Dive Brief:
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The Grommet, a marketplace owned by Ace Hardware and specializing in small brands and quirky products, is shutting down, according to a LinkedIn post from Grommet founder Jules Pieri. On Wednesday The Grommet also notified customers by email of a liquidation sale.
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The platform, formerly known as The Daily Grommet, is laying off 44 people between Thursday and July 31, according to a WARN notice filed with the Commonwealth of Massachusetts. Neither Ace Hardware nor The Grommet returned several requests for more information.
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Ace Hardware acquired a majority stake in the platform in 2017 for an undisclosed amount. At the time, the companies said The Grommet would retain its autonomy and that Ace had no plans to interfere with its strategic direction.
Dive Insight:
When Ace took over The Grommet, it probably seemed like a lucrative opportunity for the marketplace and its sellers. The hardware retailer’s scale and well-known brand, plus the two companies’ merchandising synergies, seemed like upsides. Their deal gave the platform and its sellers a portal to brick and mortar, and Ace a way to appeal to younger consumers.
Yet the tie-up may have been The Grommet’s downfall, as “Ace’s co-op structure meant having to sell each store owner individually on a Grommet program,” according to the LinkedIn post from Pieri, who maintained a stake in the marketplace and remained in charge when it was sold but announced in 2020 that she left at Ace’s behest.
Ace Hardware stores with Grommet displays were somewhat akin to the Story spaces once found at some Macy’s stores, in that they featured merchandise from small, independent brands, many of them DTC — but on a much smaller scale and absent of any coordinated theme. An endcap with a Grommet banner at the Maine Ace Hardware store in Portland, Maine, at press time featured a small hodgepodge of items.
Everything must go. Score huge savings with UP TO 50% off* for a super limited time. Shop now at https://t.co/ihMhbKgeUB pic.twitter.com/Xo60y3NKXm
— Grommet (@TheGrommet) June 27, 2022
The marketplace’s demise also demonstrates more general difficulties often faced by e-commerce companies. While legacy retailers like Walmart, Target and even Ace have developed online and omnichannel capabilities, many pure-play e-retailers have struggled to establish physical footprints. Even Amazon threw in the towel when it came to its brick-and-mortar bookstores and 4-star general merchandise stores.
That has led many DTC brands to turn to wholesale as a more efficient channel for growth, and that had been Pieri’s strategy when Ace came calling, according to her post.
“As CEO I decided to commit hard and invested for wholesale success at Ace and beyond,” she said, adding that the co-op setup made that time-consuming and expensive. “Growth slowed and losses mounted. On top of that, customer acquisition via Google and Facebook (without concurrent investments in brand awareness) got impossibly pricey.”
