A Gathering of Knowledge
By Bill Sendelback
Recently, in order to understand what’s happening this year with sales of hearth products in the U.S., Hearth & Home interviewed independent manufacturers’ representatives to get their opinions. We interviewed the following eight reps, interspersed throughout the country.
“Last year was a good year in our South Central region,” according to Shirley Byrd, Byrd Marketing, “and everyone is optimistic about this year. Dealers are seeing more people coming into their stores, so they are excited. If there is a negative, it’s that the Internet has become a huge factor for dealers. After coming to the dealer to look at the products, consumers are buying online, and this is affecting dealers so much that some are dropping product categories sold online, including grills. After a bad year for high-end grills, our dealers are all so ready for fall.
“Gas hearth products are selling strong, and sales of wood-burners are doing well, particularly in our rural areas.” she says. “Pellet stoves are not much of a factor, but sales of electric fireplaces are growing.” Traditional styling still is strongest in this region, but contemporary styling is “growing quickly,” Byrd says. “In fireplaces, bigger is better, and they don’t have to heat. Millennials are going for the modern look, and price is not a factor.”
Dealer inventories of non-2020 certified wood-burners are a concern, says Byrd. “Some have a lot of this old inventory, with a few dealers still with more than 20 units in stock. They are discounting these models and trying to sell them, but this is causing many dealers not to order 2020 models until the old units are gone. Some dealers are really nervous about their unsold pre-2020 inventory.” This may result in lower sales of wood stoves in 2020, Byrd believes. “But sales of wood-burning fireplaces will boom next year, along with big, clean, no heat, direct-vent gas fireplaces.”
It was a great year for hearth product sales in the Northeast, according to Ed Coleman, Coleman & Associates. “The entire Northeast is doing great, and some dealers are even opening new stores,” according to Coleman. “We’re selling more gas models than wood-burners, partially because of the confusion among dealers about the 2020 NSPS deadline to sell-off their non-2020 models. Dealers are concerned, and those who are buying wood stoves are only buying 2020 models.”
Dealer inventories of non-2020 wood-burners have other dealers concerned as these inventories are being heavily discounted. “As an example, a non-2020 pellet stove that retails for $4,500 is now being blown out at $2,500, less than dealer cost,” says Coleman.
While sales of gas models, especially large 45- and 60-inch linear fireplaces, lead the way in the Northeast, followed by wood-burner sales, electric fireplaces are doing well with growth in the construction of high-rise apartments and condos, says Coleman. “There are hardly any oil stoves being sold here, but, believe it or not, coal stoves are making a comeback.”
Coleman expects a “very strong” 2020. “The ‘Farmer’s Almanac’ forecasts a long, cold spring, so we should see our season start in the spring,” he says. “Hearth dealers are doing well this year and are very positive about next year. But they don’t know what to do with their non-2020 wood-burners since these are not selling this year. Dealers need an extension beyond the May 15, 2020, deadline to be able to sell off their non-2020 inventory.”
Amantii is one of nearly a dozen companies Ed Coleman represents. Shown here is the Amantii Symmetry SYM 50-XT Electric Fireplace.
“We’re seeing renewed excitement in dealer showrooms in our Mid-Atlantic area,” says Bob DeYoung, DeYoung Associates. “New products and new designs are being displayed and sold, whether it’s gas, wood, pellet, or electric.” Along with that dealer enthusiasm, DeYoung is forecasting a 15% sales increase of hearth products for 2020 in the Mid-Atlantic region.
“All fuel categories are selling well, but gas models are doing especially well thanks to improvements in product burn presentation technology,” according to DeYoung. “We’re seeing a trend away from sales of the usual standard gas fireplace models to new high-end models that burn with a more realistic flame but carry a higher price tag.
“Mid-Atlantic dealers have prepared themselves for the May 15, 2020, NSPS deadline on sales of wood-burners by offering strong discounts on their pre-2020 models. Dealer inventories here on those pre-2020 models are lower than expected, but many still have held off purchasing 2020-compliant models. This 2020 deadline has been a real challenge for our dealers.”
A newly-passed Master Hearth Specialist state licensing law in New Jersey has been a blessing for dealers in that state by allowing hearth dealers to become licensed for product installations rather than requiring those installations to be done by non-hearth industry individuals, says DeYoung.
Despite some confusing head-scratching environmental regulatory challenges, hearth product dealers in California are doing well, according to Jay Hanson, J. Hanson Sales/Sierra Marketing. “New-home construction had been heating up, but recently it has slowed down some. Consumer confidence is still pretty good, and there is plenty of sales activity, but the momentum has slowed, making this year a bit slower than 2018.”
Hanson says another reason for the sales slowdown is the growing concern about limiting new multi-family construction to electric products only, and environmentalists’ pressures to limit or eliminate natural gas in new housing starts. “One result of this concern is that some dealers are expanding into electric fireplaces,” he says, “and while speculative new developments of single-family homes have slowed, custom-home construction and major remodels continue to grow.
“There still is strength in sales of gas-heating products in markets where custom-home owners want some heat rather than simply decorative models. Wood-burner sales have slowed in many suburban markets and in areas where wood-burners are now ruled out in new-home construction. Yet wood-burners continue to be in demand in rural areas dependent on propane or electricity for heating.”
While linear fireplace sales continue to increase in the California market, custom homeowners are looking for “value” even in high-end models, says Hanson. “And value is now under even more consideration as the area’s economy slows.”
Wood-stove dealers have spent the last year selling down their inventories of non-2020 compliant models, Hanson says. “Discounts and special offers have helped this sell down, but dealers are worried that future sales of wood-burners will be impacted by price as a result of the discounted prices of these non-2020 models. Dealers have backed off on purchasing any wood-burners that are not 2020 compliant, and they are not placing stocking orders for 2020 models, ordering only units that are pre-sold.
“Dealers are very concerned about the weird regulations occurring in California concerning wood and gas hearth products. So their reaction is to make few new product purchases.”
Despite concerns about regulatory challenges and non-2020 inventories, the outlook for specialty hearth dealers in California is “pretty strong” since most are dealing with homeowners looking for remodel upgrades or inserts for wood-burning fireplaces, Hanson says. “There is a clear trend for upgraded electric fireplaces that need to be installed by a qualified installer,” says Hanson.
Reclaimed Wood Collection by American Fyre Designs, which is represented by Ross Johnson.
Ross Johnson, Johnson Marketing, says hearth product sales in the Southeast are up, and most dealers are optimistic. “The dealers who are doing a good job of displaying are doing better, he says. “Dealers are facing pricing issues from mass merchants and online retailers, especially with hearth accessories. Even chimney sweeps now are selling hearth accessories and glass doors, so many dealers are simply conceding the hearth accessory business.”
Sales of gas hearth products, including gas logs, are up and doing well, says Johnson. “It has been a tough year to sell wood-burners, and pellet stove sales are also down. Meanwhile electric fireplace sales are doing well, with electric models now finding their place in the specialty market.”
Johnson says that dealers are cutting prices of non-2020 wood-burners to sell off those models, but he is not seeing replacement of those models with new 2020 models. “I’m also concerned that we’ll see some die-off of smaller wood-stove manufacturers that simply cannot afford to develop, test, and certify to the 2020 standard.”
While not unique to the Southeast, Johnson points out that many dealers are seeing challenges with their “changing of the guard. More and more old timers are retiring, but fewer in the younger generations are interested in our industry, leaving some dealers with few choices – to pass on or sell their businesses.”
Hearth product dealers in the Midwest are healthy, and business started picking up in August, according to Tim Snyder, Snyder & Associates. “We’ve seen colder weather in the north, but we really need that first frost to kick things off. Dealers’ biggest challenge right now is finding qualified help that wants to work. Some dealers that do not own their own building are seeing their rent increase to the point where it may not justify continuing to do business.”
Direct-vent gas product sales are “huge”, says Snyder. “And despite concerns about getting rid of non-2020 wood-burners, wood-burning appliance sales are stronger than anticipated. There is real concern, an elevated sense of anxiety, about clearing out this non-2020 inventory, but so far dealers and distributors are promoting their non-2020 models and are not giving them away. They are taking a ‘wait and see’ attitude, hoping the EPA will extend the May 15, 2020, deadline to sell off these Step I models. That has also caused them to delay purchases of 2020-certified models.”
There is more sales activity with pellet grills than with pellet stoves, Snyder says, again because of the 2020 deadline that includes pellet burners. “Although electric fireplace sales through furniture stores are waning as consumers move away from media centers, many more electric fireplaces are being sold through retailers other than specialty hearth product dealers. By selling an electric model that requires no professional installation, the dealer may miss out on a $4,000 to $10,000 gas or wood-burner sale, plus installation of that product.”
Gas log sales are very strong in the Midwest, Snyder says. “There was a lull in gas log sales seven years ago, but we had a huge uptick in gas log sales two years ago. Gas logs are being retrofitted into older wood-burning, zero-clearance fireplaces where the chimney has corroded. The consumer is faced with a new fireplace for maybe $10,000, or a gas direct-vent fireplace insert for $4,000 to $5,000, or gas logs for maybe $600.”
Snyder also sees prices of fireplaces, stoves, and inserts increasing because of a “dramatic” increase in the costs of raw materials in part because of tariffs on Chinese steel. “We’re seeing price increases of 10% to 15%, and this, too, is helping gas log sales.”
Snyder is “very bullish” on the 2020 hearth product business in the Midwest, even with a presidential election next year, and a trade agreement with China yet to be made.
Blaze King’s Clarity CL29 Gas Fireplace Insert, which is represented by Andy Todd.
The first half of this year was good for hearth product sales in the Pacific Northwest, according to Andy Todd, Energy Classics. “In general, dealers are doing well after a pretty good off-season, but 2019 is still a question mark for dealers concerned about how much dumping is going on with non-2020 wood and pellet stoves. Most dealers have done a pretty good job of selling off those models. They were very careful about early-buys and ordered only 2020 models. It’s still scary for them.” With new-home construction up, that’s helping dealers do well. “Even spa dealers are doing well,” Todd adds.
Despite concerns about natural gas and carbon footprints in other areas of the West Coast, gas hearth product sales continue very strong in the Pacific Northwest, especially in the cities where gas fireplace inserts are selling well, says Todd. More dealers are interested in wood stoves and in manufacturers offering a full line of 2020-certified models. Some, but not all, are doing well with pellet stoves. “Dealers here are leaving electric fireplaces to the mass merchants,” says Todd. “Because of that low-price competition, they don’t sell well in our specialty hearth shops.
“The chatter from California about possible bans of natural gas in new-home construction is reaching up here now, with a similar ban being considered in Seattle,” says Todd. “Depending on what happens in next year’s presidential election, we may see a more aggressive attitude toward climate change, and that certainly will affect our industry. We need to promote to, and educate, regulators and consumers that today’s hearth products are efficient and that our wood- and pellet-burners use renewable fuel that is carbon neutral.”
Todd expects a “very, very good” 2020, and he says his dealers are excited about next year. But he’s concerned about March and April. “It may get ugly with dealers selling off non-2020 models, as an example, $2,500 non-2020 wood-burners for $500. Hopefully, May 15 will see a return to reality.”
The hearth product business in the Rocky Mountain region is doing well, with new-home construction up, according to Kevin Wood, Wood/West & Associates. “Dealers are concerned about price increases for the new 2020 wood-burners. And the May 15, 2020, NSPS deadline has slowed their wood-stove purchases. There’s not much non-2020 inventory in the field, but what is there is being blown out. The concern among dealers about that blow-out is keeping most dealers from even purchasing 2020-certified models.”
The region is seeing sales increases in gas and electric models, while sales of wood- and pellet-burners are down, Wood says. “Linear gas fireplaces are big sellers. They are now even selling in rural areas, but here they want logs rather than glass or rocks. We’re seeing more sales of high-end models. But the biggest trend is clean-faced, gas fireplaces with the ‘cool touch’ feature, allowing a TV to be installed over the fireplace. And we’re seeing sales increases in outdoor gas hearth products, especially gas fire pits.”
Besides concerns about non-2020 wood-burners being blown out, dealers are finding it difficult to find labor. “Dealers just can’t find people who want to work,” says Wood.
The state of Utah has introduced a program offering a $3,800 tax credit for gas fireplace inserts being installed in wood-burning fireplaces. “For the first round of this program, it sold out in one day,” he adds.
Rocky Mountain area hearth product dealers have a “very positive” outlook about 2020, says Wood, “but some are worried about the economy and a possible recession.”
Independent manufacturers’ representatives are hired by manufacturers because they know the territories, the products, and the dealers. Hearth & Home interviewed some of the best professional reps in the hearth product industry. Although each territory or region of the nation is different, these interviews show a consensus on important points for the hearth product industry.
The Evolution 360 by Hearth Products Controls is one of many products that Kevin Wood helps distribute to dealers.
- Hearth product sales this year, 2019, have been pretty good, and sales in 2020 are expected to be even better.
- Gas hearth products still are king and are expected to continue to gain market share next year.
- Wood-burning product sales have shown slight growth despite dealer, and manufacturer, concerns about the May 15, 2020, NSPS deadline for selling off old non-2020 certified models.
- Dealers are reluctant even to purchase 2020-certified models until their inventories of non-2020 Step 1 wood-burners are blown-out.
- Pellet stove sales are very regional with some territories showing flat sales growth and other regions showing pellet stove sales almost non-existent.
- Electric fireplace sales are showing strong growth among specialty dealers, although some hearth product dealers are reluctant to offer them.
- While fireplace sales are off in less expensive Builder-Box models that are sold to tract-home builders, sales of high-end fireplaces to custom-home builders and for remodels are showing strong growth.
The hearth product industry in the U.S. is strong, but it’s changing, and dealers need to keep abreast of these changes and take advantage of them.