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Hearth & Home March 2017

Ingrid Schroeter, co-owner of Napoleon Fireplaces.

Meet Ingrid Schroeter

By Richard Wright

She’s the incoming chairman of the HPBA, co-owner of the Napoleon Group of Companies based in Barrie, Ontario, and she already has plans to improve business education, and to increase retail membership in the association.

Hearth & Home: As I was preparing for this interview, I thought about how well you and Wolfgang complement each other. You have always had separate sets of skills, and the intelligence and strength to turn those skills into growing a business.

Ingrid Schroeter: “Well, we had to learn, because in the beginning it wasn’t quite like that. In starting the business we were getting into each other’s hair, so we separated very early what I was doing and what he was doing. We still consulted each other, and that worked beautifully. That worked great.

“Wolfgang handled Production, Operations and Purchasing. I did Sales. I did all the Administration. We had a little retail store at the time and I looked after the store and Advertising, Payroll, anything to do with the detail work, that was me.”

Most people would think running a retail store would be enough of a responsibility. You not only did that, but you did all the rest. You had a lot going on.

Schroeter: “That’s right. In the beginning, when our first son was born in 1977, we had a very small business; I took Chris with me everywhere. He would sit beside my desk, and I would take him to the bank and what have you. I guess that is why both of my sons are still in the business, so that worked out well for us too.”

Is it fair to say that your two sons complement each other much like you and Wolfgang complement each other?

Schroeter: “They do, actually, and Stephen, he’s the younger one, has been working with me. I taught him as much as I could and he’s probably more advanced than I am because I still don’t know much about computers and all that stuff. He is with me, he does all that part, and Chris is on the operations side, the R&D side, and he works with Wolfgang. They are basically on their own and, of course, we have a president and vice presidents that run the larger departments.”

How well did Napoleon do in 2016?

Schroeter: “Well, 2016 was an excellent year for Napoleon, and it was not just for hearth, it was growth from HVAC as well. We were up very nicely in all those categories and that includes the U.S., Canada and Europe. In the U.S., all three categories, grills, hearth and HVAC did well and we expanded the warehouses in the U.S. and we now can stock more product and offer better service to all our U.S. customers across the country.

“In Canada we also supply all of our product categories, and we have been well set up for many years; we’ve done remarkably well here. We keep striving to service and support our customers; it’s not just an option, it’s a must in our company, and we really stress that.

“Just another thing, twice a year our managers, including Wolfgang and myself, work in different departments in the plant. This helps us better understand what the other departments are up against, and how it correlates to our job or the other managers’ jobs.

“Last week, for example, I worked in Customer Solutions and Order Entry on the grill side. Well, we’ve come a very long way from taking orders and writing them down on a piece of paper. It was an amazing learning curve what the people do there and I’m so proud of them. Putting all the managers in different departments has worked well for us.”

The Georgia World Congress Center, Atlanta, Georgia.

You just told me that 2016 was a very good year for you in all departments. That really wasn’t the case with the hearth industry in general, was it?

Schroeter: “No, it was not. From whatever statistics we get from HPBA it doesn’t seem like that. So, yes, I think we are making some inroads there and taking some market share.”

Do you still have a very strong wood business?

Schroeter: “We do still have wood and it is still going strong. Wood fireplaces are strong and pellet has been down, definitely. Now we have a new line of pellet stoves that are Italian made, which are phenomenal. Our biggest business is gas. We are very well known for reliable gas products.”

Your pellet stoves are beautiful. The Europeans certainly can do design, can’t they?

Schroeter: “They certainly can, yes. It’s amazing what they can do. Not just one manufacturer, many.”

Which European countries are you in?

Schroeter: “We are in most of the countries, more than 25. Our main warehouse is in Holland. We have a subsidiary in Austria and England as well. We only sell grill products in Europe. We do not sell hearth. Hearth is different in Europe than it is here. The product is different; the looks are different. We would have to produce a product that is meant for that market, and we are very busy with grills at the moment.”

Are many of your Canadian dealers struggling right now? When I look at the differential in the currencies, it’s very good for the manufacturers, but if you have dealers who are trying to bring in products from the States, by the time it gets to the consumer it is awfully expensive.

Schroeter: “That is affecting our dealer network in Canada, definitely. There are no buts or ifs or whens. It is more expensive. So they have to be very careful on what products they select to sell in their stores. We actually import a lot of products and parts from the U.S., so for us, too, it is a bit of a balancing game.”

Right now the Canadian dollar is still worth around 76 cents compared to a U.S. dollar. It’s been that way for a few years. Do you think it will remain at that level for a while?

Schroeter: “I think it will stay that way for at least another two years.”

What is the best piece of advice that you could give specialty retailers right now?

Schroeter: “Well, first of all be the specialist in your market, the go-to company for any advice and questions regarding hearth products or any other products that you carry. Make sure you know what’s available on the market, especially on the hearth side, and keep your knowledge up to date because knowledge is power.

“That means going to the HPBExpo is a must. It’s a must for us as a manufacturer to exhibit and show our dealers our product lines and what is new; that is what they expect. That is one of the reasons they go there, to see new products, get educated. Anybody who doesn’t go is making a big mistake.

“Many dealers are just too happy with what they are selling and think they are doing well. But if you don’t know what’s out there, how can you improve your sales and your income? Products have changed so dramatically over the last five years, like electronic ignitions, now Bluetooth, Wi-Fi activity and a lot of others things – clean faces and linear fireplace solutions are on the market.

“The education classes at the Expo are extremely cost effective. If you think how much you have to pay for those classes it’s crazy; it’s cheap and it is invaluable not just to the Millennials, but even for the Baby Boomers in their 50s, 60s.

“Also, a retail store needs to be up to date on any tools, like computer programs, that will help make the store run more ef ficiently and effectively. We see this in a lot of stores, especially on the service side. Retailers don’t manage it properly, and they are losing on the service side. Taking educational classes is very essential to achieving this.

“You also should hire younger people. There is some amazing talent out there that can help with websites, social marketing, keeping track of inventory, invoicing and adding new computer programs. There are a lot of older people, like my age, who aren’t savvy about digital technology. Those young people will bring a fresh view to the store.

“Being successful is not a goal, it’s a continuous voyage. That’s what you have to think. You can’t just sit idle and wait until the business comes to you. That’s my advice to any dealer.”

L to R: Ingrid and Wolfgang Schroeter in their Outdoor Room in 2012.

That is very good advice. Would you advise hearth dealers to begin selling other products, to diversify perhaps into barbecues, or patio furniture, or spas or whatever?

Schroeter: “Absolutely. If you want to expand into a different category you have to do a lot of research. You just cannot go in cold turkey. First you need to know your competition inside and out. What are they doing well, what are they not doing well, what products are they carrying, price points, market share, potential? That also applies to your hearth business, not to just other product lines that you want to take on.

“The Outdoor Room is certainly doing well just about everywhere. There are many categories a dealer can go into – grills, spas, patio furniture, gaming, pools, landscaping, irrigation, lawn mowers, chain saws, snow blowers. We had one dealer who was selling sewing machines and got into selling fireplaces very successfully. So the sky is the limit.

“One thing to remember is that if you want to be successful in another category, you need to have a good selection and, of course, the room for it. If you have a small showroom, you cannot sell pools and outdoor furniture. Just showing one model won’t do it. You need to show the consumer that you are the specialist in that category.

“We tried to sell patio furniture in our own store, and it didn’t work. We dabbled in it but we didn’t have the showroom for it. So you have to find your categories. Now another great opportunity, which hasn’t caught on with hearth retailers, is selling HVAC equipment, heating and air conditioning. For that you need minimal showroom space. You are already installing gas fireplaces, you’re already at the house to give a quote on a fireplace, and the consumer is trusting your company.

“That’s a perfect opportunity to check the furnace, and chances are the consumer will need a new one or maybe need one later, but you’ve got your card in there. You can give the consumer package deals, furnace, air conditioning, fireplaces, maybe a grill even and, of course, this one is even true for selling to the builder because they like to deal with one source.

“In Canada a lot of hearth dealers have taken on HVAC products to diversify, which adds to their sales and profits and they are growing their business that way. So that’s an important category and I don’t think this is happening in the U.S.

“So, yes, I would definitely advise hearth dealers to diversify and go into another category or categories. They must be prepared, though. It will take two to three years to get known for a new product line. It does not happen overnight. So why would you not want to sell the consumer or the builder multiple products? I think it is much better to stand on two, three or four legs, than on one. That’s my advice. We have three categories in our product line (hearth, grills and HVAC) and it has worked well for us.”

Ultimate 9700 Series by Napoleon.

What do you consider to be the biggest problem facing the HPBA right now? It could be the NSPS or DOE or the Net Zero regulations, or it could be declining membership in the HPBA or manufacturers choosing not to exhibit at the Expo or anything else.

Schroeter: “I think that all those issues are really important and you have to tackle them all. NSPS and DOE have cost manufacturers and the HPBA a lot of money to date. The HPBA is doing a great job in tracking and coordinating efforts to bring those issues to a close, hopefully in the near future, but we cannot lose sight of them, they are still there.

“The challenge for the industry is Net Zero. The HPBA is following those developments aggressively and with dedicated resources. Just talking to some builders we can see that gas will be eliminated from job sites, so it’s a trend that has started. Will it continue is the question.

“Declining membership is definitely a problem. The HPBA and its affiliates are working actively on increasing membership; that is definitely a focus for them. Kelly and her team are doing a good, persistent job increasing exhibitors, and Atlanta looks quite good for exhibitors right now. But one thing that is very important is to work together as a team, because that will make us a more effective organization to deal with any of those problems.”

How well are you doing with your HVAC products? Is that a market you’ve been able to break into in a big way?

Schroeter: “I wouldn’t say in a big way. It’s a lot of work. You have to have a lot of models. You have to have a lot of R&D. For example, we invested in an environmental chamber where you test the air conditioning and the furnaces, which cost $3 million. Our competition is the big companies, so it’s not easy to get into it and you have to have a whole array of products. We’re doing quite well, but it’s very tough.”

Am I correct that the Outdoor Room trend is very big now in Canada, as well as in the U.S.?

Schroeter: “The outdoor trend is big in North America and Europe, and it’s not going to go away. It gives homeowners another room, it’s pleasant to be outside, and a lot of people put a roof over it. So, definitely, it’s going to stay.”

That certainly bodes well for your barbecue and outdoor fireplace business.

Schroeter: “Yes.”

Do you have any particular agenda, any pet projects that you would like to see accomplished while you are chairman?

Schroeter: “Yes. There are two things I would like to see. One is to get more relevant, practical, business-oriented, education programs for the dealers offered through Expo, online and through our affiliates because I think it is worthwhile for the retailers; they need that education and they are looking for that education. The challenge will be to get their attention and dedicate their time to it because retailers are very busy, so their time is very valuable.

“Also on my agenda is increasing the membership because that is another important point, and we can all work together on that through utilizing manufacturers co-op programs. We have talked about it in meetings and this will entail working with the whole association, especially with the affiliates and the manufacturers.

“The HPBA Canada has developed a program that I hope to move to the U.S. affiliates and help them increase membership. The manufacturers would be paying 50% of the fees of the retailers by using co-op funds. Every year a lot of co-op funds are not used. So why not utilize it to get additional dealers on as members?

“Participating manufacturers would contribute a chosen amount toward membership through their co-op program. For example, let’s say membership cost $600 for the retailer. The retailer can then apply to possibly three manufacturers, to receive 3 X $100, thus paying 50% of the membership. Of course, under this program manufacturers could set their own dollar amounts depending on how they want to support membership. It would be coordinated by the affiliates.

Ingrid Schroeter with the hot-selling Rogue grill.

“I think that it would be very affordable for the manufacturers, or at least for the major manufacturers and it is worthwhile. It will increase attendance at the shows hopefully, but especially increasing our numbers again and get information to those retailers and get them on board. I think that is very important.

“We just did a research project called Hot Spots; it’s designed to drive business to the retailers, and to help them and builders understand just what drives consumer home appeal and the crucial role the hearth and outdoor category play now and in the future. Hot Spots examines the connection of homeowners to certain rooms in the home. Some of those rooms are associated with positive emotions and memories. Those are the key Hot Spots in a home.

“The goal of the study was to get smarter so we could help building professionals and drive business to the retailers, basically to differentiate themselves from the competition, sell more homes and projects and strengthen homeowner satisfaction. The research shows that 52% of homeowners have a more positive perception of building professionals who integrate Hot Spots de signs into their projects. It’s something that attracts the consumer to look at a room in a house more thoroughly.

“Based on that insight and research, we developed a 62-page Hot Spots design guide and this is a great study to bring forward to all the builders and educate them. This will drive fireplace sales and we think it is a great thing for the retailers and, of course, at Expo we’re going to roll it out. There is a seminar on it.

“Here’s an example of what it can do. For the research, participants were exposed to pictures of rooms with and without fireplaces. The desire for rooms with fireplaces increased 41%.

“So adding a fireplace to a room is a sure way to increase homebuyer appeal, and that’s what we’re trying to get across to the builders. It will go into the retailers’ showrooms because it will drive business to them. That is something that we worked on and it is already available. It plays into having something in common to help the industry.”

What have I not asked that you would like to get out?

Schroeter: “I just want to say that I think we’ve got all the fundamentals to have a very solid hearth future, because remodeling is on the rise, new construction is on the rise, Outdoor Rooms are on the rise, and that is all good for our industry. As an industry, we just have to keep pushing the fact that the fireplace should be a focal point in any room, and that it adds value to the home and it creates life’s best memories with family and friends.

“If we do that, I think the hearth industry is definitely here to stay and even to increase because people like to be around a fire, outside or inside. They love looking into the flames, and that can only be beneficial to us as an industry.”

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