By Richard Wright
Mike Rupp is president of Empire Distributing in Arcade, New York. He entered the hearth business as a retailer, then sold that business and, for the past 26 years, has been a two-step distributor of hearth products. His territory is New England, New York and Pennsylvania.
About two years ago Mike and his family saw the handwriting on the wall and began a search for counter-seasonal products that would help his 300-plus dealers survive and thrive. Like many before him, he settled on patio furniture and barbecue products.
Rupp made that move into diversification at just the right time. Most hearth dealers had struggled through the downturn and were searching for other product categories that would provide cash flow were hearth products to suffer another disappointing season.
Hearth & Home: How well did you and your dealers do with patio furniture this past year?
Mike Rupp: “We did very well. We surpassed all goals that we set, and some we beat by 30 to 40 percent greater than what we anticipated. If it wasn’t for the outdoor products that we brought in this year as a distributor, we would have seen a decrease over 2014.”
Obviously, hearth products were off in 2015, but was it mainly pellet and wood appliances that died?
Rupp: “Yes. Pellet and wood were definitely in the tank. We did well with our gas products. Freestanding stoves were off a bit. Inserts and fireplaces were okay. We did the bulk of that business in the early part of the year.
“When fuel prices continued to stay low, that helped the gas products sell. But because we really haven’t had a winter up here in the Northeast, at least until the first week of the new year, it really put the brakes on dealer sales.
“I’ve got a fair number of dealers that are down and a few dealers that were at par with last year, or a few percent better than what they did last year.”
So, all in all, it was a pretty poor hearth year, right?
Rupp: “Yes. Definitely. We still haven’t seen an increase. We haven’t seen it turn around yet. I would have thought that, with the colder weather in the last week or two, and with the holidays behind us, we would have really seen a jump in business, but that hasn’t happened.”
As you know, Hearth & Home sends out a monthly survey that we publish in the Business Climate section of the magazine. Our survey of sales in the month of December is now being returned and the results are striking.
Hearth dealers are reporting sales of hearth products down 15 to 30 percent in December, while results from patio furniture sales are showing increases of 130 to 190 percent, and barbecue products at increases of 150 to 350 percent.
It seems that the much warmer weather is having quite a positive effect on outdoor products, even in December.
How well did your dealers who sell patio furniture and/or barbecue products do?
Rupp: “Getting our dealers involved in patio and barbecue products was a big part of our dealer meeting last year. I would say 50 percent of the meeting was dedicated to the outdoors, and that got the wheels turning for our dealers, helping them understand that they could be successful in those new categories.
“There were some who felt they couldn’t do it, but I got them to put the product in and they did 15 or 20 units. When I say unit, that’s a fire table and furniture. That opened their eyes to the fact that they could enter the patio and barbecue categories.
“Dealers carrying only hearth products are seeing that they can’t depend on hearth alone to carry them through. With hearth, it used to be that their business was so good in the busy season that it could pretty much carry them through in the slower times. Now hearth sales are so far off that dealers are recognizing they have to do something else besides hearth.”
By what percent was your average patio dealer up over last year?
Rupp: “Most of my guys went from not doing it at all to some doing $15,000 or $20,000 in patio, and some did $100,000 or more.”
So, most all of your dealers who tried selling patio furniture and barbecues are pleased with the results, correct?
Rupp: “Everybody is pleasantly surprised how well they did with it. We’ve got dealers calling us right now, asking ‘When are you coming in so we can sit down and put an order together?’ As a business, as a distributor, we’re making a huge commitment to that end of the business.
“Last year we were late in the season getting product to our dealers. This year we’ve already got containers of Louisiana Grills and Emilyrose Outdoor Living on the water. This year we’ll be getting a lot of product in at the end of January/February and we’ll be able to hit the ground running. Our commitment to Emilyrose is going to more than double what we did last year.
“Plus we still do a lot with the Outdoor GreatRoom Company. Even though they are a more expensive product, our numbers held up very well."
So you’re happy? Business is good?
Rupp: “Yes. I have no complaints, but if we didn’t make moves in our business and diversify, we would not have been in as good a shape as we are now. Outdoor products have definitely helped flatten the sales curve for our dealer network. Louisiana Grill has been phenomenal for us. They are good people, a good company, and the quality of their product is terrific.”
Well, if global warming continues, which it certainly will, and we have winters such as this one, patio and barbecue products are bound to benefit.
Rupp: “Definitely. It wasn’t until this week (first week of January) that we actually had some sub-zero weather. It has been incredibly warm.
“The other product we had a good year with, particularly on Long Island, is Travis Industries’ DaVinci fireplaces.”
For new construction or into existing homes?
Rupp: “You know, I’m surprised at what’s happened. It’s been residential remodeling and new construction and commercial. It’s split all three ways. I’m surprised at the amount of residential applications we’ve been getting on Long Island, and I’ve had some sales of two or three units in a house in a higher-end home. The DaVinci is going to be one of the frontrunners in the linear, cool-touch type of fireplace.”
What’s the average retail price point?
Rupp: “It’s probably $18,000 to $25,000. Some of our commercial jobs have been as high as $80,000; that job required three 36- or 48-in. units.”
Do you see the era of a stand-alone hearth shop slowly disappearing?
Rupp: “I’m not sure about disappearing, but I do see the most successful dealers seeking diversification to offset the slow time. As we see the current generation of hearth store owners approaching 30-plus years in business, succession planning has never been more important. Whether it be passing their business to their children or selling to an employee, the next generation needs to be more diversified and adaptable to the way today’s consumer shops.”