Why generational leadership is to thank for the success of leading retailer, Costello’s Ace Hardware
Family owned by the Costello family for more than 50 years, Costello’s Ace Hardware (Costello’s Ace) offers an extensive range of products and services for home improvement, automotive, and DIY needs. The business has grown from a single hardware store to a network of 48 locations across five states: New York, New Jersey, Maryland, Pennsylvania, and Virginia.
Offering everything from electrical products and household care items to outdoor furniture and hot tubs, its portfolio also includes a growing hearth and spa business, providing stoves, inserts, and fireplaces, as well as hot tubs, at 14 showrooms in Maryland, Virginia, New York, and New Jersey. Costello’s Ace has also established a reputation for customer service, helping people find optimal solutions that meet a range of requirements and budgets.
Robust relationships
The company’s success to date would not have been possible without the sheer determination and passion of founder, Vincent Costello. Having been forced to close his air conditioning business during the oil shock recession in the 1970s, Vincent was presented with an opportunity to take over ownership of a small, fledgling hardware store in Deer Park, New York. With ten children to provide for, he took the risk, despite the challenges of the economy and having no previous retail experience.
“It was his strong values and hard work that guided him through the years that followed,” begins Michael Costello, Vincent’s son, and current CEO. “Over the course of five years, he transformed that 2300-square-foot store from dismal sales to a thriving location that offered extraordinary customer service. He was a genuine problem solver and ‘people person,’ always advocating for the customer and helping them in whatever ways he thought best. There was an era of consistency about my dad; he was great at building strong and trusting relationships, which led to an incredible alignment between him, customers, vendors, local businesses, and the community.
“Dad was driven by the idea of growth, both personally and for the business. He was compelled to make himself smarter every day by taking risks and learning from mistakes, as he knew that growing the business relied on the personal growth of himself and his employees. He built a rapport with his landlord, who then acquired another commercial building and offered him the chance to open another location. By refinancing his home, he opened the second store, a 5000-square-foot industrial space, in 1982. The same thing happened for our third and fourth stores too, as the landlord developed shopping centers in the little-known town of Nesconset, and then Farmingdale. We were not well-funded back then. Success came through hard work, patience, and doing more with less. Eventually it paid off, which fueled further growth into larger outlets.
“Aside from stores, a major turning point in our history occurred when we became Ace Hardware (Ace) dealers, which was in the early 1980s as we were opening the second store. The partnership had multiple benefits, as being associated with a successful brand gave us instant credibility, lower cost of goods, and freed my dad from the heavy demands of product sourcing, which freed up time for him to do what he enjoyed – helping customers. Also, while Ace was well-known in other parts of the country, ours was only one of two stores on Long Island at the time, so our partnership had opportunities for mutual growth.”
Growth through acquisition
Michael has learned first-hand from his father, having experienced his determination to succeed while prioritizing customers and the community. “I was just ten years old when my dad took over the first store, so although I was too young to work, I hung around – probably causing a nuisance – and helped out where I could with cleaning and putting away stock,” Michael reflects. “I spent a good chunk of my childhood like this, which looking back, gave me an opportunity to learn from scratch and has shaped how I lead the business today. 
“I have nine siblings in total, with six of us currently involved in the business. My three older siblings had already established their careers or were at college by the time our dad had taken over the first store, so they didn’t have the same opportunity to get involved as some of us younger siblings did. With our dad’s support and guidance, myself and my siblings, Michael, Jaime, Tim, Dan, Joey, and Bobby, became owners in 2001, opening a 24,000-square-foot home center, our largest store to date. We have maintained our leadership structure since his passing almost eight years ago.
“We are all equal owners and are all active in the day-to-day operations of the business. My sister is our President; my brothers occupy the roles of Marketing Director, Merchandising Specialist, District Operations Director, and IT Director. We also have some from the next generation involved too, not in leadership roles just yet, but learning the ropes from their parents as we did from ours.”
While Michael, Jaime, Tim, Dan, Joey, and Bobby have retained their father’s hunger for growth, they have changed the company’s approach to opening new stores. “Our early growth has historically been ground-up stores, or in other words, leasing an empty building and building a team from nothing. This was fueled by population growth and changes in competition, which led to the demise of many regional home center brands.
“However, there aren’t nearly as many open markets in the areas we operate, so we have shifted our focus over the past ten years more towards acquisitions of existing stores. Growth through acquisition serves us in two ways. Firstly, it decreases risk. We are not starting from the ground; we have a team, a customer base, and history, as in many cases we are acquiring businesses that have been around longer than we have.
“Secondly, we get to provide a succession plan for a business that doesn’t yet have one, which provides our business with a strong social purpose,” Michael adds. “We are passionate about helping fellow small business owners in our industry, and we want to continue the legacy they have worked so hard to create, supporting the local community and economy.
“We recently acquired Smith’s Ace Hardware (Smith’s), which saw us take on an additional five Ace stores in New Jersey and Pennsylvania. This was our largest acquisition to date, but it was a successful transition. As Smith’s already operated Ace stores, we had many similarities like using the same computer platform and technology, which allowed for seamless integration. George and Ed Smith built an amazing company and family; any retail company would be proud to be associated with these stores and this team, and we feel honored to have them in our family.”
As our conversation draws to a close, Michael turns to the current activities of Costello’s Ace and how he is planning to take the business to new heights of success. “We’re currently in the process of relocating one of our stores, as well as building a new site from the ground up in New Jersey,” he says. “There are a lot of moving parts and we’re also preparing to announce another New Jersey acquisition, which is super exciting.
“Our growth has historically been one step at a time, so there are always ongoing conversations about growth, whether through additional stores or acquisitions,” he concludes. “We have ambitious plans to double the business over the next five years and grow our family to more than 75 stores by 2030 while developing a world-class team and maintaining the high level of customer care we have become known for.”