The Electrification of Comfort
By Richard Wright
PhotoS Courtesy: ©2020 Glen Dimplex Americas. www.dimplex.com.
Robert Bartucci joined Glen Dimplex three years ago, and since then has maintained a low profile (at least as Hearth & Home is concerned). In those three years, he has absorbed a great amount of knowledge regarding the hearth, patio, and barbecue industries – as you will soon see as you get to know him.
Hearth & Home: Let’s begin with your background. Where were you before Glen Dimplex? When did you start with Glen Dimplex?
Robert Bartucci: “I’ve been in the home improvement manufacturing space my whole career. I’ve been with Glen Dimplex for about three years; I started in April 2017. Prior to that, I began my career with Masco Corporation. It’s a large, publicly-traded entity that has a bunch of home improvement brands, such as Behr Paint, Delta Faucets, Milgard Windows, for example. I was there for about 12 years.
“Then I left and went to work with an entrepreneur for three years. We manufactured outdoor play structures, outdoor gazebos, and pergolas for the home. We more than doubled that business over a three-year period, and we successfully exited the business by selling it to a private equity (firm).
“At that point I was looking for something closer to my heart, which was private entrepreneurship, rather than being in the public space. I met the Naughton family, the family that owns Glen Dimplex globally. I really enjoyed my interview process with them, speaking with them, understanding their values, and what they wanted to do with the business. I joined them, as I said, in April 2017.
“Their business was founded in 1973 by Martin Naughton, who celebrated his 80th birthday recently, still very active in the business. The day-to-day business is now being run by two of his three children, Neil Naughton, who’s our Executive Board chairman, and Fergal Naughton, our global CEO. We are the world’s largest manufacturer of electric heating products, and we have a significant position in domestic appliances, cooling, ventilation, fires, and renewable energy sources.
“The common thread through all of those things is comfort, and trying to find ways to control or influence home comfort, whether it’s heating or cooling through a variety of different sources. We’re primarily trying to be focused on the electrification of comfort. We believe that the world, over time, will continue to move away from fossil fuels, and we want to be leading the change to that sustainable future.
“Now, we certainly have wood fire businesses. We’re also in the gas fire business. But even in those spaces, we are looking for ways to make those technologies much more sustainable for the future.”
My first comment is why did you acquire Faber, a wood stove company? It seems so strange in the mix of products you have.
Bartucci: “Faber has been part of our product portfolio in Europe for a very long time. As we looked at becoming a fires supplier in North America, as opposed to just an electric fires supplier, we were looking for products that we felt fit a gap in the market.
“Faber is a premium price-point, high design company. It has some patented features, such as the burners and the logs that we feature – campfire-style fires. We thought it was a good fit for North America. In fact, Faber has been part of the Glen Dimplex family for a significant number of years, it just didn’t have a presence here in the Americas.”
When did you bring Faber to North America?
Bartucci: “We did a soft prelaunch at the Kitchen & Bath Show in January this year. We showed some of the product at the previous HPBExpo in 2019. We had a little bit of product in our booth; we were testing it with the hearth dealers, trying to get some reaction. We did a launch at the KBIS show in January 2020, and we actually just won the Vesta Award at the HPBExpo this year (in the category of Gas Products).
“It’s a new brand to North America, and a new brand for us. But again, it’s leveraging technology that we’ve used in Europe for a very long time. We are launching the MatriX and the e-MatriX, the electric version along with the gas version this summer.
“We’re in production as we speak, but it’s very limited, slow production. We’ve got a number of distributors that have signed on for the product and will be introducing it into the market as we get later into the summer and into the heating season. Over the next 12 months, we’ll continue to expand the offering, both indoor and outdoor products, gas and electric.”
You’re going up against a lot of the major competitors that have been out there for years and years. Correct?
Bartucci: “The reality is that the major competition you’re describing has been starting to encroach on the electric space as well. There were only a few dominant players, from a design and technology perspective, in the electrics for the last 10 to 15 years. But very recently we’ve seen some of those large powerhouses look at electrics as a legitimate line of product for them. So we need to make sure that we are not just the electric fireplace guys; we are the fireplace supplier, Glen Dimplex.”
How many retailers do you have now?
Bartucci: “We’ve got upwards of 2,500 retail locations across Canada and the U.S.”
Bartucci: “I would say that 600 of them have really great showrooms and we’re very proud to be working with them. But the electric fireplace business is still a pretty small part of the hearth specialty business. Depending on what part of the country we’re in, it could be as low as 10% of their business. It could be as high as 20%. But it probably is somewhere in that range. While we have some models that definitely retail at $2,000, $2,500, up to $3,000, we don’t get up to the $8,000, $9,000, $10,000 gas fireplace range with electric, and the electric installation is far less complex.
“So the total bill to install an electric fireplace is, in some cases, significantly lower than what a gas installation would be when you factor in product and service, and the installation fees. However, there are two things that are working in our favor.
“Electric fireplaces can go anywhere in the home. Where previously you were very limited in your design as to where you could physically locate a gas fireplace or your wood-burning fireplace – you needed to effectively be able to get a vent outside of your house, which meant it was on one of your exterior walls, most likely – electric fireplaces can go anywhere in your home.
“Even people who are installing gas fireplaces are, at times, putting electric fireplaces in their master suites, in their bedrooms, in their kitchens, in their foyers, in locations where previously fireplaces were not possible. Many times, the electric fireplace is an additional fireplace sale for the retailer. Where they previously would have only sold one fireplace per dwelling, they now have the opportunity to sell multiple fireplaces.
“The other part is there are some changing regulations that are providing tailwinds for electric fireplaces. In markets where gas is no longer being run to the house – in some jurisdictions in California, or in multifamily applications such as a new condominium being built in Chicago or LA or Manhattan – those guys weren’t putting fireplaces in, but now they’re using electric fireplaces, giving both the builder and the homeowner the ability to return fireplaces into the dwelling. It’s really an exciting opportunity in some ways, to displace gas, but it’s actually growing the overall fireplace market.”
So, instead of going after someone who can afford an $8,000 fireplace, you’re going after a market that’s substantially lower, which is in your favor.
Bartucci: “Part of the challenge for electric fireplaces is they’re easily knocked off, where gas is less so. There’s a significantly higher number of regulations and approvals required in order to launch a gas fireplace into the market. But barriers for entry around electric fireplaces are much lower, which means you might find something that they call an electric fireplace on Amazon or on Walmart at ridiculously low prices. While technically they are electric fireplaces, they are not the same types of electric fireplaces you would find at a hearth dealer.
“We do believe that we have industry-leading technology and IT that we can build into our fireplaces, heating elements that will heat up to 1,000 sq. ft. We have high-performance electric fireplaces that, frankly, are really geared toward people at the upper end of the electric fireplace market. But to your point, on average they do cost less than what a gas fireplace would.”
The heating element is becoming very important, isn’t it?
Bartucci: “What we like about the heating element on the electric fireplace is that you have the option to run the fireplace with the heater or without. In warm markets, where perhaps you don’t want to heat the entire room, you have the ability to enjoy the ambiance of the electric fireplace 12 months of the year. It also allows you to change the temperature in the room very rapidly, but also to maintain the temperature in the room. You don’t have to wrestle with turning the appliance on and off to try and maintain temperature.
“Our technology and our industry-leading position as an electric heating company has allowed us to take that technology and work it into the electric fireplace. But it’s optional, meaning that while it comes with every fireplace, the homeowner has the option to operate the appliance with or without heat. That’s certainly an advantage over a gas or wood stove.”
It seems to me that the HPBA has taken positions directly opposed to electric. They want to protect gas and wood at all costs.
Bartucci: “We aren’t taking a position against gas or wood. Frankly, I believe that Glen Dimplex will be in the gas business. In fact, we are with Faber. It’s very possible that we’ll be in the wood-burning business at some point in the future. What we are suggesting is there’s a better way to do it, and we want to make sure that we’re doing it in a sustainable way. I think the EPA 2020 guidelines regarding wood stoves are great for us as an industry, but also for the economy.
“Now, some of the manufacturers in that space may disagree. Certainly, there are a lot of hurdles to jump through in order to comply. But I do believe that it allows businesses and companies that are innovative and have great technology to bring the best possible solutions to the market.
“Are we competing with that product? In some ways, we are, absolutely. But we want to see that the overall fireplace market, generally speaking, grows. With the split among electric and gas and wood there’s some room for us to battle one another in that space, but certainly it’s in our best interest to see fireplaces overall continue to grow in prominence in the U.S. and in Canada.”
I’m sure you’re keenly aware of the fact that the incidence of fireplaces in new-home construction has been plummeting over the past decade or two. No one seems to know exactly why, and they certainly don’t know how to stem that tide.
Bartucci: “Yes. My hypothesis is that, as we went through the financial downturn in ’07 and ’08, new-home construction and home values plummeted. As that market came back, builders and probably consumers were looking for ways to get back into homes in a more cost-effective way. The features that used to be packed into homes now started to either disappear completely or they became upgrade options. The fireplace is one of those things.
“Where previously a fireplace was a standard feature in a home, builders realized they could either go to less expensive fireplaces, or to no fireplace at all, and just offer the fireplace as an upgrade. Certainly, one of the places where we see an opportunity for electric fireplaces is at that new-home builder market where installing an electric fireplace returns fireplaces to new-home construction, but that’s at a much lower cost than previously existed with gas.”
I think it has something to do with all the electronic gear that the younger people really covet much more than they want to spend money on a fireplace. But the other thing, and probably more important, is for all of the years that I’ve been watching this industry, manufacturers have sold their cheapest products into new construction. So that’s what many millions of people grew up with – an ugly, cheap, low quality fireplace. Why should they want one now that they’re grown up?
Bartucci: “Yes. There’s a lot of work to be done as an industry on reeducating the consumer, as opposed to spending as much time as we do with the dealer. Certainly, the dealer is critically important to what we’re doing and a big partner, but the technology has come so far that we really need to do a better job as an industry, in my opinion, of educating the consumer on what those technologies are. Whether it’s gas, electric, or wood, they each have their own challenges.
“But I agree with you. If we look at some of the product that has been installed over the last 20 years, it was inferior technology. It wouldn’t light. It wasn’t pleasing to the eye, relatively speaking. It wasn’t easy to maintain. It wasn’t easy to get service.
“We talked about the number of empty hearths in America. I would tell you there’s probably triple or quadruple that number of underused gas fireplaces in America because people just don’t know what to do with their old gas-burning box. If there were a way that they could get that unit upgraded or improved, or if we could get back to a demand situation, I think that is really the way into this. Fire is something that humans have been drawn to since caveman days. What we’ve learned, though, is if we don’t do it correctly, it actually scares people.
“Whether it’s gas or wood – I know you’ve seen our Opti-myst technology that looks like a realistic fire – we actually see people who are afraid of these products. We have to explain to them the technology that we’ve built in to make them safe and enjoyable, because everybody would like to hang their stockings by the fire for Christmas, or have it on when they’re watching a movie with their family, or in a romantic setting with one of their loved ones. The hearth is at the center of family life, and we’ve pushed it away because we’ve created these ideas around it in the last 20 years that we’ve got to battle against.”
But some of us – and I include myself in that group – find it hard to warm up to an electric fireplace. I don’t get a sense of warmth from it. Frankly, I want to poke the fire. I want to move the log. I don’t much care for gas fireplaces either.
Bartucci: “That’s not an electric problem, then. A gas fireplace has the same problem for you. I appreciate that. My family and I get to spend some time outdoors, building a campfire, learning how to build the fire with the kids, and roasting marshmallows, the smell of that wood burning. There is no replacement for that.
“If we move indoors in trying to find ways to replicate that ambiance, there’s really two different strategies here. One creates heat. When we talk about wood-burning stoves, those aren’t really for ambiance. That’s actually a heating method, and it competes with other heating methods. When we talk about gas, or we talk about electric fires, for the most part, those are ambiance creators. Even the premium, higher-end products that we’re offering at Faber, or Ortal, or some of these other high-end lines, they spend an enormous amount of time, energy, and money taking heat away from the product. We’re actually sucking as much heat as we can outside of the building because we want that for ambiance.
“I hear what you’re saying. It’s difficult to get comfortable around that fire, but I would challenge you that the electric fireplaces that we’re producing today are as realistic as they’ve ever been. In some instances it actually is as close to a fire as you can get. The technology has come a long way, and we’re working on new technology around using real flames in order to create the right aesthetic in the electric products.”
Dimplex Revillusion Built-in Firebox.
As you know, there are many companies that are saying, “Yes. Electrics are the future, and we’re going to come out with dozens of different models.” The competition is going to heat up, or has already heated up a bit, correct?
Bartucci: “Yes. Look, it’s certainly heated up a bit already. The position that we’ve enjoyed as the leader, from a technology perspective, is still unrivaled. However, we certainly are being pushed for retail space at the hearth dealer, and at the consumer level. I think the competition will bring out the best in each of us. We will continue to try and push the envelope from a technology perspective. Competition does that.
“At the end of the day, the hearth dealer, the industry, and the consumer will be the winners. I welcome the challenge that entrants like Napoleon and Hearth & Home Technologies (HHT) coming into the space bring because I think it will make all of us better. This is about growing the entire fireplace industry; there’s room for a lot of us in that space.”
All right. You have two test labs. What do they test, and where are they located?
Bartucci: “Yep. So we have labs that do two things primarily. One is a UL lab. And so we are DAP certified with UL, which allows us to test all of our heaters against those UL standards. Again, heat is a big part of those electric fireplaces.
“Then we have performance labs, one in Cambridge, Ontario, and one in Montreal, Quebec. The performance labs really simulate rooms with exterior walls. It looks at heat movement within a space, the conduction of heat, and that really looks at how these appliances operate in the real world. What can we do from a design perspective to optimize the way the heat moves through the room?”
Outside of specialty retailers, what other channels of distribution do you have for your electric products?
Bartucci: “With electric fires, our primary customer remains the hearth dealers. We do a little bit of business with some of the Box stores, but with different products.”
With Big Box stores, how high do they go in terms of a price point?
Bartucci: “They will go up to $2,000 or so. But really, those products are not intended to go after the consumer. They really support the Box stores’ move to looking at the general contractors who are buying products from them. Electric fireplaces fit that space quite nicely because a gas fireplace requires a certified gas fitter, where our electric products being sold through the Home Depot Pro Desk could go to the average general contractor. Certainly, the application and the install is much less complex.”
Have you tried opening specialty patio stores to your electric products?
Bartucci: “There’s been some limited success there. Really, the reason is that these guys are focused primarily on summer products. They dabble in counter-seasonal business. I think we’ll start to see that change, frankly. So we do that in some markets, but we do it with limited success.”
A lot of the patio stores, particularly single-store owners, are struggling. The competition is fierce. They have to go up against dot-coms, Big Box stores, Wayfair, etc. Do they need help? Yes. Do they need other products such as your electrics? Yes. That’s something that I wouldn’t neglect, and I’m sure you won’t.
Bartucci: “We’re always looking for new paths to market, and we’ve got a strong distribution network throughout Canada and the U.S. where those distributors are protected in their geography, and then, together, we approach some of the specialty dealers, hearth dealers, patio dealers, to make sure that we get our product on display and available to them.”
So you do go through distribution as opposed to going dealer-direct?
Bartucci: “Yes. We found that the distributor has actually helped both us and the specialty store. It’s been a great relationship. It allows us to get product to market more effectively. At the end of the day, it’s actually less expensive for the dealer. They don’t have to worry about prepaid minimums from us. It creates a much more efficient distribution model for us at this stage.”
How many employees do you have?
Bartucci: “Just under 300.”
Now, that’s for North America?
How many do you have in R&D?
Bartucci: “Probably about 50. That would be our global team. A lot of the technology that we develop around electric fires is done in conjunction with our European and Australian businesses. It is one of the benefits of being part of a global group.”
What have I not asked that you would like me to ask?
Bartucci: “We talked a little bit about our ambition around fires and expanding into gas and wood, but we’re also looking at ways to take some of that technology and expand into counter-seasonal business. So we have a series of outdoor heating products that we’re bringing to market that have electric infrared technology, and gas heaters as well. We’re really trying to find a way to make Glen Dimplex a 12-month business for our partners.”
That’s excellent. This whole trend that started back in the late ’90s, called the Outdoor Room, that’s just been marvelous for the hearth industry, the patio furniture industry, the barbecue industry. I don’t know where these industries would be without that.
Bartucci: “I believe in that Outdoor Room strategy. I would love to also see Glen Dimplex in the barbecue business. One of the benefits that we will see for our industry coming out of the COVID-19 scenario is people will be spending less money traveling.
“For some industries, that’s going to be a problem. Hospitality will have a problem, so will airline industries, travel industries. That means we’re going to be able to spend time with our loved ones at home in smaller gatherings in our backyards. I can see that the Outdoor Room is going to continue to grow in popularity, probably faster because of the situation we’re in.”