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Hearth & Home April 2018

Down, Not Out

It’s clear that the barbecue industry could really use a jump start.

Ed. Note: During the first week of February, Hearth & Home sent a survey to 2,500 retailers of barbecue products. A total of 192 were returned and useable.

Questions:

Do you consider the margin you make on your barbecue products to be too low?

Are more of your customers creating Outdoor Rooms?

What could barbecue manufacturers do to help you sell more of their products?

U.S. Barbecue Products Sales
Year-to-Year Sales Change
U.S. Sales of Hearth Products

The chart clearly shows that the year 2014 was an anomaly. In 2017, the downward trend continued.

Sales of Barbecue Products
2017 Compared to 2016
U.S. Sales of Hearth Products

Sales of barbecue products were down in the U.S., but up 7% in Canada. In the U.S., the Northeast posted the strongest gains (+10%), followed by the South (+9%).

2017 Sales of Barbecue Products
Retailers Up/Down/Same
U.S. Sales of Hearth Products

Sixty-seven percent of barbecue retailers in the West were up in barbecue sales or the same as the prior year. In the Northeast, only 8% were up.

NORTHEAST

Maryland: “Yes, margins are too low.”

New Jersey: “Margins are very low. A few of our customers have Outdoor Rooms. Manufacturers should stay off the Internet and out of Box stores!”

New York: “Yes, I do feel the margins are too low as the industry is flooded with gas grills. It seems manufacturers are in communication with each other. I am just starting to offer Outdoor Rooms. As with most of the brands that I retail, I would suggest a better advertising program from the manufacturers themselves. Most companies expect us retailers to advertise for them.”

New York: “Low margins even with MAP pricing. Assembly is time consuming and customers are not willing to pay for that service, as the Box stores typically have grills ready to go. If manufacturers would make MAP pricing higher, that would help make it more profitable and hopefully generate more sales for us.”

Pennsylvania: “Fair margins. Not many people in our area are doing Outdoor Rooms. We need more Internet advertising on the manufacturers’ level pointing the customers to us.”

Pennsylvania: “Margins are too low!”

Pennsylvania: “Margins could always be higher, but given the online sales pressure, I don’t want them to get lower. It seems that more customers are doing outdoor areas. Manufacturers could help with more co-op for advertising or run more national advertising. There are not any really nice brochures or even websites showing design ideas and product displays for outdoor products.”

SOUTH

Arkansas: “The Big Green Egg is OK. Holland is too low. More emphasis on Outdoor Rooms.”

2017 Derivation of
Gross Revenues
Expected Purchases for the 2018 Season

Specialty retailers of barbecue products derive only 16% of their revenue from that category. Hearth products account for over half (52%) of their revenue.

Main Factor for a
Down Sales Year in 2017
2017 Hearth Appliances Replacing Existing Hearth Products

Specialty barbecue retailers who had a down year in 2017 attribute that fact mainly to the Internet and Other factors.

2018 Sales Expectations
2018 Sales Outlook

Forty-three percent of respondents are forecasting an increase of less than 15% in 2018. Only 9% are expecting a down 2018.

Number of Brands Sold
2017
New Installations vs. Hearth Replacements

Seventy-five percent of barbecue retailers carry six or fewer brands.

MIDWEST

Iowa: “Low margins. There are more Outdoor Rooms on new homes. Control Internet prices.”

Illinois: “No, margins are pretty much the same for all grills. Yes, we are seeing more customers creating Outdoor Rooms. Enforce their Unilateral Minimum Retail Price (UMRP) better.”

Indiana: “Margins are OK for what we deal with. Yes, we are seeing more customers creating Outdoor Rooms. Seems like the Internet advertising helps Green Mountain sales a lot.”

Michigan: “The Big Green Egg has their prices set pretty high with low margins compared to other items that we sell. They make the suggested retail price, and when you have other locations like ACE Hardware in your city selling the same grills you have to be competitive with pricing. It would be extremely helpful if they would set their MSRP prices higher and/or the cost of the items lower. It’s a great product and is definitely worth every penny, but for dealers there should be more of a profit on the grill and accessories.”

Ohio: “We consider barbecue products to be nothing more than cash flow through the summer months. The margins are considerably lower than hearth products and, on small ticket barbecues, it’s not even worth the liability to carry them. We focus on high-end grills starting at the $1,000 price point and work our way up. If folks want a cheap grill, they know where to find them. We market ourselves to be the place to go for higher-end barbecues. We fight the Internet sales like every brick-and-mortar store does. Manufacturers developing and enforcing reasonable MAP pricing always helps us make the sale locally.”

Barbecue Product Categories
2017 Compared to 2016
U.S. Sales of Hearth Products

Pellet grills are on a roll, with 42% of barbecue retailers reporting an increase in sales in 2017. Kamados trailed the pace with only 13% reporting an increase.

U.S. Sales of Hearth Products

Twenty-six percent of respondents experienced a decline in sales of Kamados; 25% reported a decline in sales of charcoal grills.

Gas Grills by Price Range
2017
U.S. Sales of Hearth Products

The sweet spot for sales of gas grills is now between $800 and $1,999; only 8% of grills sold are in the $4,000 and up range.

WEST

Colorado: “Outdoor Rooms are popular – we have a choice of barbecue islands. Ads in magazines, Houzz, social media. Pass leads to distributors and control online discounts.”

Colorado: “No, we just sell a lot more fireplaces and spas. Hard to carry more grills.”

New Mexico: “Yes, margins are too low. We are seeing more customers creating Outdoor Rooms. Better displays.”

Oregon: “Margins are too low for the expected set-up and delivery. We got a lot of push-back when we were charging for delivery and set-up. We then tried to build that into the price, and that also did not fare so well. It seems the Outdoor Room is here to stay, but I do better with fire rings and fire pits than barbecues nowadays. Wondering if we should leave the category.”

Wyoming: “Margins are too low. Customers in Wyoming, due to weather, are still not creating Outdoor Rooms. Manufacturers need to hold firm on their MAP pricing and not get greedy, and go the way of TV manufacturers, who lost control of pricing.”

Percent of Barbecue Retailers That Sell:
U.S. Sales of Hearth Products

The role that fire and heat play in the Outdoor Room is remarkable. If you’re not carrying fire pits, outdoor fireplaces and/or patio heaters, then you’re missing a lot of sales.

Began Carrying Barbecues
2017
U.S. Sales of Hearth Products

The specialty barbecue network is composed of retailers with a great deal of experience; 25% have been selling barbecues for over 33 years.

CANADA

Alberta: “The margins on one or two brands are too low, the others are OK. Not my customers, this seems to be a landscapers area, I think that is where people are going to design a backyard. Manufacturers should not sell to Box stores.”

Ontario: “Barbecue margins are too low. More outdoor areas are being created. All manufacturers should allow greater margins on products.”

Ontario: “I would like to see 40% given to store owners and less to people that sell on the Internet.”

More Industry Data

2018 April Business Climate

In early May, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, patio and barbecue products asking them to compare April 2018 sales to April 2017. The accompanying charts and selected comments are from the 208 useable returns.

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2018 March Business Climate

In early April Hearth & Home sent a survey to 2,500 specialty retailers of hearth, patio and barbecue products, asking them to compare March 2018 sales to March 2017. The accompanying charts and selected comments are from the 186 useable returns.

» Continue

2018 February Business Climate

In early March Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, patio and barbecue products, asking them to compare February 2018 sales to February 2017. The accompanying charts and selected comments are from the 172 useable returns.

» Continue