In an exclusive interview, Michael Costello, CEO of Deer Park, N.Y.–based Costello’s Ace Hardware, reflects on the values and strategies that have shaped his more than 50-year-old family-owned business into a thriving multistate enterprise. Drawing on lessons from his parents, Vincent and Margaret, Costello emphasizes the importance of leading by example, treating people with respect and prioritizing relationships in every business decision.
These principles have guided the company’s growth to its current 51 locations across Maryland, New York, New Jersey, Pennsylvania and Virginia. Most recently, Costello’s Ace Hardware expanded into new areas in Pennsylvania, strengthening its presence in the Northeast market. The company has also carved out a unique niche with its Hearth & Home division, which specializes in products such as fireplaces, stoves and grills—a strategic focus that has set it apart in the competitive hardware retail landscape.
Costello highlights an aggressive yet thoughtful expansion strategy, from acquiring new locations to developing these specialized offerings. The company’s innovative approach includes centralized fulfillment services and home-related products designed to meet evolving customer needs. Here, he shares insights into working with family, navigating challenges in acquisitions and cultivating a team-oriented company culture.
Hardware Connection: What lessons did your parents teach you that still resound today?
Michael Costello: The best lesson from my parents was how they acted. They didn’t tell you to be generous; they were just generous. They didn’t tell you to be responsible. They just acted responsible.
What’s your favorite part of being in the hardware business?
Growth. It’s exciting to be able to serve more customers in more neighborhoods, and it’s rewarding to see the impact and opportunities that growth has created for our team. Frank Aquino, our director of merchandising, started as a part-time sales associate when he was 16. It was neither his nor our plan for him to have this position more than two decades ago, especially since the position didn’t exist in the company. Frank, and so many of his peers, have committed themselves to continuous improvement; they are the reason the company has grown. We like to think that company growth provides additional inspiration to individuals to achieve greater heights.
What’s the best business decision you’ve ever made?
If I had to give you the top five, they all would be centered on people: who we brought on, or who moved on. But it’s always about people.
Costello’s Ace Hardware is a good example of smart succession planning. What are the keys that helped move the business to a new generation?
Dad was truly a steward. In his mind, the company was not his to do as he pleased. He was accountable for leading and nurturing it to success and growth for as long as he was able. And when the time came, he would put his faith in his children to carry the company forward. That’s what succession planning is all about.
Every day, you work with several family members. What advice would you give other hardware store owners to successfully run a family business?
One thing we all learned from my father is that there is no boss among us. The boss is the customer, and the values of the company are the highest authority. With a family business, take ego out of the equation and you’re not going to have a lot of conflict. There’s no shortage of passion. We each have ideas on how things should get done, but at the end of the day, you live and you lean on the values together. We talk a lot about values in the company. By keeping values at the forefront, we remember our business is not to serve ourselves, it’s to serve our customers and to honor our parents. Mom and Dad started with very little and took incredible risks with the vision of passing it along to their kids.
You’ve steadily built the company to more than 50 locations. Describe your expansion strategy.
The strategy has always been based on the opportunity. If we go back 20 years, the strategy was based on underserved markets, because regional home centers were going out of business. So we focused our energies in markets that we knew had communities and people who supported stores in the past. There’s always risk in business, but our chances for success would be high because we knew the markets and history.
Over time, our strategy has transformed to acquiring existing stores from retiring owners. There are a couple of reasons for that. First, it’s increasingly difficult to predict the success of a new store, how long it will take for the neighborhood to respond and how well we will be able to serve customers out of the gate. Much of the knowledge and skills needed to successfully serve in our business takes years to develop, and there just aren’t as many folks available as there once were. The larger reason is how fulfilling it is to be the succession plan when owners don’t have kids to pass the business to. For so many hardware store owners this is their life’s work—they love their community, they love their employees and they’ve reached a point where it’s time to retire. We are thrilled to be part of a solution that keeps businesses thriving, employees working and communities served.
What’s an example?
One recent example is Warrenville Paint & Hardware in Warren, N.J. It is a successful True Value store for 47 years, owned and operated by Bill McDonald. Over the years, Bill and his wife, Michelle, assemble a talented team, serve their community tirelessly and build a very successful business. When they reached retirement age, their kids were all mature, successful with careers of their own, so they looked for the best pathway forward for their business, employees, customers and community. For us to be able to step in and take over for Bill and Michelle is an honor.
What kind of community analytics do you look at before expanding? What’s your checklist?
When we’re looking at a new market, we’re trying to answer the question “does the community need an Ace Hardware store?” There are a few factors that help us answer this. Market density is one. We like to be where there are plenty of homes or planned growth. Also, distance from the big boxes. We want to be in a more convenient location for our customers than the boxes. The more driving time we can save them, the better. Additionally, we use a lot of demographic analytics that Ace provides. This helps predict the number of consumers in the market who are likely to shop at an Ace store.
We’re not the low-price leader, and we know that. We offer service like other retailers our size do, and we ask customers to pay a higher price. We look for a little more affluence, a little more expendable income and, again, distance from the boxes. But there are no hard-and-fast rules. We try to balance those factors out.
Describe your approach when deciding to open new stores.
When we’re looking to add stores, we generally start by identifying regions adjacent to where we already are. Supporting our stores is important, and close geographic proximity makes efficient store support possible. When we have outliers that are hundreds of miles from their peers, we can’t give them the same kind of attention. We rely on a combination of talent—Ace’s new business team, regional real estate professionals and market experts—to pinpoint where we want to be.
What makes Costello’s Ace Hardware distinctive?
We think of ourselves as forward-thinking. We like to embrace what we think is coming next. I’m proud of the things that we jumped on early, like embracing online sales, building an outside sales force and investing in delivery and centralized fulfillment for our grills. We are investing in home services and envision this a big part of the future, both in diversifying our business and increasing stickiness with our core customers.
That’s a fascinating niche. What has driven its growth?
We acquired the Hearth & Spa business as part of an acquisition. This particular retailer had three Ace Hardware stores, each containing showrooms for fireplace inserts, pellet stoves, hot tubs. It was a significant part of the business, beyond what I would call a niche. We saw Hearth & Spa as this opportunity; there was potential to grow further. What allowed us to even consider taking this on was that we were acquiring the talent to run and grow that business. It has worked out well. We have built new showrooms that sell product within our stores. And we made three acquisitions in the past five years in the hearth-and-spa world. Now we have 16 Hearth & Spa showrooms and a dedicated sales team. But it’s not just about selling products—it’s also a team of dedicated technicians performing installation, service and maintenance. Our vision is to expand both the size of our field team and the suite of services we provide.
