list, with $27.55 billion in 2025 U.S. retail sales, according to the National Retail Federation's annual ranking compiled with Kantar. That number is remarkable for a reason most shoppers never think about: Ace does not technically compete against Home Depot and Lowe's the way a normal chain would. It is not one company. It is more than 5,000 of them, bound together by a piece of financial engineering from 1973 that turned out to be the best defense the hardware business ever built.

Five rivals who stopped competing

The story starts in Chicago in the early 1920s, not with one founder but five: Richard Hesse, Frank Burke, Oscar Fisher, E. Gunnard Lindquist, and William Stauber, each running his own hardware store and each getting squeezed by the same wholesalers. Rather than keep fighting each other for scraps of margin, they pooled their purchasing power. They adopted the name "Ace" in 1927, after the World War I fighter pilots who "overcame all odds," and incorporated the following year, according to Wikipedia.

Frank Burke served as the first president. Richard Hesse took over in 1930 and ran the organization for more than four decades, a tenure that shaped everything Ace became. Within two years of incorporation, the group had stopped merely negotiating discounts and started buying directly from manufacturers out of its own Chicago warehouse, cutting out the middlemen entirely, per FundingUniverse's company history. By the mid-1930s, 41 dealer-members were doing more than $650,000 in combined sales. By 1959, that figure had grown to $24.5 million across 325 locations.

The move that mattered more than any store opening

In 1973, Hesse retired. Instead of selling the company to an outside buyer or taking it public, he sold Ace to the very dealers who depended on it, converting a wholesale purchasing group into a dealer-owned cooperative. Members bought minimum equity stakes, kicked a share of their purchases back into national advertising, and received profits as cash or stock rebates. By 1976, ownership had fully transferred to the retailers themselves, with systemwide sales at $382 million.

This is the detail worth sitting with. Ace's competitors, then and now, are chains: a single corporate parent owns the stores, sets the strategy, and keeps the profit. Ace flipped that. The people running the stores are the shareholders. When Ace negotiates a better price on fasteners or paint, that saving flows back to the same small-business owner who is competing for a customer's trust across the counter. Home Depot opened its first stores in 1979. Ace had already spent six years building an ownership structure that made every one of its dealers a true believer, not a franchisee paying up.

Fighting scale with scale, without losing the neighbor

The arrival of Home Depot and Lowe's in the 1980s and 1990s forced Ace to borrow the enemy's tools without becoming the enemy. It started manufacturing its own paint in 1984, eventually building a private-label catalog approaching 7,000 items, according to FundingUniverse. It opened 14 regional distribution centers by 1994 to keep small stores stocked at a price they could compete on. And in 1994, under its "New Age of Ace" initiative, it told dealers to route 80 percent of purchases through the co-op and standardize signage and computer systems, pushing thousands of independently minded entrepreneurs toward the discipline of a chain, just one they collectively owned.

It worked. Ace overtook Cotter & Company, then the largest hardware cooperative and parent of rival True Value, in 1996. It passed TruServ to become America's largest hardware wholesaler in 2001. Sales climbed from $801 million in 1983 to over $2 billion by 1993 and past $5 billion by 2015.

The unique insight here is not that Ace is "friendlier" than a big box, which is the marketing story everyone already knows from decades of "helpful hardware folks" ads with Connie Stevens and later John Madden. It is that Ace solved a coordination problem Home Depot never had to face: how do you get thousands of fiercely independent small-business owners to act with the discipline of a single national chain, without asking them to give up ownership. Most industries that tried this kind of federation, from grocery co-ops to real estate franchises, ended up either too loose to compete on price or too rigid to keep local operators loyal. Ace's rebate-funded governance threaded that needle for fifty years, and it is arguably why hardware is one of the only categories where a co-op, not a corporation, sits atop the field alongside the category killers.

Where the ownership model is stretching today

Under CEO John Venhuizen, Ace has started buying outright rather than only recruiting new member-dealers, acquiring Westlake Ace Hardware for $88 million in 2012 and adding home-service businesses like Handyman Matters (2019) and Legacy Plumbing (2022). By 2024, the network passed 5,000 domestic locations. It is a quiet admission that pure cooperative recruitment has limits, and that owning some stores directly is now part of keeping the model growing.

Retail's biggest arms races get fought over square footage and same-day shipping. Ace's century-long story is a reminder that some of the most durable competitive advantages get built in the back office, in who owns what and who the profits belong to.

Sources: Wikipedia, FundingUniverse company history, Ace Hardware About Us, NRF Top 100 Retailers 2026