Ace Hardware, the 93-year-old national hardware retailer, has acquired a majority stake in Somerville, Mass. e-commerce startup The Grommet.
The deal, which was announced Tuesday, marks the Oak Brook, Illinois-based company's first startup acquisition. Ace gained majority ownership by purchasing shares of The Grommet from its previous investor, Japanese ecommerce giant Rakuten.
Financial terms of the deal were not disclosed.
Founded in 2008 by Jules Pieri and Joanne Domeniconi, The Grommet provides an e-commerce website that showcases new products created by entrepreneurs. With 3.5 million supporters and early adopters, the website has served as the launching pad for brands like FitBit, IdeaPaint, OtterBox, SimpliSafe and SodaStream.
"For Ace, our ability to identify, test and validate unheard of and innovative products is like competitive gold."
In an interview with BostInno, Pieri said the deal happened after the two companies started working together in 2016 as a way to bring The Grommet's curated products into select Ace stores. The relationship has been mutually beneficial, giving Ace improved buying power with emerging companies while providing The Grommet a solid retail presence.
"For Ace, our ability to identify, test and validate unheard of and innovative products is like competitive gold because they compete locally against big-box stores," Pieri said. If a certain Grommet product is performing well at Ace, she added, it will give the hardware store an easier way to develop a relationship with the supplier.
On the other hand, the acquisition will give The Grommet an even larger physical presence in the United States. With The Grommet displays at 400 Ace stores now, Pieri said they will eventually cover a majority of the retailer's 5,000 stores.
Ace said it has already seen a boost from Grommet customers, who visit Ace stores over 50 percent more than average Ace Rewards customers and spend nearly three times as much.
"We both stand as strong advocates for the underdog. From the very beginning we have appreciated our alignment in support for and advancement of the independent maker," John Venhuizen, Ace's president and CEO, said in a statement. "Under Ace’s ownership, I believe The Grommet can offer our customers more of that which fuels global economies and makes America special - the unbridled creativity of the local entrepreneur."
With Ace as The Grommet's majority owner, the retailer said Pieri, Domeniconi and their employees will continue to have some equity ownership in the company. The company said The Grommet have "considerable autonomy," with no plans to change the startup's strategic direction. Pieri added that The Grommet will continue to run its wholesale business, which gives 10,000 retailers access to products showcase on its website.
"It’s a world right now where it’s Amazon and everyone else, pure and simple, and I love being able to move from sort of pushing the train from behind to being at the front with Ace," Pieri said. The Grommet has 85 employees.
