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Hearth & Home December 2017

L to R (top): Falco’s, Bachle’s Fireplace Furnishings & Outdoor,
L to R (bottom): David’s Stove Shop, Best Fire

HEARTH: A Good Year for Most

By Bill Sendelback

It has been a surprisingly good year for hearth products, as well as a break-out year for sales of electric fireplaces through the specialty channel.

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Wayne Stritsman Janet Merschat George Breiwa Fred Kirkpatrick
Nate Rice David Clack Dominic Federico Brian Nelson
Bill Mathewson Cathy Galbreath-Buzzbee Larry Bourne Grant Falco
Charlie Turner Sharla Dupuis Steve Pulone Doug Houston

It’s been a good year for hearth product sales through the specialty hearth channel – not a great year, just a good year. Most dealers are happy to have a slight sales increase, or at least to hit 2016 numbers. Yes, a very few are enjoying large sales increases, predominantly in the West and mainly the result of a strong, growing economy in their area.

Forecasts for next year are just as unpredictable as hurricanes off the southern coast of the U.S. For most dealers, it will depend on the obvious – cold weather and the price of heating fuel. It may be just wishful thinking, but many dealers in snowbelt areas are hearing that it will be a cold winter that will provide momentum to 2018 hearth sales.

Gas hearth products, especially direct-vent fireplaces, are king in most areas and continue to take market share from wood, pellets and electric fires. Wood-burner sales are relatively stable, but some are surprised to see gas models taking the long-term bloom off wood stove sales in their area.

Very few retailers tell us that sales of pellet stoves are up this year; most say pellet stove sales are down as customers shift to gas models. Many retailers have opted not to offer pellet stoves at all. Electric fires, too, are not big sellers for many retailers, but a few are seeing an uptick in electric fire sales in areas where the aesthetics of a fire are more important than heat. Homebuilders now seem more responsive to electric fires due to their ease of installation.

Wayne Stritsman
Best Fire
Albany, New York

Sales of hearth products are up at Best Fire, and up “dramatically” as fall begins, according to Wayne Stritsman, Sales manager. “Housing starts are flat,” he says, “but we’re seeing a lot of remodels. With 90 to 95% of our sales including installation, our sales are limited only by our capacity to install.” Part of that limitation is Best Fire’s difficulty finding qualified and willing-to-work manpower.

Best Fire sales include a high percentage of gas models, and while sales of wood burners are soft, Stritsman says pellet stove sales have been “brisk” because of a New York state change-out program.

Stritsman sees 2018 as a big question mark, dependent on the actions of the current administration and increasing worldwide security threats. He does think new-home construction will be up and remodels will continue to be “very robust.”

“Sales can be strong if you are willing to market yourself,” he says. “Don’t wait for the market to dump something, like higher fuel prices, in your lap.”

Nate Rice
Friends of the Sun
Manchester Center, Vermont

Hearth product sales are up, and it has been a “good” year at Friends of the Sun, according to Nate Rice, manager. “We haven’t had any cold weather yet, but traffic is increasing,” he says.

Although wood burners are Rice’s primary hearth product category, gas hearth products, propane-fueled since natural gas is not available in the area, are up the most. Pellet stove sales are down, and Rice says many consumers are moving to gas because of convenience and the cheaper fuel prices.

Electric fireplaces are up again because of their convenience, and
because many customers are only looking for the ambiance of a flame. Rice’s market area is “behind the curve” on consumer acceptance of contemporary and linear models. But he is seeing an increase in interest in contemporary units.

The Manchester area is a second-home market for New York City and Connecticut, and while new home construction is not as robust as in the past, Rice is seeing an uptick in home building.

Sales success next year at Friends of the Sun depends on the cost of heating fuels and the weather, says Rice. But with talks of a cold winter this year, he expects hearth sales in 2018 to “stay stable.” Changes for Rice’s business next year include updating his product offerings and putting more burning models on display.

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Bill Mathewson
Home Comfort Warehouse
White River Junction, Vermont

“This year is shaping up to be another consecutive disappointing year,” says Bill Mathewson, president of Home Comfort Warehouse, citing another warm season as much of the reason. “Our business is highly dependent on cold weather,” he says, and weather is the key to a better 2018.

Propane gas-fueled hearth products are strong for Mathewson, with gas fireplace inserts selling “disproportionately” well in primarily a stove market. Pellet stove sales “sparked” in September, but then disappeared from his sales radar.

Mathewson also sells heat pumps. His retail strategy is to offer only products that require installation – no grills, no patio. He says this sets Home Comfort Warehouse apart from area mass merchants, and he reports that his installation services are profitable.

Mathewson will be looking to add “distinctive, high end” gas fireplaces to his lineup. But “distinctive” does not necessarily mean “innovative” to him. “What manufacturers see as innovative, such as complicated remotes and apps, we’re not seeing any demand for from consumers. No one is coming in our door asking for these features. More hearth products are becoming too complicated, needing more service. And dealers lose money on warranty services.”

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Charlie Turner
Cricket on the Hearth
Rochester, New York

After a slow start to this season, Cricket on the Hearth, is doing “very well” in hearth product sales, according to Charlie Turner, president. “Our economy is pretty crappy,” he says, “and Rochester is one of the poorest cities in the country. But the upper percentile of customers is buying hearth products as a luxury, not a necessity.”

Turner is selling gas fireplace inserts “in a big way” fueled by the predominance of masonry fireplaces in his market area. “We don’t have a lot of building going on,” he says, “so fireplaces are for remodels only.” What’s not selling are pellet appliances. “I quit selling pellet stoves for the second time. We have natural gas almost everywhere, but very little heating oil or propane.”

Turner thinks the federal government is “headed in the right
direction” with actions that will benefit the public. He’s hoping this will create more jobs in his market to give his 2018 sales a boost, and he hopes the recent government reining in of the Environmental Protection Agency (EPA) will help.

Located in a mall, Cricket on the Hearth has expanded 50% over the past 12 years. Now Turner plans to concentrate on his core products, wood and gas stoves, fireplace inserts and vented gas fireplaces. “Since the Internet has killed so many brick and mortar stores,” he says, “we need products that require installation in order to survive.”

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Janet Merschat
Rustic by Design Fireplace & Patio
Morgantown, West Virginia

Hearth product sales this year have been “fine, about the same as last year,” according to Janet Merschat, company owner. Gas hearth products are still the biggest sellers for Merschat, but she has been “surprised” by the recent increase in sales of wood-burning stoves and fireplace inserts. She sells very, very few pellet models.

Warm weather has slowed hearth sales this season with temps in the 70s and 80s in late fall. Merschat hopes that will change for 2018, bringing cold weather that just might stimulate sales.

Morgantown is a college town, so the economy is “good,” Merschat says. She has expanded Rustic by Design every recent year in both floor space and products. But this year, and probably throughout 2018, she plans to “hold our own” on any expansion plans.

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David Clack
David’s Stove Shop
Weatherford, Texas

“Last year was not a year to brag about, and it looks like 2017 will match that,” says David Clack, president. “Sales are so dependent on the weather, and we’ve had mild winters the past several years so I’m generally pessimistic about next year. We’re taking it day by day despite the fact that the economy in the greater Dallas-Fort Worth area is always good.”

According to Clack, gas hearth products are seeing some sales increases, and pellet stoves show stronger sales than either wood or gas models and are slowly gaining strength. “The biggest change we’ve seen is in wood-burning fireplace inserts. This was our biggest hearth category years ago, but that has slowly decreased.”

Clack is ambivalent about the benefits of advertising. “I don’t think it does much to help our sales,” he says, “but like fishing, we’ll bait all the hooks we can.”

Due to the lack of growth in hearth sales, Clack has found it necessary to diversify. He dropped his John Deere equipment dealership, added pellet cookers, decorative home products, and six years ago he opened an adjoining barbecue café.

“Manufacturers seem to be going in a different direction than we are,” Clack says. “They are introducing new products our customers don’t want. The whole industry is scary because we won’t see growth unless heating fuel costs go up. But with today’s very tight, well-insulated new homes, I can’t in good conscious sell wood or pellet stoves to those customers because we don’t need that much heat.”

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Cathy Galbreath-Buzzbee
ABSCO Fireplace & Patio
Birmingham, Alabama

Although hearth sales have been “good” this year, Cathy Galbreath-Buzzbee, owner of ABSCO, hopes for a cold winter after a warm 2016. “Going into this fall, we still had 87 degree temperatures here,” she says.

ABSCO’s main business is gas logs that “always sell well,” says Galbreath-Buzzbee. Although ABSCO does not sell many fireplaces except for some vent-free fireboxes, it sells “a ton” of grates, and fire pits are “selling like crazy.” “We’re scaling back on hearth,” she says. “With all the manufacturer consolidations and resulting confusion among brands, it’s just getting too difficult to do hearth business.”

Birmingham’s economy is “flat,” Galbreath-Buzzbee says, and even with some increases in new home construction, she doesn’t see much changing for 2018. “So we plan to hold our own without any major changes here.”

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Sharla Dupuis
Aspen Hearth and Home
Blairsville, Georgia

With the local economy back to “maybe 60%” of what it was in the past, hearth product sales are “a little slower” than 2016 because of the warm weather, says Sharla Dupuis, co-owner.

Usually she would sell “wood, wood and more wood,” including “a ton” of wood-burning fireplace inserts, but Dupuis now says she is shocked that now she is selling more gas products than wood units. “This is not our norm,” she says. An uptick in new home construction is helping sales of direct-vent gas fireplaces.

“We’re hearing that this winter will be colder than normal down here, so that will stimulate sales of more wood burners next year,” Dupuis says. But 2018 will bring uncertainty for Aspen Hearth and Home. “They are widening the road in front of our place, so our building will be torn down, and we’ll have no choice but to relocate.”

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George Breiwa
Chimney Specialists
Highland, Wisconsin

Despite a very warm fall and not a “normal” rush of customers, hearth sales were up 10 to 15% going into winter, with a historically strong fourth quarter yet to come, says George Breiwa, president. He has seen some renewed interest in wood burners, but pellet stove sales are down.

“The economy in our area is mixed,” he says. “We seem to have full employment, but many have topped out on wages, so they are now stretched financially. However, I’m cautiously optimistic.” Breiwa, like some other hearth retailers, is having trouble hiring qualified people.

“The lifestyle available through government entitlements today seems to make it too comfortable for those not willing to work,” he says. He also points out that employment in the trades is “bleak” as that segment of employees is getting older and many left the job market during the last recession.

Breiwa sees continued low fuel prices for 2018 and “slow, incremental” sales growth. But he is particularly concerned about continued increases in our U.S. national debt, the actions of the Fed, and the potential for an “implosion of our national economy, now in a dangerous bubble.” So his actions for 2018 will be to watch his profit-and-loss statements, reduce overhead to “do more with less” and manage his risk.

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Dominic Federico
Country Stove Company
North Royalton, Ohio

Country Stove Company experienced an early start to the season; they’re busier than normal, according to Dominic Federico, owner. “Our economy is doing well with more new home construction and remodels. After two warm winters, customers are ready to gear up for a colder season and are confident in spending money.” Federico expects a late sales season, like 2016, but if this season is colder with more snow, as some predict, he will have a “strong” 2017 that he hopes will provide momentum into 2018.

Wood burners have been a sales surprise for Federico, after gas models dominated his sales last year. But while hearth products are selling well, Federico’s sales of outdoor products and hot tubs have been slow. “We have expanded our offerings in our existing product categories, but we’re always looking for new product categories the mass merchants don’t have.” A recent showroom remodel has given Federico’s wood burners more display space.

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Larry Bourne
Bachle’s Fireplace Furnishings & Outdoor
Oklahoma City, Oklahoma

Bachle’s is doing “great” this year in hearth products, up 67%, says Larry Bourne, owner. “We mostly sell accessory products rather than appliances,” he says. “Gas logs are our biggest sellers, but glass door sales are steady, and electric fireplace sales are up as more homebuilders are installing them. We’re doing a lot of remodels, and sales of custom products are up.”

The economy in Bourne’s market area is doing “surprisingly well. It’s based on the oil industry, but the city has done a good job of bringing in more industries.”

Bourne cites two new distribution centers coming from Amazon, and Boeing is hiring people. “We’re not into fireplaces, but contractors and designers want to do business with us, so we special order for them. We’re now even seeing homes with four or five new fireplaces.”

Bourne expects to see his sales continue to climb in 2018, but that’s weather dependent. That growth does create problems; he’s running out of warehouse room, and is expanding his space and also expanding his product offerings in the lines he currently carries. Bachle’s also has added kitchen cabinets and a design center to serve contractors, designers and consumers.

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Steve Pulone
O’Malia’s Fireplace Shop
Carmel, Indiana

“Our hearth product sales are good this year, a slight uptick from 2016,” says Steve Pulone, vice president of Operations. “The first four months of this year were slow, but we’re seeing an uptick now. People are coming in earlier this year, and they are coming in ready to buy – not two or three visits to kick the tires.”

Gas logs, glass doors and direct-vent gas fireplaces are selling well at O’Malia’s, but Pulone is surprised at the sales growth of electric fireplaces. “Customers where venting is extremely difficult are finding electric fires are their answer,” he says. Many are coming in with computer printouts on electric fires from websites offering decorating information, he says. On the flip side, pellet stoves and mantles are not doing well at O’Malia’s.

The economy in the greater Carmel area is “booming,” according to Pulone, with a lot of general construction and high-end homebuilder business.

He expects to be up 5 to 10% this year, and after a recent $50,000 showroom remodel, a complete upgrade of product displays, and adding a new fireplace line, he expects to see a 5 to 15% sales increase next year.

Pulone also has added a good-better-best purchasing strategy, a suggestion of his late father and hearth industry icon, Ron Pulone. O’Malia’s is adding a full-time salesperson to specifically work with homebuilders and designers.

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Fred Kirkpatrick
Classic Heat Source
Portland, Oregon

It has been a “really good” hearth sales year for Classic Heat Source, says Fred Kirkpatrick, owner and general manager. Sales are not strong for gas or pellet models, but Classic Heat now sells mostly wood burners, partially as a result of Oregon’s tax credit for purchases of efficient, EPA-certified wood and pellet stoves. Based on published EPA efficiency numbers, the tax credit increases as the efficiency numbers improve.

“Based on that formula, we’ve actually seen tax credits of as much as $1,000,” says Kirkpatrick. He promotes the EPA efficiency numbers of his products rather than relying on manufacturers’ information, which he thinks tend to be overly optimistic.

Next year is difficult for Kirkpatrick to forecast. The economy in his area is “booming” with building permits way up. “I’m conservative when it comes to money, so we ‘go with the flow’ as it happens,” he says. Being conservative, he does not “overly participate” in early-buy purchases. “Our money would be tied up, and half of that inventory may sit there if we guess wrong and consumers don’t want it.”

Conservative? Perhaps, but Kirkpatrick is rolling the dice on 2018. He has purchased property in a better neighborhood in nearby Gresham, Oregon, on which to build a larger store.

Replacement parts are “huge” business for Kirkpatrick. “If you don’t have a good parts department and inventory, providing parts even for products you don’t sell, you’re missing out on big sales and profits,” he says.

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Brian Nelson
Ace Hardware
Payson, Arizona

“It has been absolutely a good hearth year; we’re up 11%,” says Brian Nelson, Hearth manager. Gas hearth products are not selling well because of the expensive propane in the area, but that has helped pellet stove sales. “It’s an easy-to-use fuel, and we sell pellet stoves all day long.”

Payson, in the mountains northeast of Phoenix, has many vacation homes and a good local economy. “People are spending money, and they don’t hesitate to put a $3,000 deposit on a hearth product. We’re booked out for installations. So we expect an absolutely good 2018.”

Paul’s Ace Hardware, with seven stores in the greater Phoenix area, purchased the Payson store a year ago, so Nelson says that, at this time, the store will “stick with our current high-dollar hearth lines.”

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Grant Falco
Spokane, Washington

Hearth sales at Falco’s have been “outstanding, up 25 to 30% this year,” according to Grant Falco, general manager. “We’ve had steady 10 to 15% annual sales increases for the past few years,” he says. “We have an extraordinarily good economy, with relocations from Seattle fueling new-home construction and a high demand for remodels.”

Gas hearth products dominate at Falco’s, up 40%, while pellet and wood sales are “off slightly.” To stimulate counter-seasonal business, Falco’s now is selling and installing air conditioning, in addition to grills and portable cooler containers. “We also sell pellets – anything to bring people in the door to maybe buy a hearth product,” he says.

Falco claims he’s a skeptic, but he is “extremely optimistic” about the next two years, forecasting a slight sales increase each year.

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Doug Houston
Fireplace Distributors of Nevada
Reno, Nevada

This year has been a “phenomenal” year for hearth product sales at Fireplace Distributors of Nevada, according to Doug Houston, president. “In 2008 during the recession,” he says, “we had 15 employees. Now we’re up to 48 and I can’t find enough qualified people.”

Wood-stove sales have declined because of burn restrictions in the Reno area. “We still sell wood, but we now sell a tremendous amount of gas models, both fireplaces and stoves,” he says. Houston is also selling more pellet stoves because of the rising costs of propane in the area. But electric fire sales have been a big surprise, now amounting to “a big part of our business,” because of the growing number of apartments in the area.

The economy in Reno is booming, creating a severe housing shortage. Tesla has built a large warehouse and battery factory there, and Google has moved in with a large operation. Both companies are bringing in many Californians to live and work.

“We’re becoming another Silicon Valley,” says Houston. “They can’t build houses fast enough, and we’re booked out four weeks on installations.” Fortunately, Fireplace Distributors deals with 85% of the area home developers, and he also sells them garage doors, which account for half of his business.

With a strong demand for housing in the area and the company’s strong growth in hearth products sales, Houston believes 2018 sales will be “just as good” as 2017.

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More Stories in this Issue

2017 Retail: Past & Future

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Hearth & Home interviewed 48 specialty retailers of hearth, patio and barbecue products throughout the U.S. to determine how well they fared in 2017. For some it was a great year, for some it was a bad year, and for most it was an acceptable year.

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The Carys of Wichita

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2017 October Business Climate

In early November Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare October 2017 sales to October 2016. The accompanying charts and selected comments are from the 214 useable returns.

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Parting Shot: Smart Move

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