Glowing Opportunity

August 1, 2007 By    

Having the capability and desire to offer customers propane-powered zone heaters, grills and other indoor and outdoor auxiliary appliances can add some significant sizzle to your bottom line. Marketers actively working these categories say they are achieving a competitive advantage over retailers that don’t supply this equipment or the related installation and maintenance services.

As industry leaders lament how these lines generally are being under-pursued, a number of dealers who are tackling this niche are not only notching extra income at decent margins, but they also are obtaining customers new to LPG, thus recruiting potential accounts well into the future.

Others, citing cost and liability concerns, are declining to get involved. They are referring prospective customers to specialized hearth shops and price-based mass merchants selling units that operate on a variety of competing fuels such as wood, electricity and natural gas.

These heat, hearth and outdoor living categories can be especially appealing to independents with the ability to render individualized customer service, giving them a chance to siphon market share from larger gas-only operations.

“The majors and the other companies tend to stay away from it. I see it as a competitive advantage,” says Shane Fortner of the Fortner Gas Co. in western Kentucky.

“We get more and more people coming in wanting back-up heat. They want an electricity-free heat source for when the power goes out.”

Fireplaces are another hot mover among the merchandise displayed at the company’s 3,500 sq.-ft. hearth products showroom. Appliance sales, installations and service calls amount to 3 to 5 percent of Fortner’s business.

“As long as we’ve been doing this, the problems we’ve had are minimal compared to the amount of installations we do each year. We’re getting new gas customers out of it, so it’s worth our efforts,” he says.

“When people call and ask if I sell these products, I say, ‘Yes.’ If they ask if I install and service this equipment, I say, ‘Yes,’ so I’m adding value,” Fortner explains.

Close to 60 percent of these product purchasers are first-time propane users primed for future up-selling.

“It’s a customer-building tool. It’s not just a sale; I’m getting a propane customer for a number of years,” he says.

Plenty to offer

According to Tracy Burleson, director of residential trade outreach and partnerships at the Propane Education & Research Council, marketing indoor and outdoor appliances presents “an opportunity to add burner tips” that increase your gas load.

PERC officials recently met with the Hearth, Patio and Barbeque Association in what Burleson terms a “brainstorming session” aimed at enhancing cooperation among the two constituencies. A key entrée on the menu is the February 2008 HPBA Expo in Atlanta.

“We’re going to encourage our dealers to attend this show and bring the builders they work with,” Burleson says.

“We hope that by working with PERC we can attract more people (from the propane industry) to our show,” says Leslie Wheeler, the HPBA’s director of communications. “There are lots of products available for homeowners that will burn propane; any propane dealer who wants to get into this business has plenty to offer.”

Propane accounts for 50 to 60 percent of the auxiliary gas products sold.

‘A troubling indicator’

In 2006 gas grill shipments were up 13 percent, lighting up an outdoor living category that includes propane-powered patio heaters, bistro lights, fire rings, mosquito killers and turkey fryers.

“It’s the highest increase we’ve ever seen since we started tracking this in 1985,” Wheeler reports. “It’s a huge indicator that people are spending more time living outside.”

The indoor supplemental heating element, meanwhile, is cooling off at a considerable clip.

“All you have to do is look at new housing sales,” says Mary Carson, program director for the Vent-Free Gas Products Alliance at the Gas Appliance Manufacturers Association. “One-fourth of the new housing market has disappeared; there were 500,000 fewer homes built last year.”

In 2006 shipments of gas-fired indoor equipment decreased 18 percent, according to the HPBA.

“We’re very closely tied to the building industry; a lot of our fireplaces (and related heating products) go into new homes,” Wheeler explains. “Shipments are down, but consumers these days are very interested in saving money on energy, and zone heating helps them be more efficient.”

Fireplace logs, on the other hand, constitute an item that appeals to warmer-climate households. “You certainly don’t need heat if you live in Las Vegas, but a gas log gives you the ambience that you’re looking for. They’ve come out with some outstanding designs — it’s not just a ceramic log,” Wheeler says.

Propane industry consultant Mike Sloan, project manager for Energy and Environmental Analysis, says new housing starts are down by more than 30 percent in the last year. Housing completions — new homes “already in the pipeline” — are just starting to decline.

“But that’s only half of the story. The other half is the restoration market; money is still going into renovations” of existing structures, he notes.

Citing the HPBA’s statistics and the near 20 percent drop in indoor gas hearth shipments, Sloan sees disparity in the fact that electric appliance shipments were up by 20 percent, while wood pellet appliance shipments increased by 12 percent.

“The decline in gas hearth shipments following four years of steady growth is a troubling indicator that the price increases in propane and natural gas are likely starting to influence customer appliance choices,” Sloan observes.

GAMA’s data is equally disheartening since electrical appliances gain market share at the expense of both gases. On the brighter side, Sloan says dealers in certain areas of the country who render individualized customer attention are primed to take advantage of the appeal presented by propane appliances.

“You can compete on service and convenience. A full-service propane provider would be more successful in a growing market. In a stable market there would be less of an advantage. Those customers already have their appliances in and they already have a propane supplier that they are comfortable with,” Sloan says.

“Propane is becoming a premium fuel. That’s something you can trade off of.”

‘A huge market’

Another industry plus is that the supplemental appliance trade is not relegated to the higher income brackets, notes Jim Hitzemann, chairman of PERC’s Consumer Education Advisory Committee.

“You have both sides of the coin,” he says.

As propane-powered zone heating equipment becomes more efficient, user-friendly and visually attractive, homeowners — especially in the South — are eagerly dumping their clunky kerosene contraptions in favor of LPG.

“It’s opened up a whole new market for us,” Hitzemann says.

Motivated by across-the-board higher fuel prices and a desire to conserve energy, “consumers are interested in heating where they sit, particularly with empty-nesters who haven’t sold that big house they had when the kids were there,” says Hitzemann, who asserts that “the housing market slowdown probably won’t last that long.”

Growth for propane applications can be found in vacation-home-oriented resort areas in addition to bedroom communities sprawling into formerly fallow farmlands.

“The natural gas mains have gotten to the stopping point,” Hitzemann reports. “You get out to the suburbs, and at some point it becomes the country, yet it’s still just 20 miles from the central city. That’s a huge market for propane guys to go after.”

An eager proponent of this segment, not surprisingly, is Frank Horne Jr., president of SunStar Corcho.

“Most of our product goes to the retrofit market and remodeling market rather than new construction. If the propane companies don’t sell the appliances, the appliances are going electric,” he warns.

“If you’re a gas company, your job is to put more burner tips out there,” Horne adds. “I do remember some old folks in the industry saying that when things are tougher, you wish you had put more burner tips out there.”

Companies should be available to help solve customers’ problems, Horne says.

“It’s hard to go head-to-head with Home Depot and Lowe’s on price,” he notes. “We offer a 10-year warranty, which gives the LP professional something unique to sell. When you give a consumer a 10-year warranty, they realize they’re getting something of value. If you buy a gas heater from a mass merchant, if you need a part a year later — good luck.

“The homeowner is looking for quality and something they have confidence in.”

Horne also reports selling a large amount of natural gas appliances to propane marketers, who set these units up as a method to cover the overhead associated with maintaining an installation/service crew.

Adding value

“It’s a growing market in some of the areas we cover,” says Mike Rowan, vice president at the Rural Gas Co. in Trumbull, Conn. Concentrated in commuter communities outside Bridgeport, much of the sales involve units designed as aesthetic add-ons for a middle-to upper-middle class clientele.

“It’s certainly been a substantial part of our business over the past few years,” Rowan says.

Rural carries several manufacturers’ lines, achieving what Rowan calls a marginal load and enough work to keep a six-person installation/service crew busy.

“You can really create some growth with your customer base,” says Bill Chaffin, assistant manager/service for Dixie Gas in Richmond, Va. “A customer puts in a gas log this year, and then next year they buy a propane water heater.”

“We market that class of trade as hard as we can,” reports Keith Brownlee, manager of propane business at the Clark Touchstone Energy Cooperative in Winchester, Ky. “We’ll use some kind of incentive to get them into the store. You really have to do that (type of selling) face-to-face.”

Discounts or a year’s worth of free service are among the offerings.

“It doesn’t require a lot of effort to go out and clean an unvented heater that’s a year old,” Brownlee says.

“Dealers that have a showroom do a lot better,” concurs Drew Holland, branch manager at Dealer’s LP Equipment Co. Inc. in Hickory, N.C. A picture in a brochure doesn’t quite cut it with potential customers because “they want to touch it and really see how it will look in a home setting.”

Proper category management is another issue that a propane retailer must address, Brownlee cautions.

“You have to periodically step back and look at your marketing area,” he says.

In Brownlee’s region, indoor supplemental heating has matured — most people who want these items already have them.

“Five years ago we used to order 30 fireplaces at a time; now we order four or five,” he says. “We’d sell more products if propane’s price wasn’t so high.”

Fortner’s western Kentucky auxiliary appliance clientele typically opt for a 120-gallon tank and are charged 15 cents more per gallon than those with larger vessels on their property.

“They may fill their tanks three times a year; some once every two years,” Fortner says.

Most of the existing customer base consists of traditional propane customers already equipped with a 500-gallon capacity, which means most of the tanks being set are for new customers.

“In the fall and winter our largest demand is for tanks in the 120-gallon size,” he says.

In Fortner’s marketplace, it’s not the low-income demographic that’s buying supplemental heating products with the desire to shut down the main furnace. Instead, “It’s more the people who have an all-electric heat source and they want a secondary heat source,” he says.

In Fortner’s view, propane dealers who simply sell gas are missing out and steering the trade away from what they want most to sell — propane.

“When people go to those stores, they don’t care if it’s electric, wood pellets or whatever,” he says. “They’re not adding value to the product — they’re just delivering.”

Although grilling and other patio products amid the outdoor living segment have yet to catch on in Fortner’s region, Hitzemann is excited over propane’s prospects in this category. Homeowners are deciding to stay put and invest money in their existing property.

“They want to save the cost of moving to a new house. If you look at the price of gasoline these days, people are cocooning at home and spending $20,000 to $30,000 on a patio,” Hitzemann says. “They’re moving to the better-grade merchandise that is sold in the specialty stores, and many of the propane dealers around the country have formed alliances with these specialty retailers.”

Restaurants and bars are especially embracing outdoor table settings and the accompanying appliances.

“In California their patio heaters are as important to the business as the drinks they serve,” Hitzemann says.

Hitzemann, Southeast regional representative for Ray Murray Inc., cites a restaurateur in Richmond, Va., whose customers can’t get enough of dining outdoors.

“The guy bought 40 patio heaters because he keeps expanding his patio,” he says.

For Chaffin at Dixie, outdoor living products “have always been a strong seller for us in the off-season.”

Propane marketers can seek all types of commercial sales as various states enact bans on indoor cigarette smoking, resulting in higher demand for outdoor comfort zones. In Ohio, for example, the Department of Liquor Control reports that it is overwhelmed with applications for tavern patios as licensing requests have doubled over last year’s numbers.

For some companies, however, neither indoor nor outdoor equipment presents an attractive offering to pursue.

“We’re really not installing hearth products; we simply hook up the gas,” says Mark Bausha, a Suburban customer service regional manager covering New Hampshire. “We refer people to fireplace shops. They’re a dime a dozen, and they know the product lines better than we do.”

He says this was a corporate decision implemented so “we don’t get distracted by appliance sales: We sell gas.”

Outdoor infrared heaters

Infrared heating units from Detroit Radiant Products are available in both stainless steel and a black, powder-coated textured finish. The PH Series infrared patio heater is the perfect solution to stylishly extend the outdoor season. The product mounts out of the way for added comfort, creating an extended outdoor season for residential, restaurant or other high-profile applications.

For more information, visit www.detroitradiant.com.

Professional grill

The Lynx 30-inch professional grill has ProSear infrared technology, a red brass burner, seamless welded construction and control illumination featuring blue LEDs and an internal halogen light. The unit includes the Lynx hood-assist kit, rotisserie system and optional cart mounted side burner. Also featured is the Lynx freestanding Cocktail Pro.

For more information, visit www.lynxgrills.com.

‘No hassle’ 10-year warranty

The SunStar Corcho line of vent-free gas room heaters comes with a 10-year limited warranty supplying a “no hassle” guarantee on workmanship and materials.

The devices have heating capacities from 6,000 to 30,000 BTUs.

The ultra-modern style of slim, compact European-design of the SunStar Corcho line complement the décor in kitchens, living rooms, dens, hallways, sunrooms and workshop areas. Models rated less than 10,000 BTU can be installed in a bedroom and those under 6,000 BTU can be utilized in a bathroom where permitted by state and local codes. The heaters also can be installed in “aftermarket” manufactured and mobile homes as permitted by state and local codes.

An oxygen detection safety pilot is designed to shut off the gas supply should oxygen in the room fall below 18 percent, while the flame failure safety device is designed to cut off the gas supply in case of flame failure. The Piezo Spark Ignition System allows simple start-up without electricity, matches or batteries for worry-free operations in case of a power failure. All models offer user-friendly top mounted controls and can be either wall or floor mounted.

For more information, visit www.sunstarheaters.com.

95 percent AFUE furnaces

The G61MPV Dave Lennox Signature Collection furnace models with SilentComfort technology are quietly efficient, remaining eligible for a $150 U.S. energy efficiency tax credit available to homeowners through 2007.

With ratings of up to 95 percent AFUE, the Energy Star-approved furnaces can reduce energy costs by hundreds of dollars each year.

With a variable-speed blower, the G61MPV can be paired with any Lennox cooling/humidity control system.

Four available field-selectable blower profiles provide application-specific choices in arid and humid climates with quiet blower on/off ramping and active or passive humidity control.

The G61MPV can convert to any of the four available positions without rearranging components, saving installation time and ensuring installation accuracy.

A two-stage furnace, the G61MPV can more closely match a home’s needs by running on low heat in milder weather and switching to high heat in colder weather. When combined with any Healthy Climate IAQ accessory, the variable speed blower can be run continuously at two-thirds less cost than a traditional blower.

The G61MPV furnace line is backed by a limited lifetime warranty on the heat exchanger and a five-year limited warranty on all remaining covered components.

For more information, visit www.lennox.com.

Ceramic fiber log set

Napoleon’s ceramic fiber lightweight molded Phazer log set presents a natural wood-burning look while generating up to 26,000 BTUs. The set provides 50 percent flame/heat adjustment for maximum comfort and efficiency while offering a clear, unobstructed view through high temperature, heat radiating ceramic glass. It is bathroom and bedroom approved and also suitable for mobile homes.

For more information, visit www.napoleonfireplaces.com.

Direct vent fireplace

The Dream direct vent gas fireplace from Napoleon boasts a 48-in. by 48-in. viewing area, amounting to a substantial focal point for a great room, ski lodge or lobby.

It emits 50,000 BTUs with 75 percent efficiency. With hidden controls that remain easy to access, the unit’s exclusive Dual Night Light system illuminates the logs and firebox while gently adding a glow to the room even when the fireplace is off.

A multi-functional remote control adjusting the flame height, blower and Night Light is standard equipment along with sandstone herringbone decorative brick panels, a decorative pull screen and large cast andirons. Optional decorative facings, a country crane and a hearth pot also are available.

Fore more information, visit www.napoleonfireplaces.com.

Direct vent fireplace system

Monessen’s newly released 36-inch direct vent fireplace cranks out 26,000 BTUs and also is available in a 42-inch clean face design. The top-vented units are field-convertible for either propane or natural gas with a variable hi/lo flame control. Fifteen feet of pre-installed millivolt wire is included along with a wall switch and cover. Remote control accessories and wooden cabinetry selections also are available.

For more information, visit www.monessenhearth.com.

Large-view fireplace inserts

The Shoreline is the newest addition to the Lennox Hearth Products integration of the two companies.

The insert has an exceptionally large glass viewing area while still fitting into the space of an average factory-built fireplace. To allow for the large viewing area, the fireplace controls have been moved to the side of the unit behind the surround panel, leaving room for the firebox to extend down to the hearth, much like a traditional fireplace.

Boasting the appearance of a built-in masonry fireplace, the Shoreline offers the choice of three full-brick panel refractories and a selection of extruded surrounds that fit a variety of installations. The unit can be configured to an output of either 33,000 or 40,000 BTUs to fit a wide range of heating needs without sacrificing space or efficiency. This option allows dealers to stock fewer units while still offering consumers the ability to heat a variety of spaces.

For more information, visit www.lennox.com.

Bistro table heater and gas light

Outdoor Leisure is extending the patio experience with its Gas Light patio heater by providing body-level warmth in a way ordinary “mushroom”-style patio heaters can’t accomplish. The recently introduced unit radiates consistent warmth from top to bottom, providing a zone of head-to-toe comfort. The company has topped the heater with a wind-resistant gaslight to provide a muted, indirect source of natural firelight.

Outdoor Leisure also is introducing a bar-height Bistro Table with a built-in heater for those cocktail parties where guests need a warm place to congregate and converse. The Bistro Table acts as both a guest-warmer — with heat coming from below the table — and an impromptu gathering spot at outdoor parties.

The products are offered in either an Arts & Crafts or an Ornate decorative styling accented with a hammered bronze finish.

In addition to being a clever source of firelight, ambience and heat, the Bistro Table patio heater also offers adjustable heat output up to 16,000 BTUs that makes it capable of warming a 360-degree area. The heater unit uses an electronic ignition and will provide heat for up to 26 hours when set on high. The Gas Light patio heater will provide a heat output of up to 36,500 BTUs for 12 hours on the high setting, hiding its 20-pound propane tank in the unit’s base. The gaslight and heater units operate independently. Even when turning off the heater, the gaslight still can provide a flickering firelight to help set the mood.

For more information, visit www.aboutoutdoorleisure.com.

Outdoor kitchen array

The Lynx Outdoor Kitchen features a Lynx 42-inch professional grill with ProSear infrared technology, red brass burners and seamless welded construction. Also included is a warming drawer, access doors, double side burner with prep center, storage drawers, Cocktail Pro, outdoor refrigerator and ice machine.

For more information, visit at www.lynxgrills.com.

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