Hearth & Home June 2017

Varia 1V-100h from Spartherm.

2017 Buyer's Guide – Hearth Data

Note: The estimate of hearth specialty retailers in the U.S. is derived from Hearth & Home’s circulation database. All other data are from recent surveys.

FAST FACTS

Hearth Specialty Retailers - U.S.

3,107

Specialty Retailer Gross Revenues – Hearth products and accessories

U.S.

<$25,000

4%

$25,000 - $199,999

15%

$200,000 - $499,999

19%

$500,000 - $999,999

31%

$1,000,000 - $1,999,999

19%

$2,000,000 - $4,999,999

11%

>$5,000,000

1%

Percent of total hearth revenues represented by hearth accessories

9%

Average Target Gross Margin for 2016

40%

Average Actual Gross Margin for 2016

37%

Percentage of retailers equaling/exceeding average target gross margin

34%

Indoor selling area (median sq. ft.)

3,000

Indoor selling area devoted to hearth products in season (median sq. ft.)

2,000

Percentage of retailers who opened a new store in 2016

5.3%

Percentage of retailers who plan to open a new store in 2017

9.6%

Percentage of pellet appliance retailers selling pellet fuel

36%

Average tons of pellet fuel sold by pellet appliance retailers in 2016

890

Average U.S. wholesale price of pellets in 2016

$185

Average U.S. retail price of pellets in 2016

$242

Average number of units on the

Floor (F) and Burning (B) F B
Wood-burning 15 3
Pellet-burning 5 2
Vent-free gas-burning 3 2
Vented gas-burning 14 12
Electric 5 5

Average number of years retailing hearth products

26

U.S. Sales of Hearth Products
Year-to-Year Sales Change
U.S. Sales of Hearth Products Year to Year 2005 to 2016

During the past two years sales of hearth products have shown little growth, due primarily to climate warming and relatively low prices of fossil fuels.

Hearth Retailers’ Product Mix
Product Category % Retailers Selling
Hearth 62%
Hearth Barbecue 23%
Hearth Barbecue Patio 12%
Hearth Patio 3%

At 62%, there are far too many hearth retailers who have not diversified, but still sell only hearth products.

Retailers’ Market Area
Retailers' Market Area

Sixty-six percent of hearth retailers are in market areas with population under 250,000.

Total Retail Sales for All Products
2016
TOTAL RETAIL SALES FOR ALL PRODUCTS

Seventy percent of hearth retailers have total retail sales of under $2 million.

Retail Sales of Hearth Products and Hearth Related Accessories
2016
RETAIL SALES OF HEARTH PRODUCTS AND RELATED ACCESSORIES

Thirty-one percent of hearth retailers have sales of hearth products and related accessories over $1 million.

Years Retailing Hearth
Years Retailing Hearth

Fifty-four percent of hearth retailers have been in business over 20 years.

Number of Retail Stores Operated
Number of Stores Operated

Only 16% of hearth retailers operate more than one store.

Service Contracts
Service Contracts

The majority of hearth retailers have never embraced service contracts.

Outlook for Selling Hearth Products
Outlook for Selling Hearth Products

Sixty-one percent of hearth dealers expect business to be better in 2017 than in the prior year.

United States
Wood Stove Sales
U.S. Wood Stove Sales

For wood stoves, steel remains the material of choice (56%), freestanding is still the preferred type (66%), and non-catalytic is the technology of choice (81%).

United States
Gas Stove Sales
U.S. Gas Stove Sales

For gas stoves, cast iron is the favored material (62%), fireplace inserts are the preferred type (53%), and direct-vent the favored technology (86%).

 

Pellet Fuel – U.S. Averages

Average Wholesale Price

$185

Average Retail Price

$242

 

Average Tons of Pellets Sold by Dealer
Average Tons of Pellets Sold by Dealer

Together, the Northeast and Midwest regions accounted for 95% of pellet fuel sold in 2016.

Sell Pellet Fuel
Percent of Pellet Retailers
Percent of retailers who sell pellet fuel in 2014

Only 36% of hearth retailers sell pellet fuel.

Sell Solar Products
Percent of Pellet Retailers
Percent of retailers able to secure pellet fuel in 2014

To date, only 3% of hearth retailers also sell solar products.

 


Average number of tons sold by Dealer
890 tons


Percent of pellet retailers
able to secure pellet fuel
100%


Median Years Selling Solar
8 Years


Average percent of business
that solar represents annually
13%


Average percent of business
solar represented two years ago
9%


The four charts below show 2016 specialty retailer sales to retail customers, new housing contractors, and remodeling contractors for the indicated products.

Wood Stove/Insert Sales
2016
U.S. Wood Stove and Insert Sales to retail customers, new housing contractors, and remodeling contractors
Wood Fireplace Sales
2016
U.S. Wood Fireplace Sales to retail customers, new housing contractors, and remodeling contractors
Gas Stove/Insert Sales
2016
U.S. Gas Stove and Insert Sales to retail customers, new housing contractors, and remodeling contractors
Gas Fireplace Sales
2016
U.S. Gas Fireplace Sales to retail customers, new housing contractors, and remodeling contractors

 

Percent of Hearth Business by Category at Retail
Percent of Hearth Business by Category at Retail

In the hearth specialty retail channel, sales of vented gas appliances are approaching 50% of total hearth sales.

 

Hearth Accessories
Percent of Hearth Revenues
Hearth Accessories

Sixteen percent of hearth retailers receive over 10% of their gross revenue from hearth accessories.

2016 Hearth Appliance Sales
Percent of New Installations
2015 hearth appliance sales, percent of new installations

For 72% of responding retailers, new installations accounted for more than 50% of their hearth appliance sales in 2016.


 

Type of Hearth Product Replaced
Type of hearth product replaced

When selling a hearth product as a replacement, 55% of those sales are to replace either an inefficient wood fireplace or a pre-EPA stove.

Which Days of the Week Are You Closed?
Type of hearth product replaced

Only 17% of hearth retailers remain open seven days a week.

Retailer Primary Focus
U.S. Wood Stove and Insert Sales to retail customers, new housing contractors, and remodeling contractors

In 2016, only 10% of hearth dealers sell all three product lines – hearth, patio and barbecue.

Hearth Products Installations
How They Are Handled
Hearth Products Isntallations

The majority of hearth installations (64%) are handled by the owner or employees of the store.


 

Installation Backlog Days
2011 – 2016
Installation backlog days from 2010 to 2015

Installation backlog days were greater in both 2015 and 2014 than in the past year (2016).

Product Category Penetration
U.S. Retailers - Products Carried
Hearth product category penetration

Electric fireplaces and electric stoves have made considerable progress in dealer penetration. They are now carried by 53% and 23%, respectively, of hearth retailers.

Fireplace Sales
That Included Add-ons
fireplace sales that included add-ons

There appears to be only slight interest in fireplace surrounds (18%) and mantels (14%) to accompany the sale of a fireplace.

Gross Revenue by Category
2016
Gross revenue by category

The average hearth retailer receives 25% of his/her revenue from outdoor products – barbecue, patio furnishings, spas, pools, and lawn and garden.

 

Hearth Purchases
2016
hearth purchases

Similar to last year, 62% of hearth purchases by retailers are made in the last half of the year.

Expectations for 2017
Expectations for 2017

Gas will remain king in 2017, although wood will make a minor come-back.

 

Average Price Point
Clean-burning Fireplaces $4,348
Wood Inserts $3,671
Pellet Inserts $3,569
Vented Gas Fireplaces $3,411
Pellet Stoves $3,197
Vented Gas Inserts $3,160
Zero-Clearance Fireplaces $2,860
Vented Gas Stoves $2,667
Wood Stoves $2,321
Vent-free Gas Stoves $1,450
Vent-free Gas Fireplaces $1,328
Vented Gas Logs $1,185
Electric Fireplaces $1,062
Vent-free Gas Logs $953

Clean-burning fireplaces are the most expensive hearth products, while vented and vent-free gas logs, and electric fireplaces, are the least expensive.

U.S. Overall Product Sales 2016
u.s. overall product sales

It wasn’t a great year for hearth products, but it was a horrible year for pellet appliances; pellet stoves were down 14% from 2015 (which was a bad year), and pellet inserts were down 11%.

Increase in Marketing Dollars
Year % Retailers Average Increase
2017 29% 19%
2016 20% 12%
2015 36% 14%
2014 N/A N/A
2013 30% 13%

In 2017, 29% of hearth retailers plan to increase their marketing dollars, and by an average of 19%.

 

Clearion See-Thru Electric Fireplace from Napoleon Fireplaces.

 


click here to view and download hearth shipment data from the HPBA 2005 through 2016

Click the thumbnail above to view Hearth Shipment Data from the HPBA from 2005 – 2016

More Industry Data

2017 May Business Climate

In early June, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare May 2017 sales to May 2016. The accompanying charts and selected comments are from the 196 useable returns.

» Continue

2017 April Business Climate

In early May, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare April 2017 sales to April 2016. The accompanying charts and selected comments are from the 232 useable returns.

» Continue