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Ace Hardware has announced opening offices in Shanghai to further expand its sourcing network and distribution options in China.

The Ace Global Distributing office was relocated from Hong Kong. Future plans call for the opening of a warehouse and distribution center in Shanghai later this year. Once open, Ace will be the first home improvement retailer with a warehouse in China. Ace believes the warehouse and distribution center will give its overseas retailers direct access to a wider assortment of products in smaller quantities and reduce operational costs.

An interesting quote regarding doing business with Wal-Mart:

“The way to avoid being trapped in a spiral of growing business and shrinking profits, says Carey, is to innovate. “You need to bring Wal-Mart new products - products consumers need. Because with those, Wal-Mart doesn’t have benchmarks to drive you down in price. They don’t have historical data, you don’t have competitors, they haven’t bid the products out to private-label makers. That’s how you can have higher prices and higher margins.”

Reasonable advice, but not universally useful. There has been an explosion of “innovation” in toothbrushes and toothpastes in the past five years, for instance; but a pickle is a pickle is a pickle.”

The people at Wal-Mart know full well their business model has reached levels of diminishing returns.  Proof positive is the new Plano, Texas location which is offering upscale merchandise in an attempt to see if Wal-Mart can either add to existing stores or open new store concepts attempting to get more affluent consumers to do business with an institution many of them dislike:

Wal-Mart Stores Inc. has overcome its rural roots and downscale image to attract affluent shoppers, but executives admit that many of those well-heeled consumers come only for cheap groceries and steer clear of the other merchandise.

In its boldest effort yet to target upscale shoppers, the nation’s largest retailer is opening a new store this week with an expanded selection of high-end electronics, more fine jewelry, hundreds of types of wine ranging up to $500 a bottle, and even a sushi bar.

Wal-Mart says it won’t duplicate this format anywhere else. But if plasma TVs, microbrewery beer and fancy balsamic vinegar sell in Plano, those items could be added to stores in other affluent communities.

The MSNBC.com article can be read here.

No doubt about it, the frugality Wal-Mart expects from its vendors is not a double standard:

Last fall, addressing a conference of American magazine editors in Puerto Rico, Scott finished his speech with a little story. He said Wal-Mart staff members who travel on business for the company — literally thousands are on the road all week, Monday to Thursday — are asked to take the pens from their hotel rooms and bring them back to the home office, to use as office supplies. Which means that each week, in Fairfield Inns and Hampton Inns and Hilton Garden Suites, Wal-Mart staffers pocket the ballpoint stick pins with the hotel logos on them, and carry them back to the home office in Bentonville.

The moment is revealing for two reasons — one intended by Lee Scott, and one unintended. First, of course, that is one heck of a frugal company. They ask their employees to systematically collect the free pens from hotels and use them for work. Wal-Mart could easily be harvesting 200 dozen free pens a week — 125,000 pens a year, or more. The company might be saving $10,000 or more on the cost of office pens. Now, $10,000 is real money, but clearly for Wal-Mart, it’s as much about instilling a tight-fisted, no-waste mindset in employees as about free pens.

Read the entire article at FastCompany.Com here.

Can be read here.