What’s hot this year

More than ever, consumers are buying home heating products for beauty and ambiance as much as for warmth on a cold winter night.

Fireside chats have become a popular pastime for many Americans in this post-9/11 era as they seek a warm and fuzzy comfort zone within their homes. Propane marketers with showrooms that convey feelings of serenity, love, family and friendship can stoke sales of their propane-fueled auxiliary heating appliances.

“These thoughts and concepts are a part of the presentation,” says Maurice Boekeloo, executive vice president at the R.H. Peterson Co. “It creates an emotional warmth, and ambiance is an issue for these products – spending time with family and friends in a comfortable environment.”

Contemporary styles offer new options for homeowners looking for more than the basic fireplace units.

About 5 million households in the United States use propane for their central heating furnaces, while more than 1 million choose propane to keep the home fires burning in fireplaces, firebox inserts, logs and freestanding units such as stoves and space heaters, according to figures compiled in 2001 by the U.S. Energy Information Administration.

In 2002, 62 percent of the 1.4 million hearth appliances sold were fueled by gas, with propane accounting for 15 percent to 20 percent of the units shipped, according to the Hearth, Patio & Barbecue Association. The association notes that these rates are heavily influenced by the large numbers of new housing developments served by piped-in natural gas. There are about 70 million fireplaces across North America, and about 1.4 million new fireplaces are installed each year in the United States. These product lines can bring profit margins approaching 40 percent to propane retailers who work the category by actively pursuing these discretionary accounts.

“We’re very enthused about the opportunities in this industry,” Boekeloo says.

Industry suppliers report that success in this segment depends largely on the amount of effort that a propane dealer is willing to expend.

“If you follow the programs you’ll see your sales increase,” says Kelly Matheny, sales administrator for Rinnai. “We’ve done a lot more marketing this year than we’ve done in the past,” she adds, noting that record sales were achieved during last year’s colder heating season.

“When you start getting into the colder winters you’re going to sell more heaters,” Matheny points out. “But the year before we had a mild winter – and we still had record sales. You wouldn’t think you’d sell many heaters with a mild winter, but that is not the case.”

Companies like California-based R.H. Peterson Co. are hustling to keep up with sales of the increasingly popular gas fireplace logs.

Much of this has to do with the comfort and ambiance levels that these appliances provide, especially with flaming fireplace logs that project a suitable mood of emotional contentment even if they are not providing a room’s main heat source.

The auxiliary units themselves have become increasingly sophisticated in recent years with increased fuel efficiency levels, cool-to-the-touch cabinetry and timers that fire-up the devices prior to people entering the room.

Boekeloo reports that his company’s remote-controlled fireplace log systems are particularly popular among homeowners attuned to using remotes for their televisions, automobiles and a host of other consumer goods. Hand-painted finishes that more accurately capture the subtlety of colors found in wood fires further emphasize the high-end attractiveness of these items.

But convincing propane marketers to carry – and actively promote – these auxiliary product lines has been a struggle for some suppliers, which is especially vexing since the propane industry is so well positioned to achieve considerable sales activity.

“I’ve yet to crack the code of LP dealers,” laments Peter Rafle, senior vice president for Princeton, N.J.-based Monitor Products. “They don’t want to sell equipment, they want to sell gas.”

Rafle says he’s had propane marketers object to Monitor’s line of room heaters because they are too efficient and don’t burn enough propane, yet these improved efficiencies are what makes the products an attractive consumer buy and a healthy profit center for the dealer.

“I’ve always felt that LP dealers should be in the equipment business. The fuel oil people have been doing this for years,” he says.

Some propane dealers object to obtaining the proper training or maintaining the necessary staffing levels, he reports. Yet he knows the dealers must be able to support the products they sell.

“I wish there was a way to turn propane dealers into propane marketers. It would make us both happy; it would be a steady customer for the propane dealer.”

Industry observers agree this common reluctance hinders what could be a big business for retail propane marketers. As discretionary items, retailers can sell the equipment as luxury items and charge accordingly. Instead, too many marketers simply respond, “We don’t do that.”

For many suppliers the propane industry is by far the channel of choice for marketing these heating products.

“The specialized dealer is more able to give personal service. We’ve chosen to stay out of the larger stores. People will go to specialty stores and propane dealers rather than go to a box store,” says Jerry Scott, vice president at R.H. Peterson.

 

“The dealers work with us. The loyalty from these (propane) stores is stronger. A lot of our ideas have come from our dealer base. That type of partnership is something you don’t get from the big box stores. The propane dealers that get behind the product do a really good job of selling the product line.”

Credibility counts

“We don’t even sell our products over the Internet – all of our sales go through propane marketers,” reports Jason Perry, director of marketing for Vanguard/DESA. “The propane marketers have the most credibility among homeowners about gas.”

September and October are the primary months for stoking up a concentrated sales program, according to Perry. This includes advertising the product line to let the public know that you have these units in stock. Newspaper and radio ads are usually the choice methods for getting the word out, although Perry suggests that propane dealers evaluate their own marketplace to determine the most cost-effective type of advertising.

Most suppliers have cooperative programs to help defray the cost of advertising, and several states – including Oklahoma, Illinois and Missouri – have government-sponsored rebate programs to further entice consumers into purchasing alternative-fueled heating products. Manufacturers also offer installation employee training programs and sales seminars to better boost a product line’s success.

Brochures, videos and attendance at fairs and home improvement shows are other methods for promoting these heating products to the targeted customer base.

Cool-to-the-touch cabinets and multiple-stage, modulating gas valves have added to the popularity of some models of vent-free heaters.

Running spots on local cable television is particularly effective, according to Boekeloo. “TV advertising lends itself well to demonstrating the product,” he says, noting that this is the second-best selling tool compared to having the units actually operating in your showroom.

“It’s critical that you have them burning in your place of business,” Perry concurs. “If people see how beautiful these are and feel the warmth they will want to buy one.”

The atmosphere of the showroom itself should present a comfortable, happy-home environment as opposed to the ambiance of an austere “gas house” facility.

Cross-marketing opportunities is another area to pursue. “It benefits LP marketers to establish relationships with local builders and remodelers,” says Perry. “The remodelers (and builders) will refer customers to a marketer’s place of business to actually see the products, which emphasizes the importance of having burning models on display.”

Having ready-made mantels available for installation along with fireplace products is another factor propane retailers should consider, Perry suggests. “Consumers love the convenience of that. You don’t have to tear a big hole in the wall for it.”

Zone heaters are less of a discretionary item and more of a necessity for many homeowners and landlords, so the sales effort should focus on the benefits of heating where you do your living and not necessarily the whole house,” Perry points out. “The most important thing you can do to move this product is to emphasize the efficiency and cost-effectiveness of gas zone heating.”

Rafle says selling the Monitor line works best when the qualities of superior performance and economic benefit are stressed. “It’s for someone who wants to solve a heating problem – not for redecorating,” he explains.

A propane retailer’s marketing area will dictate which products to stock and actively promote. Suppliers note that vented products tend to sell well in northern climates, while the South seems partial to non-vented appliances.

Yet these are not exclusive trends. Any given model will have application-specific characteristics that the situation will dictate. An area’s economic climate and housing demographics are always worthy of study. Income levels, the age of the housing stock and rental vs. owner-occupied structures are figures to be reviewed when ordering this equipment. A neighborhood with older homes hit hard by the recession will have differing needs and desires than a new upscale, new housing development.

A propane marketer preparing an Internet site highlighting this equipment may wish to take a more encompassing approach to the product mix based on the wide variety of hits that can be expected. The pages should be attractive, informative and professional looking.

“We’re a small company, but we try to make our website look like we’re a big dealer,” says Tom Overbaugh, owner of Ehrhart Propane Gas of Trumansburg, N.Y. “We sell a lot of room heaters and vent-free heaters,” he says, adding that the appliances are carried more as a convenience to customers rather than as a stand-alone profit center.

Nichols’ LP Gas of Clifton, Texas saw heating appliance sales spike when it went online in 1999 in anticipation of Y2K events. Internet sales have slowed since then, but owner Tom Nichols says he has done well with a showroom featuring eight to 10 working models and a spurt of new-home construction in the region.

Even if you don’t have an Internet presence for your company, a propane retailer should be familiar with the content of the suppliers’ websites, says Scott at R.H. Peterson. “Your customers will be visiting the website, and they’ll know about the product.”

Selling serenity

Some 25 to 30 percent of the appliance customers at the Midwestern Propane Gas Co. have done research online before coming in the door, according to Darrell Urban, owner and president of the Belleville, Ill.-based operation. Urban has wholeheartedly embraced the auxiliary heating appliance market.

When the business was founded in 1936 it began selling propane and butane appliances of all types, later evolving into a more focused product line that at one time included installation of central furnaces. Now concentrating on flaming “leisure products,” Midwest has two retail sites called Hearthside Grill and Fireplace along with 13 propane plants serving home delivery accounts.

“I keep that house going; that’s my job,” Urban explains. “I bring ‘serenity’ to their house. It’s an emotional thing. With a fire in the room you have company all the time.”

All types of room-oriented heating and hearth products are sold, including wood-burners, pellet stoves and natural gas products. “I’m selling every accessory that works for the customer. One display went to 13 displays because the customers demanded it; the customers want the product,” Urban reports. Currently the company is building an outdoor room to highlight its grill and patio lines.

The briskness of the heating appliance business has mandated separate crews to handle the respective workloads for the heating and propane delivery divisions. The complexity of the installation training also calls for specialized focus.

“Fireplace does not let up – it’s 12 months a year,” says Urban. “We may be involved with six sales and a guy at the counter wants a 20-pounder filled. In the fall it’s (especially) crazy at the counter, but that’s what we want.”

Venturing into this marketplace was not easy, according to Urban, who routinely deals with 6,000 inventory items.

He says that he had no visions of selling more propane when he pursued the appliance element.

“Increasing my propane load never crossed my mind,” he recalls. “My main motivation was to serve the customers, and the business just took off.”