Hearth & Home Magazine – 2018 December Issue by Hearth & Home

THE VOICE OF THE HEARTH, BARBECUE AND PATIO INDUSTRIES

DECEMBER 2018

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DECEMBER 2018

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MIKE HOLMES HGTV Host and DIY Network star, Mike Holmes will share his thoughts on housing and product trends, the importance of fireplaces in the home, and how outdoor products enhance the homebuying experience. Sponsored by Napoleon Products.

THURSDAY, MARCH 14 | 8:00AM – 9:15AM Featured chair supplied by Telescope Casual Furniture.

| CONTENTS | FEATURES Pioneer Spirit 1 0 That Dorothy and Frank Matthews started their first ‘legitimate’ hearth shop in 1986; they sold their business and retired a few months ago. This is their story.

Good But the NSPS 2 4 All 2018 was a good year for hearth products; 2019 could be the same.

Make the Difference 3 2 Details Listen to Dave Rettinger: “Be hands on, train all employees well, finish what you start.”

Season 3 8 A ButStrong on the way to retail bliss, it started to rain. Me Crazy!” 4 8 “Call Somehow, for 35 years, Brett Freiberg has been able

to retain his enthusiasm for the business of selling patio furniture (and there’s no sign that he’s going to change).

Time, Right Products 5 4 Right The barbecue category was solid in 2018, and the future looks bright.

by Passion 6 4 Fueled Premier Grilling is on a quest to be the best, and don’t bet against them.

32 4 | DECEMBER 2018 | www.hearthandhome.com

DEPARTMENTS

Perspective

72 Industry News

74 Business Climate 78 80

80 81 82

Stock Watch Classifieds Ad Index Who Reads Hearth & Home? Parting Shot

JOURNAL

A PUBLICATION OF THE HEARTH, PATIO & BARBECUE ASSOCIATION

ON THE WEB News Americans Are More Afraid, Survey Finds Three Generations of Married Couples

Recipes Pacific Living’s Cheesy Ham Divan Bull Outdoor Products’ Peppermint Patty Brownies.

THE VOICE OF THE HEARTH, BARBECUE AND PATIO INDUSTRIES

DECEMBER 2018

On the Cover

A home in the Telluride area designed by RKD Architects; they also designed the furniture.

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SUBSCRIBE ONLINE For Print and Digital editions!

Publisher/Editor Richard Wright wright@villagewest.com Editorial only, send digital images to production@villagewest.com

Advertising Jackie Avignone, Director avignone@villagewest.com Melody Baird, Administrative Assistant baird@villagewest.com

Contributing Writers Lisa Readie Mayer, Tom Lassiter, Bill Sendelback, Paul Stegmeir, Dr. James Houck, Mark Brock, Kathi Caldwell-Hopper

Creative Services

To subscribe, please go to our online subscription form at

www.hearthandhome.com/subscribe Editorial coverage of all three industries is provided in every issue.

Erica Paquette, Art Director Kristin Gage, Sr. Graphic Designer April Brown, Jr. Graphic Designer Tobi Carter, Jr. Graphic Designer Susan MacLeod, Proofreader production@villagewest.com

Circulation Sheila Kufert circulation@villagewest.com Karen Lange lange@villagewest.com

BUYER’S GUIDE

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B20UYER’S E GUID 8-2019 201

The Buyer’s Guide includes information on manufacturers, reps, distributors, resources, products, services and essential data for the hearth, barbecue and patio industries.

www.hearthandhome.com/directory To inquire about your company listing or to learn how to get a listing, please email buyersguide@hearthandhome.com

6 | DECEMBER 2018 | www.hearthandhome.com

Judy McMahon, Accountant mcmahon@villagewest.com

Copyright© 2018 by Village West Publishing. All rights reserved. Reproduction in whole or in part without written permission is prohibited. All advertising is subject to approval by the publisher. Please address all correspondence to Hearth & Home, P.O. Box 1288, Laconia, NH 03247, (603) 528-4285, (800) 258-3772, FAX: (603) 524-0643.

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Office

Hearth & Home, The Outdoor Room and Vesta Awards are registered trademarks of Village West Publishing. Village West Publishing is not associated with and has no financial interest in, the Hearth, Patio & Barbecue Association.

Hearth & Home (USPS 575-210/ISSN 02735695), Vol. XXXIX, No. 1, is published monthly by Village West Publishing, 25 Country Club Road, Ste. 403, Gilford, NH 03249/P.O. Box 1288, Laconia, NH 03247. Subscription price $36 per year; $60 (USD) in Canada; $120 (USD) overseas (first class, airmail only). Single copy price $15 (includes postage and handling) in U.S. and in Canada. Periodicals postage paid at Laconia, NH and at additional entry office. POSTMASTER: Please send address changes to Village West Publishing, Circulation Department, P.O. Box 1288, Laconia, NH 03247.

| Perspective |

Pretty Darn Good!

o, it was a bit of rain, and a bit of heat, that disrupted an otherwise steady march to double-digit sales growth and a substantial increase in that bank account. We should all be used to it by now, for there are far fewer sales seasons when foul weather (wet or dry, hot or cold) passes us by, than there are years when it harshly disrupts our plans for growth. We should be used to it, and we all should look to Florida, Georgia, the Carolinas, and California, as reminders of what is truly harsh weather. | Hearth Sales: Past & Future |

In this issue, you’ll find articles titled “Hearth Sales: Past & Future,” “Patio Sales: Past & Future,” and “Barbecue Sales: Past & Future.” Stop and read the one, two, or three that relate to your business. Therein you’ll find ideas and advice from your peers.

Other patio retailers mentioned they “had a great year,” consumers “were snapping up big umbrellas,” “consumers rediscovered extruded aluminum furniture,” “plastic furniture continues to boom,” and “online sales rose at an unprecedented rate.” The Barbecue industry also felt the impact of a lot of rain. Yet, retailer sales appear to be close to those in the Hearth industry. Products such as gas grills, pizza ovens, pellet grills, and kamados, to a lesser extent, caught the fancy of consumers and propelled sales to a more-than-acceptable level. Here’s a few comments from barbecue retailers – “fantastic, business was way up,” “very consistent with steady sales,” “pellet grills are going crazy,” “best year since 2007,” and “our growth wasn’t tremendous, but it was good.”

Even with the mid-term national elections, the U.S. economy is expected to continue strong through 2019, according to Robert Dietz, chief economist for the National Association of Home Builders (NAHB). After 3% 2018 growth in the gross domestic product (GDP), he predicts 2.7% GDP growth for 2019, with inflation increasing to 2%. Unemployment, at 3.7% in October, is expected to drop to 3%, continuing to create labor shortages for new home construction, and slowing the growth of housing starts.

ALL GOOD BUT THE NSPS 2018 was a good year for hearth products; 2019 could be the same.

By Bill Sendelback

n real estate the mantra is “location, location, location.” In hearth product sales, it’s “weather, fuel prices, economy, new-home construction.” Those factors all lined up positively to make 2018 a strong hearth product sales year. They are predicted to continue on a positive track that will make 2019 another strong hearth sales year. Weather tops everyone’s list of what propels hearth product sales – obviously, the colder the better, and the earlier in the year the better. The Farmer’s Almanac forecasts a 2018-2019 winter with temperatures below normal in the majority of the U.S., with the coldest temperatures occurring in February 2019. The National Oceanic and Atmospheric Administration (NOAA) is concerned

that an El Nino is “likely” for 2019, predicting that there is a 70% chance of a warm 2019-2020 winter. Ed. Note: The NOAA is by far – BY FAR – the more reliable source. High heating-fuel prices are another trigger that could help hearth product sales. However, so far it appears there is nothing on the horizon that would push heating-fuel prices up. The U.S. Energy Information Administration forecasts for 2019 that crude oil prices will rise only 1.6%. Heating-oil prices are predicted to go up only 0.4% to $3.18 per gallon average. Natural gas prices are expected to increase 1.9% to $10.04 per thousand cu. ft. average with a similar increase in LP prices. Electricity prices will bump up the most, up 2.9% to $13.31 per kilowatt.

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The Hearth industry, which had two miserable years in the recent past, due to climate change, this year had a spectacular sales season, one that some retailers were comparing to the stellar years of the late ’70s and ’80s. This year manufacturers and retailers were using words and phrases such as “fantastic sales year,” “off the charts,” “very solid year,” “excellent sales year,” “amazing, almost like a return to the old days.” Sure, a few hearth retailers had a mediocre year, but that’s to be expected, isn’t it? The Patio industry certainly was impacted to a great extent by rain. However, according to Linda Horan at the Hill Company in Philadelphia, “It was the worse weather, rain, rain, rain, yet sales remained strong, probably topping those in 2017. We sold a ton of teak, a ton of cast aluminum, a ton of woven.” Doesn’t sound too bad, does it? At Elegant Outdoor Living on Florida’s Gulf Coast, Debbie Stegman had a “really slow” summer with a red tide close to her three stores, but summer ebbed away and winter residents returned. Now, “business is really good,” she said, “it started off like gangbusters.”

Electric fireplace sales did increase in the specialty retail channel with higher-end models, but most of those sales continue to be through Big Box stores. With low heating-fuel prices, pellet stove sales were dismal in all areas except the Northeast, a long-time hot bed for pellet burners. The big surprise in the hearth product market is the 2018 sales growth of wood-burners, particularly freestanding stoves and fireplace inserts. Low heating-fuel prices didn’t seem to slow down sales of wood-burners, while the strength of home

Pictured left: The EPA building in Washington, DC.

Dietz also predicts 30-year mortgage rates to be near 5% for 2019, and consumer confidence at “near a two-decade high” because of more disposable income created by the recent tax reform. Regarding housing starts, the NAHB forecasts total housing starts for 2019 to go up 2% to 1,293,000 units. Single-family housing starts are forecast to increase 4.7% to 927,000 units, and multi-family starts to actually decline 4.4% to 366,000 units. Dietz also forecasts that home remodeling will rise 7% in 2019 after a 9% increase in 2018. His reasoning is that more houses are aging, home prices are going up, and people are looking for more energy-efficient homes, so they will turn to remodeling their existing home. In 2018, hearth product sales were good for most manufacturers, and great for some. Gas hearth produc sales, especially gas fireplaces, continued to increase and gain market share because of the continued rebound in new-home construction, and the increase in remodeling.

remodeling, and increased interest in the aesthetics of wood-burning products, brought new life to the category. Whatever happened in 2018, most expect it to continue into 2019. The triggers for hearth product sales – weather, heating-fuel prices, the economy, and new-home construction – are expected to hold steady for 2019. The only wild card for 2019 is the impending influence of the EPA’s May 15, 2020, deadline by which retailers can sell wood- and pellet-burners that are not certified to the 2020 NSPS standards. Most industry members feel that dealers and manufacturers will be busy flushing out inventories of non-2020 models. But that may offer opportunities for dealers to replenish their inventories with 2020-certified models. While there are pending bills in the U.S. Senate and House of Representatives to delay the May 15, 2020 deadline to perhaps 2023, no action has been finalized, and many manufacturers are not optimistic about the possibility of that deadline occurring.

www.hearthandhome.com | DECEMBER 2018 | 25

The strong message coming from manufacturers and retailers as they discuss the 2018 sales year is that there is a great demand for the products produced by the hearth, patio, and barbecue industries. It’s a demand so strong that even periods of rain or sweltering heat are surmountable. That, my friends, is what you should be concentrating on as we turn the calendar, as well as the forecast from those in the field that indicates the coming year should be better than this past one. We’ll leave you with the forecast of Bob Gaylord, president of Agio International (patio furniture and fire pits): “Sales should jump by 17% in 2019.”

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Honoring Innovation In Design and/or Technology AT THE 2019 HPBEXPO IN DALLAS, TEXAS Judging will take place at your booth Thursday, March 14, 2019.

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Enter Online on or BEFORE Jan. 11, 2019 and the fee is $200 per entry; enter later and the fee is $250. Only NEW products created for sale in the year 2019 are eligible. Products previously shown at an HPBExpo, and products with changes or additions to a previously exhibited product, do not qualify.

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CATEGORIES Hearth Products Wood Products Gas Products Pellet Products Electric Products Hearth Products, Other Fuels Central Heating Systems Hearth Accessories Hearth / Barbecue Components & Controls

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A product whose primary attribute is art, as opposed to heat.

The Art of Fire

WINE RECEPTION SPONSORED BY:

Heat-resistant, Transparent Glass-Ceramic In Partnership with the Hearth Industry

| Exit Interview |

THAT

PIONEER SPIRIT

Dorothy and Frank Matthews started their first ‘legitimate’ hearth shop in 1986; they sold their business and retired a few months ago. This is their story. By Richard Wright

Inglenook: a recess that adjoins a fireplace, from the word ingle, meaning “fireplace” in Old English, and nook (a secluded or sheltered space).

“

’m a people person,” says Dorothy Matthews, “Frank (her husband) is not.” That explains why Dorothy ran their hearth shop, while Frank handled installations. The hearth shop was (is) called Inglenook Energy Center, and it’s in the small town of Conifer, Colorado. From 1986 (their first “legitimate” store) to 2018, the two partners created a healthy hearth business while surviving the Great Recession, devastating wildfires, and a few “boneheads.” During many of those years, Dorothy was a Vesta Awards judge, giving up a day of the HPBExpo, year after year, to be part of a program that promotes product innovation in design and/or technology. Prior to entering the hearth business, both Dorothy and Frank had other careers. The economy, necessity, and just plain pioneer spirit changed all of that. Hearth & Home: Tell us about your lives prior to owning a hearth shop. Dorothy Matthews: “We’ve had two careers that were so different from

running a hearth shop. It’s strange how we got into this. During the mid-’80s I worked in middle management for a big insurance company, and Frank is a structural engineer. Around 1984 or so, we were hit really hard when the economy plunged because of the oil industry. All the resources here in Colorado went flat, and the oil companies moved out, so the economy just went into the toilet. A Quadra-Fire 7200 fireplace has a primo place in the showroom.

10 | DECEMBER 2018 | www.hearthandhome.com

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| Exit Interview | “My husband had been laid off four times in two years in civil engineering. They would hire him; he would finish up one of their contracts, and then they didn’t have any more work so would let him go. He would move on to another firm, but it was the same thing. “I was sitting in the dentist’s office with the kids and reading Mother Earth magazine. I came across an ad for August West, you know, practice chimney sweeping on your friends, build your own business. I went back to Frank that night and said, ‘This can tide us through for a couple of years. You like working with your hands.’ “So we sent away $1,600 or $1,700 to August West and a big box of stuff came with chimney brushes and what we used to call the Big Red vacuum cleaner, and he did it. He started cleaning chimneys. After about six months of that, I said, ‘If we’re going to do this we might as well go big or go home. Let’s open up a store.’ We were living here in the mountains of Colorado where it’s cold and the altitude is high; most people were using alternative heat because propane was the only available gas at that time and it was expensive.

“Without Frank even knowing, I went and opened up a lease in a small little shopping center we had up here. Conifer is a very small town; it’s a bedroom community to Denver.” How many people are in your town? Matthews: “At that time, there were

only about 8,500 in the whole corridor. It has grown since then, but most of the population up here lives on a few acres. Unless you’re right down in the commercial area, which is pretty small too, you don’t even see your neighbors. People are on two to three acres of property and more. They move up to the mountains to get out of the city. “So I came home that night and told Frank, ‘Well, I just signed a lease.’ He was almost catatonic because he’s an engineer. He’s not a people person, so to speak. So I said, ‘Well, let’s just try it.’ We didn’t know what we were going to sell. We didn’t know anything about anything except that he could clean a chimney. “It was a different time back then. When you don’t have any fear, when your husband is out of work, you just do what you have to do. He put an ad in the paper

saying we were going to open a store, and Jim Gorman called and asked, ‘What are you going to sell? You’ve got a picture of one of my stoves in your ad.’ “Jim lives in Evergreen, which is the next town over; you can throw a stone and hit him. That’s how little we knew, that there were territories. He chuckled about it and said, ‘Why don’t you come on over?’ We went over to his house and he sat down and said, ‘Well, I’m going to help you out.’ He hooked us up with some lines and we opened our store.” At that time, did he have the big RV that he drives everywhere? Matthews: “Yes, he did. I do credit him

with the courage to take us on and help us through what we didn’t know anything about. We opened up the store in a bad economy, and for whatever reason, it worked. In that little shopping center, there was no way to burn anything. There was one wood stove chimney in the store and we had a Quadra-Fire, one of the original Quadra-Fire 3100s, hooked up to that. That’s how we sold. “We gained momentum and, by the time the three-year period was up and we had to move or expand, we figured, ‘You know, this is working out. Let’s just continue to do it.’ We opened up in our second location, which we shared with a paint store, and were able to put a few more stoves on the pipe there. We finally outgrew that space. They kicked us out because we were too busy and the parking lot didn’t have enough parking spaces.” (Laughs). Were you selling only Quadra-Fire at that point? Matthews: “No. We were selling

Dorothy strikes a pose in front of a wood fire.

12 | DECEMBER 2018 | www.hearthandhome.com

Whitfield. Here are some ancient names for you – Turbo Fire, Welenco, Englander. You know, Denny Wendt was an employee of Rocky Mountain Enterprises who had a distribution center in Grand Junction, Colorado. He would get an order from Jim Neuenschwander, load the truck and trailer, and sometimes deliver the same day, which was a five-hour drive. Now, that was service! “Well, he showed up one day with five Country Flames in the back of his truck;

we were just in our second year of business. He said, ‘Hey, how about being a Country Flame dealer?’ I said, ‘Well, show me what you have.’ He wound up leaving all five of those stoves at our store, and we had our first really legitimate wood stove line. The next time he brought Quadra-Fires and that was back in the time where Dan Henry and Alan Trusler were building stoves in their shed. “Well, we just took right off, and before we knew it we were the biggest Quadra-Fire dealer in the area. Of course, we were one of the only ones. But for probably nine or 10 times in the history of Inglenook, we’ve been their largest dealer in the country. That’s how it started. It was just purely by accident. “I don’t want to give people false hope that, okay, you can just stick your finger in the ground and plant a hearth stove store seed and it will turn into a giant beanstalk. It’s much harder now. It’s harder to get lines and to be credible, and there’s a lot of competition with the Internet.” From the beginning, were you doing your own installs?

Matthews: “Yes. It was Frank doing

them. I still had a legitimate job with a career. I would work the store part-time on weekends. Frank would be out doing installs; he had a helper and we had somebody in the store who was just answering phone calls. “A few years later, when we were bigger and we were actually in our third location, I had a sales manager who was a good ol’ boy by the name of Bill Stidham. I don’t know how many people might remember him, but he was kind of a redneck guy who wore jeans and red suspenders, but he was a top notch salesman and he taught me everything that I know. “Bill is not with us anymore. He passed away a couple of years ago, but we remained friends long after he retired. He’s the only legitimate Inglenook retiree that we ever had. One day, he and Frank said to me, ‘Come on, let’s go down to the Fort,’ which is a big restaurant down in Denver, ‘let’s go have dinner.’ Well, he and Frank had plotted to get me a little drunk and convince me to quit my real job that I had for 23 years, with a pension, health insurance, stock options, and everything else, and leave to work a wood stove store.

“I was almost in shock and didn’t think for a minute that I could ever do that, because I had a good job. But, after a couple of weeks thinking about it, I finally said to them, ‘I’ll do it. What the heck, life is short.’ So I did, and I was nervous for the first six months or so; after that it was worth doing, and I’ve enjoyed it ever since. I enjoyed it until the point where I said, ‘It’s time to get out. It’s time to retire.’ “I did it (the insurance job) for almost 30 years. I was a mid-level manager in a big company, so the top people didn’t know who I was and the bottom people didn’t know who I was, but I had a credible career in the middle. It worked and I liked my job, but it was time to do something different, so I did.” What year was that? Matthews: “That was in 1994. We

had started up as a ‘legitimate’ store in 1986.” That was right about the time the EPA decided to get into the hearth business.

Adding a sunroom provided another 1,000 sq. ft. to the showroom.

www.hearthandhome.com | DECEMBER 2018 | 13

| Exit Interview |

An assortment of Jøtul, Vermont Castings, Enviro and Quadra-Fire stoves.

Matthews: “Exactly. We didn’t even

know what the EPA did. That year the trade show was in Denver. So after our meeting with Jim Gorman he said to Frank, ‘Come on, let’s go down to the trade show.’ It was funny because, at that point, a lot of manufacturers weren’t able to meet the new burn restrictions that we had in Denver, and a lot of them didn’t even show up and set up. That was a funny time.” The building that you are in right now, did you put that up or was it an existing store? Matthews: “In 1996 or so, we were afraid

of being kicked out of our second location, which we shared with the paint store. We could see the handwriting on the wall. I had my local realtor/customer try and find a commercial location. You have to picture where we are. We’re in the woods. There’s not a lot of commercial stuff here. He found me something that actually was zoned commercial. It was on the major highway, but you couldn’t get there from the major highway. You had to go through a back street and on up, and I was afraid that the location move would just kill us. “He found this location and it had been a converted old house that was occupied

14 | DECEMBER 2018 | www.hearthandhome.com

by a plumbing company at that time. So I bought it. There was nothing else available. I thought we were going to be kicked out by the paint store guys, and with the limited amount of commercial real estate that we had, I thought, ‘Well, I better do this or we’re going to die.’ “So I bought it and we leased it to the people who were already leasing it, which at that time was a glass company, for about a year, year and a half, until we did finally get kicked out of our other location and we had to move. We had no choice. But I always felt that we’re a destination business. We can make this work. We’re on the highway. With the right signage we’ll make it work, and again the stars and the moon aligned and it worked. We’ve been there ever since. It has been about 32 years.”

other, but separated. Even with all the volume that we did, somehow we made it work. It was amazing. “We call ourselves The Little Engine That Could, because it could have killed a lot of companies working under those constraints, but we had really good distributors and good manufacturers, and they worked with us – like Denny Wendt with the distribution center for Quadra-Fire down in South Fork. If I needed something, as long as I ordered a couple, he would put them in the back of his truck and run them up to us, and that was a four- or five-hour drive. They worked with us.”

What do you have for square footage in your showroom?

Matthews: “At one point before the crash

Matthews: “I’m going to say the total

square footage is about 3,000 because we were able to add on a sunroom, which is about 1,000 sq. ft. Then we had an oversized, double-car garage that we call the warehouse. It’s two double-car garages with high doors next to each

At your peak how many employees did you have? in 2008 we had as many as 14. Right now the new owner, Mark Major, is working with about eight or nine. It’s funny how it all came about, Mark buying the business, because over the course of the last four or five years we had many people walk in and say, ‘You know, Dorothy, when you get ready to retire give us a call, I would be interested in buying your business.’

“We were dealing with a few of those guys for a while, but if you’re not working with a legitimate broker, go home. The guys that just walk in and want to buy your business have absolutely no clue what is involved. Even other stores that approached me wanted to buy it for nothing, and not pay for it for five years, that kind of thing. So we listed it with a commercial Keller Williams broker and it was the best thing we could have done. “Do you remember Patricia and Alan Blick? You did a story on them years ago. They had a store in Carbondale out by Aspen. She and I were friends, and she encouraged me because her store was also for sale. She explained how the process was going for her. She said that hiring a commercial broker was the only way to go. “Anyway, Frank was out on a call and Mark was buying a pellet stove from us; he was retiring from the railroad. He’s only 47 years old, but he wanted to retire from the railroad because he had the type of job where every time there was an incident on a railroad he was called out to take care of it. He was retired military so he had two retirements, and he was looking to be a local businessperson and be involved in the community. “When Frank was out there doing the consult for his pellet stove, Mark said, ‘You know, I never thought of your business. Are you still selling it?’ Frank said, ‘As a matter of fact, it’s listed. You need to talk to Dorothy.’ So he called me, and I said, ‘It’s listed, but I’ve been down this road too many times. Just call my broker.’ “That was in September of 2017. It started out as this little snowflake; it started coming down and it actually turned into a sale on June 6, 2018. You think that selling a little business like ours is going to be simple, but I think it’s almost as complicated as selling IBM with all of the microscopic things that you have to do, and the due diligence and everything. It was a very long procedure.”

went a little further and a little further. We weren’t even under contract yet, but we were getting pretty close when the trade show was coming around and I finally said, ‘Mark, you know I’m not going to take you to the trade show and introduce you as the owner unless we’re under contract.’

A pain in the butt, right?

community to Denver. Even though we are up here in the boondocks, I’m usually down in the city three or four times a week picking up supplies. It’s really a great location. The ride to Denver is only about 35 minutes.

Matthews: “Yeah. You never know until

the check clears if it has really happened; that happened to me once before. In this case, we just kept plodding along and it

“As the old realtor adage goes, it’s location, location, location. We had a fabulous location for what we do. Denver is about 30% to 40% of our business. And our trading area up here in the mountains has grown as well. In a four-town area there’s a population of maybe 35,000 people.”

L to R: New owner Mark Major with Dorothy and Frank Matthews.

“So we got that done and we brought him to the trade show and introduced him to all of our vendors and it went well. He was encouraged. Frank and I are 71. He is 47 and he has business experience, but he has never had a retail business. He went to the trade show with big wide-open eyes and was very excited. Frank and I went with old tired eyes and tried to keep up our enthusiasm. Among the three of us, we got it done.” Right now what’s the population of your marketplace? Matthews: “Well, we’re a bedroom

I assume most people in your neck of the woods are heating with wood. Am I correct, or is gas the greater seller? Matthews: “The only option up here

for a long time, besides wood and pellet, was propane. But about 10 or 12 years ago a gas company ran natural gas lines. So more often than not, it’s a natural gas hook-up instead of propane. Right now, 40% of our business is gas, and probably 20% or so is pellet. The rest is wood. Pellet used to be 60% of our business.” You think it’s the natural gas line that is changing that? Matthews: “Yes. It has been around

about 12 years now. As the population ages they are tired of dealing with wood, tired of lugging pellets. They are coming

www.hearthandhome.com | DECEMBER 2018 | 15

| Exit Interview | in for the convenience of gas, and there is no significant cost difference here.” One time when you and I were having a chat, you mentioned that a wildfire had taken down a number of houses in Conifer. Matthews: “Fire is a problem almost

every year out here. But we had a fire about 10 years ago; it was called the Hayman Fire. That was the fire that the Park Ranger started, and it was the largest fire in Colorado’s history. I think it burned about 165,000 acres. The fire started to spread almost to the front range, and it went way down to Woodland Park to Colorado Springs. We probably had 70 miles of fire. It was unbelievable. But almost every year with the climate change, it is drier and it is warmer and we have to be very careful. There is no outdoor burning allowed whatsoever here.”

about, used to say, ‘When you’re a wood stove store, when the economy is good the sales are good. When the economy is bad the sales are great.’ He used to say, ‘It’s like a liquor store.’ But 2008 proved that theory wrong.” Is it tougher today to be in the hearth business than it was, say, 20 years ago?

a better job than the in-house installers. We’re in a big territory up here and our truck would leave and drive 75 to 100 miles and then the guys found that they forgot an elbow, and the whole job had to stop until they came back and got it. “Being on an hourly wage, it was no skin off their teeth. But when a subcontractor is doing it, that’s their

Is that year ’round? Matthews: “Almost year ’round. In the

wintertime you can burn, but of course you can also use your fireplace. In the wintertime there is generally a few inches of snow on the ground so there’s not much danger. But there used to be two to three feet of snow on the ground.” When we had that chat about fire, I believe you told me that it took down a number of houses in your little town. Is that correct? Matthews: “Oh, yes. There was a fire

about five or six years ago that was so close that just looking over the ridge from our store we could see the fire. There were probably 37 to 40 houses lost at that time. Three people were killed in that fire.” You also said that your business dried up. Nobody wanted to buy anything and bring fire into their house. Matthews: “That fire was right about

the time of the 2008 economic dive. With the combination of fires and the economy, nobody wanted to be doing anything, especially with wood. That was very tough on us because, up to that point, we were able to handle the valleys of the economy pretty well. Bill Stidham, whom I told you

16 | DECEMBER 2018 | www.hearthandhome.com

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Matthews: “First of all, there are so damn

many regulations coming from the EPA. Second, consumers are on the Internet checking prices; many of them come armed with a lot of false information, so you’re combatting a lot of that information and trying to set the record straight. “So, is it more difficult today? I don’t know. There are really about the same number of hearth stores as there were back then, but the economy has weeded out a lot of the real bad ones.” Now is Frank still one of your installers, or do you have another guy?

Matthews: “Frank has not done installs

in 15 or 20 years; we really are not a store that does a lot of installations. The new owner has started to do them again, but in the last 10 or 15 years we’ve been using subcontractors. In most cases I feel they do

whole livelihood. If they screw up and it costs them 2.5 hours more travel time, it hits them in the pocket. So they make sure they get things done right. “Frank still does a lot of the service work, but mostly what he does are the consultations, because he’s a structural engineer and understands construction really well. So if a consumer wants to do the project him or her self, and probably 40 to 50% do, we want it to go well. Once the customer has committed to us with a deposit, we will make a field trip to their house and Frank will give them a consultation as to what it’s going to be like and how long it’s going to take, and give them a list of the materials and pretty much tell them how it’s going to go together. “Customers come and pick up their stuff, put their own stuff in, and if they have a question while they are doing it, Frank is available. We give them our cell

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| Exit Interview | phone numbers. I have customers even calling me at home and we’re okay with that, and we work it through. That is kind of our MO. I don’t believe anybody else does that. They all want to sell the install. But it has been very successful for us.”

residential. It’s kind of a funky little neighborhood, but we like it. We will probably stay there a third of the time, but it may be difficult to be living right next door to what used to be our livelihood, and seeing things change.”

do what he really loves before he loses his flying license.”

What is the toughest thing about running a hearth shop?

Well, your other home isn’t that far away, is it?

Matthews: “Wow! There are a couple of

For 40 years we have had a small plane parked in Pagosa Springs. We have a hangar down there and our house is pretty much right across the street from the commercial airport. It’s a County airport, and it’s real little. It’s like having a fly-in residence, almost. He wants to do that now, because we’re both 71. Every two years you have to pass a flight exam and medical exam. As you’re getting older, every year you wonder if you will be able to keep your license. So I want to be down there with him, being able to

about 35 years. We like to go down in January and May and lay on the beach. Usually there is a little alcohol involved.”

them. Keeping up with the technology is the main one. Hiring people and keeping good staff is difficult too, because this is a small industry and the number of people who really know everything is even smaller yet. So if you spend a few years training somebody, you know there is always somebody putting out feelers and trying to snatch them away from you. So maintaining a good staff is very difficult.” I hear many retailers say that the younger crowd doesn’t want to work. They don’t seem to be as nose-to-the-grindstone as perhaps you and Frank are. Is that your experience?

Matthews: “No. But Frank is an aviator.

I understand that you go to Cabo San Lucas quite a bit. Matthews: “We’ve been doing that for

(Laughing). I’ve never been there, but it sounds absolutely lovely. Now you’ve seen that area grow incredibly haven’t you? Matthews: “Oh my gosh! It’s nuts down

there. But we go to one little place like your writer, Bill Sendelback. He has met us down there a couple of times and we’ve thrown back a couple of margaritas at a place called The Office. Frank and I come from a beach area. We were originally from New York and Long Island and lived

Matthews: “You hit the nail on the head.

If we are talking about somebody from age 25 to, say, 40 or so – over 40 and it seems to change – most of those people are looking for instant gratification, and they don’t want the $12 an hour jobs. They want the $40 an hour jobs right off the bat, yet they don’t know anything. So we have to bite the bullet and hope we hire somebody who has the marbles to do the job, and we train them.” Now that you’re retired, what are your plans? Matthews: “Frank and I have another

home down in southern Colorado that we have had for 30 years. It’s down by Pagosa Springs near a ski area called Wolf Creek. We don’t do winter sports, but we like to spend a lot of time down there in the good weather. I think we will spend probably two-thirds of our time down there and stay in the area. “My house in Conifer – we bought it about 10 years ago because the people who lived in it did nothing but complain about our business – is right across the street from the store. That side of the street is commercial. Our side of the street is

18 | DECEMBER 2018 | www.hearthandhome.com

Inglenook may not be the largest hearth shop around, but Dorothy and Frank left ample space in which customers can meander.

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| Exit Interview | just blocks from the ocean, so whenever we vacation we like to go where it’s warm and where there is sand.” Do you have another place down there? Matthews: “Well, technically it’s a

timeshare, but it’s really more like a private club. Nobody ever trades into it and nobody ever trades out of it. We

business and its financials. You can actually go and have fun.” So you went from Vancouver to where? Matthews: “Banff, Lake Louise and

Jasper. We did a circle route, which left from Vancouver; we were four days on the train and three other days in hotels such as at Lake Louise, and then we got

it was pretty primitive. It was like the good old days where you were actually not a number, you were a person, and they didn’t have so much red tape when you needed something. “I used to call up if I needed a warranty plate and the guy who was the head of that would just go down into a bin, grab a handful, put them in an envelope and send them to me. Now you have to go through

The Inglenook Energy Center seems right at home in the forest at the foothills of the Rocky Mountains.

all go and it’s actually owned by the members. We know the people there, they’re the same people who have been there over the years. We’ve got friends from all over the world down there. It’s sort of our home away from home.”

back on the train and went to Vancouver. It was fabulous. I recommend it, but my recommendation for anybody is to go big or go home. You’ve got to sit in those cars that have the glass tops with the wine cart going up and down the aisle all the time.”

Will you continue doing that?

That sounds great. (Laughs).

Matthews: “Oh yeah, as long as we have

“One of the things that I wanted to say about our leaving this business is that I have had so many really good relationships over the last 30 years that are going to be impossible to maintain, but you see people at trade shows and some of them will be maintained. There are some real boneheads out there, but I’m going to miss most of the people that we have worked with over the last 33 years, and are casually acquainted with. That is going to be hard. “We were in it from almost the beginning. I remember Alan Trusler and Dan Henry, they are both friends of ours, when we first started selling Quadra-Fire;

a pulse and can stand up we’ll do the same things we’re still doing now.”

You just took a wonderful trip from Vancouver, right? Matthews: “We drove out to Vancouver

because we had a wedding to go to on the way back in Idaho. We went from Colorado to Vancouver in two days, and then we got on the Rocky Mountain Railroad across the Canadian Rockies for a week, came back to Vancouver, and then drove home and went to the wedding. It’s a whole different feeling when you don’t have the responsibility of

20 | DECEMBER 2018 | www.hearthandhome.com

a ream of paperwork to get anything like that. It has become a lot less personal. “I’m going to miss the good relationships that we had. I had a text from Dan Henry yesterday. He and we are going to be in Denver for some kind of an EPA meeting in October, and we’re going to have dinner. I hope to maintain some of those relationships, like with you guys. Any time you’re desperate for a Vesta judge give me a call and I might be able to do it. “You know, my best friend in the hearth industry is Gary Spinuzzi down in Big Horn. You did a story on him about a year ago. You either love Gary or you hate him, and I just happen to be in his fan club. We have gotten along for 20-25 years. Those kind of relationships can make or break a store too, because he is also a Quadra-Fire dealer, and a Jøtul dealer. “Gary would call me up and say, ‘Do you have a 7100 I can have?’ And I would say, ‘You know, Gary, I’ve got three of them. I’ve got two of them sold, but you can have the other one.’ He would come up and get it, and

if I needed something he would be there. We would cut off each other’s arm to help one another. We’re going to miss each other in that way. But Sherry and Gary and Frank and I will always be friends, and I’m grateful for that.” Correct me if I’m wrong, but you’ve been very heavy on Hearth & Home Technologies’ product all these years, correct? That’s your primary brand, isn’t it? Matthews: “Ever since about 1988 we’ve

had Quadra-Fire blood running through our veins, and that was initially because of the relationships we had with the distributor and Alan, Ann Mortennsen, and the guys. The manufacturers and the relationships that you have can make or break a store. “In 2005, when sales were off the roof and we were selling stuff in October that we couldn’t even get until March, we were encouraged by manufacturers to buy, buy, buy and have it in the warehouse. They said they were not going to be able to make it fast enough.

“When the economy plunged in 2008 we had a million dollars’ worth of inventory sitting in our little warehouse, and it wasn’t even all in the warehouse. We had stored some outside in the yard three-high with tarps over it. “Problem was, we had nobody to buy it. The economy was in the toilet here. All of our good customers, who were mostly professional people, were losing their homes. So it was tough, but the good manufacturers that stuck by us and helped us – God bless them. But there were a couple that didn’t and they chose other people because we became slow pay. We had a million dollars’ worth of inventory that I had to pay for. “Alan Trusler called me up one day and said, ‘Hey, Dorothy, how are you doing?’ I said, ‘What are we going to do? We’ve got a lot of stuff.’ He said, ‘I can come and get it.’ I said, ‘No, Alan. Just give me some time and I’ll get it sold for you.’ He said, ‘Done. Go for it.’ “It took three years to get rid of all of that inventory. I had $750,000 worth of

their inventory and they stuck with us, and Jøtul stuck with us and helped us get rid of it – others didn’t. They just said, ‘Goodbye.’ After we got everything paid off a couple of years later, Hearth & Home Technologies sent their comptroller into our store, he said, ‘You know what? In the history of HHT nobody has ever done what you did.’ “I was shocked. I said, ‘Really? I couldn’t not do this.’ I believe in the Golden Rule, and sometimes integrity and character have to shine through. When you have something like those relationships, that’s really important and it’s a good reason why we’ve been so successful.” Ed. Note: While remarkable, the experience of Dorothy and Frank Matthews is similar to that of many of the early entrants into the hearth industry. That pioneer spirit – the will to succeed and the guts to make it happen – is seen in many members of the hearth industry, be they retailer, manufacturer, distributor, or rep, excluding, of course, all the “boneheads.”

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| Hearth Sales: Past & Future |

ALL GOOD BUT THE NSPS 2018 was a good year for hearth products; 2019 could be the same.

24 | DECEMBER 2018 | www.hearthandhome.com

By Bill Sendelback

that an El Niño is “likely” for 2019, predicting that there is a 70% chance of a warm 2019-2020 winter. Ed. Note: The NOAA is by far – BY FAR – the more reliable source. High heating-fuel prices are another trigger that could help hearth product sales. However, so far it appears there is nothing on the horizon that would push heating-fuel prices up. The U.S. Energy Information Administration forecasts for 2019 that crude oil prices will rise only 1.6%. Heating-oil prices are predicted to go up only 0.4% to $3.18 per gallon average. Natural gas prices are expected to increase 1.9% to $10.04 per thousand cu. ft. average with a similar increase in LP prices. Electricity prices will bump up the most, up 2.9% to $13.31 per kilowatt.

Pictured left: The EPA building in Washington, DC.

Dietz also predicts 30-year mortgage rates to be near 5% for 2019, and consumer confidence at “near a two-decade high” because of more disposable income created by the recent tax reform. Regarding housing starts, the NAHB forecasts total housing starts for 2019 to go up 2% to 1,293,000 units. Single-family housing starts are forecast to increase 4.7% to 927,000 units, and multi-family starts to actually decline 4.4% to 366,000 units. Dietz also forecasts that home remodeling will rise 7% in 2019 after a 9% increase in 2018. His reasoning is that more houses are aging, home prices are going up, and people are looking for more energy-efficient homes, so they will turn to remodeling their existing home. In 2018, hearth product sales were good for most manufacturers, and great for some. Gas hearth product sales, especially gas fireplaces, continued to increase and gain market share because of the continued rebound in newhome construction, and the increase in remodeling.

www.hearthandhome.com DECEMBER 2018 | 25 friendly reading| experience

| Hearth Sales: Past & Future | Jøtul “It’s been a fantastic sales year for hearth products, with the industry up 7 to 10% led by gas fireplaces,” says Bret Watson, president of Jøtul North America. “Sales of gas hearth products for Jøtul were up 20%, and sales of wood-burning appliances were up 7%. Each month in 2018 sales were up for us, and into the fall many of our dealers had installation backlogs out four weeks.” Watson reports that Jøtul’s unit sales for 2018 were up 15% and dollar sales were up 18%. “We’ve had double digit sales growth the last two years and cannot keep up with demand,” he says.

Napoleon’s Luxuria LVX62. INSET: John Czerwonka.

Watson expects hearth product industry sales to be up 4 to 8% for 2019, not as strong as the industry sales increase in 2018. “Sales of gas hearth products will stay strong and will dominate even though rising interest rates may temper new-home construction,” he says. Watson believes that sales of wood-burners will be up for 2019, but warns that dealers will have to be cautious of early-buy orders for non-2020 certified models to keep from having carryover of these units after May 15, 2020, if the extension to 2023 is not granted.

26 | DECEMBER 2018 | www.hearthandhome.com

Napoleon Fireplaces Industry sales of gas hearth products increased in 2018 by more than an “average” increase, according to John Czerwonka, vice president of Hearth Sales for Napoleon Fireplaces, and he expects that trend to continue, driven by the strength of new-home construction and remodeling activities, as well as consumer confidence levels. In 2018 Napoleon had its largest product launch with a new line of linear gas fireplaces. “We’ve had nice sell-through on the new models,” he says, “and we expect that trend to linear styling to continue.” In 2018, sales growth of electric fireplaces for Napoleon was “off the charts,” says Czerwonka. “Pellet appliance sales were flat after being down in 2017, and wood-burner sales were also flat, perhaps because of the confusion caused by the NSPS.” Napoleon focused its 2018 R&D efforts on gas models. “But now that the NSPS has firmed up, we’re developing a new line of wood-burners.” Czerwonka believes hearth product sales in 2019 will be “up considerably, with gas models continuing to be the biggest industry growth category.” But he is concerned about the efforts to restrict or eliminate wood-burning and/or gas-burning in regions such as California and British Columbia. “Our 2018 hearth product sales are significantly ahead of last year,” he says, “and we see sales going up considerably for 2019, particularly in the U.S. with double-digit increases, assuming labor will be available to continue the rise in new-home construction. Canadian sales should be up slightly, with signs that growth of the Canadian economy is easing up.” Hearth & Home Technologies Hearth & Home Technologies has had a “very solid” 2018 hearth product sales year in its retail channel, partially because of growth in remodeling. Its sales to the new-home construction channel have been “a little softer than we thought,” according to Jeni Forman, senior vice president of Retail Sales. “We’re seeing growth in gas appliance sales, but pellet stove sales are on their historic roller coaster ride, off in most

places but up in the Northeast where an early cold snap and some rising fuel prices have helped. Sales of wood-burners always have been pretty stable, never up by much, and we expect that to continue in 2019. “With the May 15, 2020, NSPS deadline getting closer, dealers are being very careful about taking on non-2020 models, and we expect that hesitancy to continue,” she says. Forman also expresses concern about the low number of EPA-published, 2020-certified models, and the manufacturers that have few, if any, 2020 models certified. She is also concerned about the lack of inventory sell-through time if the NSPS deadline remains May 15, 2020. “If this deadline is not extended, it will slowdown wood- and pellet-burner sales to dealers since, with non-2020 models still in stock, they will not be able to take on new models in 2019.” In 2019 we will see sales of high-end products continuing strong, says Forman. “And sales of modern and linear styling will continue.” But she is concerned about the incidence rate of fireplaces in new-home construction not rising with the resurgence of new-home construction.

“Government regulations by states and provinces can affect the whole country, and are certainly affecting our business.” — Glen Spinelli President, Regency Fireplaces

Regency Fireplaces “We’ve had a great sales year,” says Glen Spinelli, president of Regency Fireplaces, “and we expect a healthy 2019. Sales of fireplaces and inserts are up. We thought wood-burner sales would be sluggish,

Heat & Glo’s Phoenix Trueview Gas Fireplace. INSET: Jeni Forman.

but they are up quite a bit, and we think that will continue. Overall, we’re selling higher-priced models in all categories. Our dealers were out three to five weeks on installations going into the fall. Sales in every region are up a healthy amount, and we’re seeing quite a bit of sales momentum going into 2019.” Sales for the year are driven by sales in January and February, according to Spinelli. “If the weather is bad, that fuels business to be up maybe 15 to 20% and drives sales into later months. We’ll adjust our sales forecast based on what January and February tells us. Working directly with dealers, we can react very quickly to trends.” Spinelli expects “some sales growth” in 2019, but not like the growth in 2018. He, too, is concerned about regional environmental pushes against gas- and wood-burning. “Government regulations by states and provinces can affect the whole country, and are certainly affecting our business,” he says. He points out a recent natural gas main pipeline shutdown in British Columbia; it also affects Washington State. “In October in that area, people were asked to shut off all natural gas appliances. We don’t know how long it will last, but it affects the entire Pacific Northwest and may drive up wood-stove sales.”

www.hearthandhome.com | DECEMBER 2018 | 27

| Hearth Sales: Past & Future | Innovative Hearth Products For Innovative Hearth Products, hearth product sales were “kind of a mixed bag” in 2018, according to Tom Krebs, executive vice president of Sales and Marketing. “Open hearth fireplaces, including vent-free models, did well as did our EPA-certified fireplaces. Surprisingly, sales of our direct-vent gas fireplaces were flat. We think sales of our open hearth models look promising for 2019.” Krebs believes linear gas fireplaces offer increased sales opportunities for 2019. “Linear models are becoming more transitional in styling rather than

Travis Industries’s Legacy BP Birch Install. INSET: Perry Ranes.

so contemporary, and while transitional styling is growing, traditional styling is holding its own and is still the majority of sales. “2019 should be a good year, but we’re concerned that the incidence rate of fireplaces going into new homes is dropping off even as housing starts continue to go up.” Krebs also sees the 2020 NSPS deadline as “a challenge. Dealers and manufacturers are nervous. If dealers don’t have time to sell their non-2020 models, they won’t be buying replacements. And it might be

28 | DECEMBER 2018 | www.hearthandhome.com

difficult for manufacturers to then clear out their non-2020 inventory if dealers are afraid to purchase them next year.” Travis Industries Travis Industries posted an “excellent” 2018 sales year after a good 2017, according to Perry Ranes, vice president of Sales. “And we anticipate a double-digit sales increase for 2019.” Gas appliance sales are leading the way for Travis, with sales of its DaVinci brand “very strong. DaVinci has developed a strong following, and sales continue to be robust.” Sales of fireplaces by Travis are “way up” because of increases in remodels and new-home construction, he says. Travis’ wood stoves are also selling “very well,” but sales of pellet appliances are “soft. In parts of the U.S. like the Northeast, pellets are more active. But if prices of LP remain low, there will be no sales growth in pellet appliances.” Acadia Hearth Acadia Hearth, a new hearth products company in 2018 with Acadia and Breckwell brands, had a slow start in 2018 but plans a “hard launch” of its lines in 2019. Even so, Acadia’s gas appliance sales have been “pretty strong,” according to Kent Roeder, general manager and vice president of Sales and Marketing. “We’re revamping our Breckwell pellet and wood models for specialty hearth dealers for 2019, including our new Traverse gravity-fed pellet stove,” he says. Roeder is counting on a good 2019 sales year. “Gas is not going away and will always be strong,” he says. “Pellet stove sales are hanging in there, particularly in the Northeast. It’s scary getting wood and pellet models ready for the 2020 NSPS standards as we and our dealers try to clear-out models that don’t meet that standard.” DuraVent DuraVent’s 2018 sales were doing very well until September, when sales slipped due to continued warm weather. “We had been exceeding our sales goals every month, and now with colder weather, sales are back and we’ve made up lost ground and are now up overall,” according to Todd Lampey, vice president of Residential Sales. “Sales

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| Hearth Sales: Past & Future | of Class A chimney have been flat, and direct-vent sales have been pretty good, up by high single digits. B-vent sales have been given new life in hearth products, with B-vent now being used in the popular linear gas fireplaces using 8 or 10 inch B-venting. Surprisingly, sales of pellet chimney are up 10 to 15% after a positive 2017.” Lampey sees “some sales growth for 2019, but it will be a fairly flat sales year. If 2019 is as good as 2018, it will be nice.” He sees a good year for wood-burners as manufacturers and dealers sell-off non-2020 certified models. Lampey sees sales of direct-vent gas appliances increasing a bit, but leveling off with the NAHB’s relatively flat 2019 projection of 1.3 million new homes – single-family and multi-family – a total slightly ahead of 2018. “And pellet stove sales are a crap shoot, depending on oil and LP prices.”

Empire Comfort System’s Boulevard direct-vent linear fireplace. INSET: Nick Bauer.

Kozy Heat Fireplaces Kozy Heat Fireplaces has had a “very good” 2018 sales year, up by double-digits as it has been for each of the “past few years,” according to Jim Hussong, president. “We finally got some cold weather going into the fall.” Kozy Heat offers mostly gas hearth appliances, but its few wood-burning models are growing slower than the company’s gas units.

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“The hearth product market is still strong, and we expect that to continue into 2019 with double-digit sales growth similar to that of 2018,” says Hussong. “We’re seeing a lot of optimism from our dealers.” Kozy Heat added warehouse space in 2018 and already is increasing that space because of sales demand. “We need products ready to ship in the season, so we have to maintain that inventory,” he says. Hussong believes the linear gas trend will continue, and Kozy Heat has added more linear models to its lineup. “But we still sell a lot of traditional models,” he says. Empire Comfort Systems “With a strong economy and an early winter, 2018 has been probably one of the most normal hearth product sales years we have had,” says Nick Bauer, president of Empire Comfort Systems. After not having had a flat or down sales year in a decade, and “substantial” sales growth in 2017, Bauer’s idea of “normal” is a 2018 where his sales growth leveled off. Offering only gas products, gas logs were the company’s biggest sales growth category in 2018. And its direct-vent gas appliance sales were up 5 to 10% because of the continued strength of new-home construction. “With the U.S.’s strong economy and very low unemployment rate, we’re cautiously optimistic about 2019,” says Bauer, “even though home mortgage rates are near 5% and we still have the threat of tariffs taking effect January 1. But we’re confident 2019 will be as good or better than 2018. Our dealers are busy, many out three to five weeks on installations.” Bauer says the early cold winter of 2018-2019 is “promising. If this cold remains, it will help us since we sell products more for heat than for decoration.” HearthStone Sales for 2018 have been “amazing” for HearthStone, according to Dave Kuhfahl, president. “It’s almost like a return to the old days. We’re growing at a rate that is making it hard to keep up with production.” With propane prices rising this year, it has been a good wood year for HearthStone. “Smaller gas stoves are selling well, but sales of bigger wood-burning models are going crazy,” says Kuhfahl.

HearthStone has been “working hard” to get its wood-burners ready for the 2020 NSPS standards. “We have a bunch of models ready, and they are selling well. Dealers are nervous, however, about that 2020 date, concerned about their carry-over inventory of non-2020 models. And that carry-over inventory at the dealer level is of concern to us. That deadline may be moved to 2023, but we’re not counting on it.” Kuhfahl thinks HearthStone is “well positioned” for another strong sales year in 2019, with a sales increase similar to that of 2018. “It will probably be a more seasonal sales year, and we’re concerned that it will not be a big year for dating orders,” he says. HearthStone is diversifying its product offerings into fire pits to flatten that seasonality. “Dealers will embrace new 2020 models, and we’re working hard to build inventory to eliminate back orders,” he says. “The lack of potential employees has been a huge problem for most, including us. We would set up an additional production line if we could get the people.” Blaze King It was a “great” sales year for Blaze King, up about 17%, according to Alan Murphy, president. “Although 95% of our line is wood-burners, we see that the sales of gas models throughout the industry were up, so we will be adding more gas units, stoves and fireplace inserts, for next year.” This sales season was about three weeks late, according to Blaze King’s dealers, after 2018 sales started off strong but softened later in the year. “We think a reason for this later softness to the season was that dealers started selling off non-2020 compliant wood-burners, so were buying fewer replacements,” Murphy explains, “and we think that will continue into 2019.” Although Murphy thinks the market conditions in 2019 will be similar to those in 2018, with similar sales increases, he’s concerned about how the May 15, 2020, NSPS deadline will affect the market. “Assuming we have no NSPS delay beyond 2020, dealers will have to sell off their non-2020 certified inventory, maybe flooding the market. But on the plus side, they’ll have to replace that inventory with 2020 models.” And based on the number

of 2020-certified models published on the EPA’s web site as fall began, Murphy is concerned that many manufacturers may not yet be ready for that sales push. “The volatility of politics and oil prices will continue, and tariffs may drive up prices. But we’ll see a continued strong U.S. economy with new-home construction continuing to grow,” he says.

Blaze King’s Boxer 24. INSET: Alan Murphy.

RH Peterson RH Peterson saw a “very strong” 2018 sales year in both its vented and vent-free gas log sets, says Bob Dischner, senior vice president of Marketing. “Vented log sales were strong across the country, while vent-free sets continued strong in the Southeast. Our new log sets that heat did well, as did our new electronic controls for log sets. We also saw a ‘birch frenzy’ this year as sales of this style of logs took off.” Dischner hopes sales in 2019 continue going up as they did in 2018. “Gas prices should be good, but mild weather is forecast,” he says. Dischner points out that, over the last 10 years, fewer fireplaces accept gas logs since gas fireplaces now dominate new-home construction. “But gas logs are still going strong.” Peterson plans to add a gas fireplace insert featuring logs to its line. As the manufacturer interviews above clearly state, hearth product sales in 2018 were strong across the board, and it appears that 2019 will be another good year for the category.

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| Retailing |

DETAILS Make the Difference Listen to Dave Rettinger: “Be hands on, train all employees well, finish what you start.” By Bill Sendelback

ertainly the big things are important in running any business, but Dave Rettinger, owner of Rettinger Fireplace Systems in Voorhees, New Jersey, strongly believes that you also need to take care of the little details – the things that can slip through the cracks – to truly

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be successful. That philosophy must be working for Rettinger, since the hearth retailer posted a 20% sales growth in both 2016 and 2017, and will end 2018 with sales up an additional 15%. “We pay very close attention to the details,” says Rettinger, “and that is very evident in the products the customer

receives and in our reputation for customer satisfaction. Our motto is, ‘Where Details Make the Difference,’ and we live by that. Included is treating each customer with respect and providing the best possible service. But what has really made us successful through the years is that we always finish what we start. We never walk away from a problem – we finish the job and satisfy every customer. We strive for each customer to be 100% satisfied with Rettinger.” While many hearth product retailers have diversified into other categories such as grills, patio furniture, and even hot tubs, Rettinger Fireplace Systems is almost totally devoted to hearth products.

Close to 90% of the store’s sales are hearth products, including wood, gas, and electric fireplaces, wood, gas and pellet stoves and inserts, gas logs, mantels and surrounds, and fireplace accessories. The remaining 10% of Rettinger’s sales is outdoor fire tables, some high-end grills, and a few outdoor kitchen items. “Hearth products keep us busy year ’round,” says Alexis Rettinger, Dave’s wife and right-hand person. “When in April through July we think we’ll have time to catch our breath, our fireplace business is hopping along with the wood mantel and cabinetry items we design and build in-house. We’re not a grill shop nor an outdoor furniture store,

and (we don’t have) spas or hot tubs. We really don’t have time for different product categories because fire is what we do, and we want to continue doing it right.” In addition to retailing hearth products, Rettinger operates a complete woodworking shop in its 8,000 sq. ft. warehouse about five miles from its showroom. “We build mantels, surrounds, bookcases, and cabinets,” says Dave, “whatever is needed for the job. Our wood shop is pretty busy even in the off-season for hearth products.” In 1995, Dave Rettinger had been working for an architectural hardware firm for 11 years, heading up the fireplace end of that business. He felt there was an

opportunity to expand that part of the business, but when he approached his bosses with the idea, they said ‘no,’ apparently being content with that part of their business as it was. So Dave resigned and quickly started his hearth products dealership in his basement, bringing with him experience in woodworking and new-home construction. OPPOSITE PAGE: L to R: Alexis Rettinger; Dave Rettinger, Jr; Alyssa Rettinger-Smith; Dave Rettinger, Sr. ABOVE: “Have a seat!” “Enjoy the fire!” “Watch the slide show!” “Sign right here!”

Click here for a mobile

www.hearthandhome.com DECEMBER 2018 | 33 friendly reading| experience

| Retailer | Dave’s wife, Alexis, joined the Rettinger operation in 2000, after having been a court reporter for 20 years. “Dave needed another set of eyes, ears, and hands to help him,” she says. “I knew nothing about hearth products.” Besides being Dave’s right-hand person, Alexis handles the company’s marketing efforts.

inviting all of their customers, which includes custom home builders, to the event. “All our showrooms are open to them,” says Rettinger, so they can wander around to each showroom, enjoying the environment of each business, although most folks ultimately come back to the warm, cozy ambiance of our showroom.”

Mantels and surrounds were made at the company’s woodworking shop.

Rettinger’s offers a profusion of hearth brands, approximately 22.

In 1996, Rettinger moved from his basement to a small 1,600 sq. ft. showroom; two years later, in 1998, he moved again, this time into an even larger showroom as the company grew. Then, in 2007, Rettinger Fireplace Systems moved into its current location, a 6,400 sq. ft. showroom in the Voorhees Design Center, a high-quality home improvement products location featuring Rettinger and other retailers offering tile, stone, kitchen and bath fixtures, and accessories. Although each retailer has a separate showroom, customers can easily visit each store. “All of our businesses feed off each other,” says Dave. “Customers can see all kinds of different high-end home products. So a lot of our customers are interior decorators, designers, and architects who use the center for one-stop shopping.” Once a year retailers in the design center host a combined open house,

While headquartered in South Jersey, Rettinger also serves the nearby greater Philadelphia, Pennsylvania, metropolitan market, and the Jersey Shore with its many second homes. “The economy in our area has improved in the last couple of years,” Dave explains. “Our clientele is a little bit high end. New-home construction here is still sort of flat – steady, but nothing like it used to be. But we stay busy with remodels and high-end, custom, new-home construction.” While heading up the fireplace business for his former employer, Dave learned the new-home construction business and developed relationships with local homebuilders, relationships that he has brought to Rettinger. Today he and his son, Dave, Jr., focus on the new-home construction business. “It’s a father‑and‑son team, but all of our staff can work with these clients,” says Dave. “Dave, Jr. has

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done a great job of opening new doors for us in the builder market.” Rettinger encourages its builder clients to send their customers into the store to see and learn about different styles of fireplaces. “This takes the burden off the builder,” says Dave, Jr. “Our reputation is one of the biggest factors in

expanding our builder business. They have heard good things about us, and when they decide to give us a shot, they switch to us. They know we’re going to make sure everything goes smoothly and properly with every job.” Rettinger also hosts a variety of events to promote its business with homebuilders, remodelers, designers, and architects. At a recent event, 60 home inspectors were presented with information on new hearth products and provided with lunch from a food truck. “This now allows them to remember Rettinger the next time they see a fireplace that needs to be changed out,” says Dave, Jr. Rettinger also hosts local architectural firms for “lunch and learn” events, again with a presentation on new products. Rettinger also brings in some of its suppliers to make presentations to remodelers and designers.

All of Rettinger’s installations are done by industry NFI-certified, in-house crews, whether for homebuilders or retail customers. “We don’t subcontract anything except for electrical and plumbing,” says Dave, Jr., “but we have licensed mechanical contractors and electricians for that. We have the same

An appropriate quote from Frank Lloyd Wright.

installation and service crews, the same guys for every job. That helps us control the quality of every installation to make sure things get executed properly and safely with proper follow-up. Maybe 5 to 10% of our customers want to arrange for their own installation, but in 90 to 95% of our sales, we do the installation.” Like most successful retailers, Dave Rettinger has learned to focus on his own operation rather than worrying about competition. “Some of our competitors have similar products, but we’re not a discount house. We know what things cost, so we price accordingly. We will work with a customer to make a sale if we can, but we’re not just going to drop the price for the sake of the sale.” “Part of working with a customer is walking that customer through the whole permit process, the documents and paperwork,” says Alexis. “We’re essentially

working with fire, and we need to go to sleep each night knowing we’ve done our very best to give the customer the right product for their needs and to ensure it’s installed safely and correctly.” Dave Rettinger drew the original design of his showroom on a napkin as he and Alexis were on their way

products, jobs that the company has completed, or maybe relaxing scenic views from YouTube. There are several large, hardcover picture books on a coffee table featuring Rettinger jobs. “People really like to sit in this area, relax and see the jobs we have completed,” says Alexis. “Our showroom is always

These three fireplaces are proof of Frank’s saying.

home from an HPBA show. Then, with Dave’s woodworking experience and the company’s in-house woodworking shop, he and his staff built the showroom. The 6,400 sq. ft. showroom includes 70 burning models and two large televisions. “When I did the original design, I thought about how customers move in a showroom,” says Dave. “If you walk right, left or straight ahead from our front door, you’ll not reach a dead end. There is a constant flow to our showroom. My whole idea was always to have people moving without ever feeling trapped.” With high ceilings in the main part of the showroom, products such as gas fireplaces are displayed in one area, while what Dave describes as “energy products,” such as stoves and inserts, are displayed in another area. In an open area is a large couch where customers can relax and watch the large TVs showing

changing, and we are constantly updating it. We’re proud of it.” Back in the day, retail advertising was Yellow Pages, newspaper ads, and perhaps some television spots. That’s long gone now. Today, social media and targeted promotions are all the rage, and the Rettingers are right on track with current marketing efforts. “We put a lot of effort into our online presence,” according to Alexis, who heads up Rettinger’s advertising and marketing. “We have a very large exposure on social media with Google Quest, Facebook, Twitter, Yelp, and Instagram. This type of advertising is not only a lot more effective with today’s consumer, it’s a lot less expensive, and we can get manufacturers to co-op it, and that is very important. Our reputation and online reviews set us apart from our competition.”

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| Retailer | Alexis works several hours a week to add, update, and improve contents of the company’s social media efforts. “We get a lot of traffic as a result of this effort,” she says. “People frequently say we were recommended on Facebook or they are here because of our Google reviews. So 85% of our advertising budget is spent on social media.” Alexis also does a small

Store Name: Rettinger Fireplace Systems Address: 476 Centennial Blvd., Voorhees, New Jersey 08043 Number of Stores: One Owners: Dave and Alexis Rettinger Key People: David Rettinger, Jr., manager; Alyssa Rettinger-Smith, purchasing; Lee Pinardo, Jr., showroom manager; Angelique Rusch, sales Year Established: 1995 Web site: www.rettingerfireplace.com E-mail: david@rettingerfireplace.com Telephone: (833) 438-7388; (833) GET-RETT Fax: (856) 783-5503 Number of Employees: Full-time, 22; Part-time, 3

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amount of print ads in a few targeted, high-end local magazines plus single-line listings in local phone books. While every one of Rettinger’s 22 employees Dave and Alexis consider very important to the success of the company, a few are key. Daughter Alyssa RettingerSmith handles purchasing. The showroom manager is Lee Pinardo, Jr., whose father

% of Annual Gross Sales by Product Category: Hearth – 90% Grills and Outdoor Kitchens – 10% Square Footage: Showroom – 6,400 Warehouse and Wood Shop – 8,000 Lines Carried: Hearth – Ortal, Montigo, Mendota, Napoleon, RH Peterson Co, American Hearth, Jøtul, Heatilator, Rasmussen, European Home, Stellar, Town & Country, Valor, Harman, Eco-Choice, Eiklor Flames, Hargrove, Amantii, Stoll, Design Specialties, Ironhaus, MagraHearth, Intercontinental Marble Grills – Solaire Fire Pits/Fire Tables/Heaters: DCS, Infratech, Lynx, Twin Eagles % of Annual Gross Sales for Advertising: 3% Social media – 85%; Magazines – 15%.

started Pine Barren Wood Stoves back in the heyday of wood stoves. Both installer John Hawley and Sales associate Angelique Rusch have 22 years with Rettinger. Linda Fleming has been our bookkeeper for 21 years. Brian Shuster has been running the company’s wood shop for 17 years. The average length of service for all Rettinger employees is 16 years.

“We’re not planning any big changes, just staying focused on what we do best to satisfy our customers.” — Dave Rettinger

“We’re not planning any big changes, just staying focused on what we do best to satisfy our customers,” says Dave. “Manufacturers are constantly making changes to their products, so we need to keep up with that. People want fireplaces, the latest and greatest looks, so rather than diversify our offerings into some kind of new category that we don’t really know, nor are good at, we’ll fine-tune our operation and keep our eyes focused on what we do best. “My advice to anyone in the retail business is to be hands on,” Dave recommends. “You can’t just turn the key, open the door, and let things happen in this business. We’re dealing with fire in someone’s home, so we have to take our business seriously. You need to make certain that all of your employees are knowledgeable and well trained, so that customers will end up with the right products for them and that those products are installed correctly and safely to the manufacturers’ specifications. “And don’t walk away from challenges. Not every job is a home run or a piece of cake, so sometimes you have to take it on the chin, profit-wise, to ensure a happy customer. Be sure, though, to finish what you start.”

Design Fireplaces

Made in Germany. www.spartherm-america.com Contact: m.aumann@spartherm.com 14 models to choose from. Here: Varia M80h GET

| Patio Sales: Past & Future |

A STRONG SEASON But on the way to retail bliss, it started to rain.

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By Tom Lassiter

he 2018 casual furniture season was, in a word, erratic. Early-season weather was too cold. Then it was too wet, and then it was too hot. Or it was too hot and then too wet. In many areas of the United States, abnormal is the new normal. “If anything put a damper on the year, it was the weather,” said Joseph Cilio, CEO and president of Alfresco Home. “If the weather had been reasonable to good, we could have had an even better year. We all would have.” Summer went on and on and on, ignoring the calendar. Sales that normally dried up by Labor Day continued through September, and into October in many cases. This late boomlet helped offset some of the weather challenges of earlier in the season.

Tucson was one exception, where sales at Patio Connection slipped in September. Otherwise, “We pretty much had an increase every month,” said Mike Moon, one of the store’s owners. Notwithstanding the seesawing weather and hurricanes that clobbered the Carolinas and Gulf Coast, 2018 turned out to be a pretty decent year. Most retailers contacted reported sales up by single digits or holding steady with 2017. “We had a great year,” said Michelle McDonald-Ross, an owner at Leisure Living in Salt Lake, Utah. “We kind of sold everything.” Manufacturers contacted also reported single- or double-digit gains. Retail showroom traffic was down (again), but shoppers who ventured in usually came ready to buy.

Sales of woven resin furniture have begun to cool in most markets but remain strong. The woven look, so popular for so long, no longer is trending upwards. There’s competition everywhere, and specialty retailers must work hard to make the case for quality when lookalike, lesserquality goods beckon shoppers. Even so, the category remains strong and important to most retailers. Consumers are snapping up big umbrellas. Side-post, cantilevered models – big enough to shade a deep-seating chat group or a long dining table – are becoming must-have components of the Outdoor Room. “It seems like the bigger cantilevers are what people want,” said Mariah Maydew, president of Fruehauf’s in Westminster, Colorado. “Our 13-ft. cantilevers from Treasure Garden sold out quickly.” Homeowners have rediscovered extruded-aluminum furniture. Aluminum sling sold like it was a new concept product. So did aluminum dining tables. Customers wanted “good dining in aluminum,” said Petey Fleischut, owner of Casual Marketplace in Hockessin, Delaware. “I couldn’t understand it. It amazed me. We haven’t seen that in years.” Competition from other channels, most of which offer lower-priced outdoor furniture of lesser quality (even though it photographs well), continues to increase. “It’s getting more and more difficult to get a customer to accept that there is a difference between something on Hayneedle (an e-commerce site) and what’s in front of them” in the showroom, says Chad Scheinerman, CEO of Today’s Patio stores in Arizona and California. Scrollwork, curlicues, and ornate metalwork are mostly out. Even in markets considered stylistically conservative or traditional, cleaner lines are in. Shoppers don’t want “super contemporary,” said Reggie Grieder, owner of Corner Collection On Line, based in Shreveport, Louisiana, “just a simpler look.” The “organic look” is important to consumers. Interpret that as mixed media, such as wood accents on metal or woven furniture. The organic look might also include rope or webbing of natural-looking fibers. Metal or composites or plastic, shaped and finished to resemble wood,

Low-maintenance plastic furniture continues to boom, retailers report. It’s heavy and refuses to be moved by winds on the Great Plains. Fade-resistant, plastic/poly/HDPE furniture loves sun and withstands salt air. also fall into the realm of the organic look. If it’s natural or merely resembles something found in nature, shoppers seem to prefer it these days. Aura, a Barlow Tyrie collection, met all the hot-button criteria for many shoppers at the Hill Company in Philadelphia. It has clean lines and matches the organic descriptors. “It’s a wonderful group,” said Hill Co. proprietor Linda Moran. “It’s sling. It’s aluminum. It’s teak. So it’s a perfect combination and just has a great look. We can’t keep it in stock.” Real wood furniture, the most organic of organics, did pretty well this season in most regions, except, perhaps, in desert climates. “Teak was huge this year,” said Sandi Ricke, casual furniture manager at Mulhall’s, a garden center in Omaha, Nebraska. Low-maintenance plastic furniture continues to boom, retailers report. It’s heavy and refuses to be moved by winds on the Great Plains. Fade-resistant, plastic/poly/HDPE furniture loves sun and withstands salt air. If there was a hiccup in the category this season, it was with C.R. Plastic Products. Numerous retailers reported that the Canadian manufacturer had trouble shipping its products on time. One retailer’s solution to the late delivery problem: Add a second line of plastic lumber furniture for next season. Otherwise, retailers had few gripes about delivery issues or quality problems, Click here for a mobile

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| Patio Sales: Past & Future | especially with domestic manufacturers. Manufacturers, they said, did a good job of getting furniture to them on time. OW Lee drew special praise for shipping products on pallets and protected by shrinkwrapping. Grieder, in Shreveport, called OW Lee outstanding and “the most progressive company there is. I wish other manufacturers would follow their lead.” Retailers interviewed accepted the Trump administration’s 10% tariff on goods manufactured in China as an unpleasant reality. Most report working with manufacturers to share the additional cost and hold the line on prices for consumers. But should the tariff rise to 25% on January 1, as planned, opinions are divided. “It’s going to be an economic disaster for the country,” said Jeremy Hodges. He and his wife, Elsa, own Hauser’s Patio in San Diego. “I don’t think the president’s going to allow it.” Scheinerman, at Today’s Patio, said the impact on higher-end casual furniture customers perhaps will be more psychological than actual. “What we sell is a want, not a need,” he explained. High-income households up-fitting an Outdoor Room probably won’t defer a purchase because of the tariffs. The tariffs may be a true deterrent for potential customers of more moderate means, such as customers who might consider buying casual furniture at a Big Box store. “The lower you go,” said Alfresco Home’s Cilio, “the more careful you have

Bowman’s Stove & Patio, Ephrata, Pennsylvania. INSET: Dustin Bowman.

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to be. For sales under $2,999, you have to be really careful” about the potential impact of tariffs on sales. Manufacturer Increases Cilio said Alfresco Home’s sales were up around 9% and could have been a bit higher “had we inventoried better.” Weather, he said, most affected reorders from the company’s domestic warehouse stock. Agio’s sales were up by 7% in 2018, said president Bob Gaylord. The company added more dealers and saw sales through specialty dealers rise. Online sales, Gaylord said, rose at “an unprecedented rate,” with full-line furniture stores showing the secondhighest growth trend. Summer Classics’ sales were at doubledigit growth this year, said president Bew White. The strongest sales were “in the designer area and in our retail stores.” Treasure Garden saw sales of market umbrellas decline slightly, offset by strong growth in cantilever umbrella sales, said Candy Chase, National Sales manager. The company saw growth in the e-commerce channel and through full-line furniture stores that have entered the outdoor market. “Full-line stores that commit to the outdoor category seem to be most successful,” she said. Looking ahead, company executives expect good things in 2019 despite the uncertainty of variables such as the tariff situation and weather. Treasure Garden anticipates “a particularly successful year,” Chase said. Summer Classics expects growth in retail sales, but some slowdown in the contract and hospitality business. Agio forecasts sales to jump by 17% in 2019, Gaylord said. Cilio declined to forecast a growth percentage, saying only that the coming season will be “super awesome. I think it’s going to be a great year.” Northeast Patio Wrap-up No pun intended, but according to Dustin Bowman, buyer at Bowman’s Stove & Patio in Ephrata, Pennsylvania, weather really put a damper on casual furniture sales this year. The season started strong, but from mid-April to mid-June, record amounts of rain fell.

“I think we did pretty well with the weather we had,” he said. The lousy weather caused Bowman’s, winner of the 2018 Apollo Award in the single-store category, to see casual sales fail to match 2017’s levels. “It would have been a really good year if we’d had decent weather,” he said. An hour’s drive to the east, the weather was no better. “Horrific,” said Linda Moran, owner of the Hill Company in Philadelphia. “It was the worst weather. Rain, rain, rain, rain.” Yet sales remained strong, probably topping those in 2017. “We sold a ton of teak, a ton of cast aluminum, a ton of woven,” she said. “I don’t think woven’s going away.” Aluminum sling wasn’t quite as popular, with the exception of Barlow Tyrie’s Aura collection. In Philadelphia, Moran said, customers like to mix and match products and styles of furniture from different vendors. It’s a look local designers encourage. “For instance, they’ll have a woven sofa and two aluminum spring chairs,” she said, to avoid a “matchymatchy look.” The funky weather extended to Long Island, where “it just wasn’t a typical year” said Zerach “Z” Michel, patio manager and buyer for Hildreth’s Home Goods. “But overall, we still had a strong season.” Teak always does well with homeowners in the toney Hamptons, but Michel noted a shift this year away from so-called mixed media furniture. Interest in woven casual furniture with teak accents declined. So did interest in aluminum and stainlesssteel furniture with teak accents. However, sales of 100% teak furniture in “more modern styles” rose. Michel called the variances “more of an anomaly than a trend,” except in the case of woven goods with teak accents. That subcategory, he said, “is slowing down quite a bit.” The Washington, D.C., area also experienced a soggy season. The first three quarters of the year were the third wettest on record since the 1800s, said Eric Stalzer, district manager for Great Gatherings’ five stores. Sales were up, he said, topping those of 2017. “What saved us is the high-end buyer,” Stalzer said. High-end buyers budget and plan and purchase, he explained. “It doesn’t matter what the weather is.”

Great Gatherings, Washington, D.C. INSET: Eric Stalzer.

Great Gatherings stocks sets by Lloyd Flanders and Brown Jordan that retail for $9,995, he said, “and those did extremely well for us.” The chain also floors a group called Kenzo, by Tropitone. The price tag is $13,000 “and customers didn’t bat an eye.” Also of note: Aluminum dining sets remain “a staple within our lineup” despite what he called the “progressive” trend in outdoor furniture. Those dining sets may be viewed as “old and stodgy or classic, but people still gravitate” to them. Great Gatherings’ sales of teak furniture were “stable,” Stalzer said. “The only teak we carry is Gloster, because of the quality. We never want to disappoint the customer in what we sell them.” Bowman’s saw an increase in Telescope’s products this season, particularly Telescope’s MGP furniture. “Special orders were up a lot,” Bowman said, accounting for about 30% of sales in that brand. Telescope also leads in sales of sling furniture. Sales of plastic lumber furniture also were up. Bowman’s carries the Breezesta brand, which is manufactured nearby. A deep seating group and a dining group “both did very well,” he said. Bowman’s saw demand rise for Treasure Garden’s 11- and 13-ft. octagonal, cantilever umbrellas. Customers this year favored octagonal models over rectangular models, he said.

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| Patio Sales: Past & Future | Telescope’s MGP Adirondack chairs “just sell, sell, sell” for the Hill Company, Moran said. So do larger dining tables, including Barlow Tyrie’s Titan table. “Around here,” Moran said, “people are still buying large.” The larger Titan table, in rustic teak, measures 118 inches in length and weighs 245 pounds. “People seem to think the bigger, the better,” she said. Great Gatherings’ bottom line was enhanced by some unexpected contract business, Stalzer said. A residential customer, pleased with his experience at Great Gatherings, returned to outfit the patios for his employer, a regional supermarket with seven locations in the greater Washington area. Great Gatherings made a similar sale to a hotel chain; a purchasing manager for the

Madison Fireplace & Patio, Madison, Mississippi. INSET: Tommy Stallings, Sr. and wife, Mary.

hotel group returned after buying casual furniture for her home. That business, Stalzer said, “has fallen into our lap. We haven’t sought it out.” He’s feeling upbeat about next year. “Considering that we were able to beat last year’s numbers in a horrific weather year leads me to be very positive for next year,” he said. South Patio Wrap-up Tommy Stallings, Sr., who with his wife, Mary, owns Madison Fireplace & Patio in Madison, Mississippi, described the year as “exceptional. We’re up at least 10%,” he said. Rick Bucy of Casual Creations in Baton Rouge, Louisiana, said the most

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notable thing about 2018 has been “how inconsistent things have been. Some days we don’t have anything (customers), and some days we’ve got more than we can handle.” Sales are probably about the same or down slightly from 2017’s levels. In Bluffton, South Carolina, sales are up by double digits at Casual Living, Fireside and Grillin’, said Missy Axe, who handles Sales and Advertising for the shop. Meanwhile, Debbie Stegman of Florida’s Elegant Outdoor Living said it’s been a great year despite a “really slow” summer when red tide plagued the beaches. But winter residents have now returned and her new season is ramping up. “Business is really good,” she said. “It started off like gangbusters.” Texas retailer Karen Galindo feels fortunate that sales at her Outside In Style stores in Austin and San Antonio are down only slightly from last year’s pace. The Texas weather has been awful. The year started with “unseasonably cold weather in April, and rain.” That was followed by weeks of record heat and more rain in September. October brought still more rain and flooding. “It’s horrible. A big chaotic mess,” Galindo said. “In those conditions, we haven’t had people sitting outside as much as we would like.” Cold, wet weather in February and March delayed the start of the casual season in Louisiana, where Reggie Grieder owns Corner Collection On Line. (It’s a brick-and-mortar store on Line Avenue in Shreveport, not an e-commerce site.) Spring came and went quickly, he said, followed by summer heat that lasted into late October. The extended summer “is where I caught up, dollar-wise,” he said. Sales patterns were as inconsistent and changeable as the early season weather, Grieder said. “One month we’ll just blow out cast aluminum, or extruded aluminum, or wrought iron. The next month we’ll have a run on synthetic wicker. Then we’ll sell the hell out of ipé or teak,” he said. “It’s weird.” Customer preferences seem a little more settled at Outside In Style. “Extruded metal is where it’s at,” Galindo said. “I don’t see that changing anytime soon.” She noted that Homecrest’s Grace and Elements collections “have done remarkably well.”

Another popular product is Klaussner Outdoor’s RealisTEAK virgin plastic furniture. “That has been crazy popular,” Galindo said. “My biggest problem is I didn’t buy enough of it.” For real wood furniture, Galindo’s customers prefer ipé products by Jensen Leisure. “We do great with ipé,” she said, “because Texans like brown” and Jensen “continues to do beautiful designs.” Stegman’s clientele leans more to mixed media products, especially woven furniture with wood accents. Teak is not a particularly strong category along Florida’s west coast, she said, but mixed media is another thing altogether. “It’s amazing how much people just love it,” she said. Ditto for the shoppers at Casual Living, Fireside and Grillin’ in South Carolina. “Mixed media is more popular than teak,” Axe said. Grieder’s customers have shown a preference for certain types of mixed media casual furniture over others. For instance, he said, his Louisiana market likes woven furniture with teak accents. But customers show less interest in metal furniture with teak accents. Nor do they warm up to woven or metal furniture with composite accents. Grieder’s has seen tremendous growth in the popularity of plastic lumber furniture. Not so many years ago, the category accounted for perhaps 2% of sales. Poly furniture now accounts for about 20% of sales. Low maintenance drives sales, he said. Plastic lumber furniture also does well on the South Carolina coast, Axe said. Casual Living, Fireside and Grillin’ sells poly furniture by Malibu Outdoor. Stegman offers her customers Telescope’s MGP brand of resin furniture as well as Poly-Wood plastic lumber furniture. “Adirondack chairs are still the thing they want” in Florida, she said. Counter-height bar sets often are purchased for use on docks. In Baton Rouge, wicker deep-seating remains strong, besting aluminum products. Shoppers are leaning toward cleaner lines, Bucy said. Most Southern retailers interviewed were positive about the prospects for 2019. If, that is, the weather cooperates a little more than it did this year. And if increased

Casual Living, Fireside and Grillin’, Bluffton, South Carolina. INSET: Missy Axe.

tariffs don’t send shockwaves through the consumer economy. And if politics doesn’t sour the markets. “I’m always optimistic,” said Stallings of Madison Fireplace & Patio. “At Premarket, I bought like it will be a good year.” Stegman was upbeat. “If there’s no catastrophe, if everything stays like it is now, it’s going to be a great year,” she said. Galindo, on the other hand, said she was nervous. However, she thinks mass merchants will be “super conservative” in buying for 2019, which could present a silver lining for specialty shops if the economy remains strong and consumer confidence remains high. In that case, she said, Big Box stores may run out of product “and that gives us an opportunity at specialty.” Bucy expressed cautious optimism that 2019 will be better. But, he added, “If I knew for sure, then I’d have more money than I do.” Central Patio Wrap-up Never generalize. It almost always backfires. Just because high winds rip across the prairie, don’t assume that heavyweight poly/plastic furniture will sell in every town in the heartland. That’s not the case in Springfield, the capital of Illinois. Laurie McWilliams, co-owner of CopperTree Outdoor Lifestyles, says her customers aren’t interested. They think the furniture, regardless of brand, “still looks like Home Depot or Walmart.”

www.hearthandhome.com | DECEMBER 2018 | 43

| Patio Sales: Past & Future | But not so far away, in the university town of Champaign, Cardinal Pool and Outdoor does a good business with plastic lumber furniture. “Where we’re growing in impressive amounts is with Berlin Gardens,” says Sharon Law Pauza, who owns the business with her husband, Mike. “It’s a great story and pretty enticing to people.” On the other hand, teak, and wood furniture, is a non-starter at Cardinal Pool and Outdoor. The shop gave it a try some years ago, Pauza said, but wood furniture presented “too much trouble.” One gets a different story at Mulhall’s, a garden center and casual furniture outfit in Omaha, Nebraska.

Cardinal Pool and Outdoor, Champaign, Illinois. INSET: Sharon Law Pauza.

“Teak was huge this year,” said Sandi Ricke, a casual furniture manager. “Teak is on trend. We’re seeing that everything natural and organic looking has increased.” Mulhall’s carries teak by Kingsley Bate. Sales of synthetic wicker furniture remain stable at Mulhall’s. Customers showed strong interest in love seats early in the season, Ricke said, while sales of sectionals picked up later on. Mulhall’s sales of poly lumber picked up this season after adding the Breezesta line. “We had struggled with poly for a couple of seasons,” Ricke said. Mulhall’s year “started out really strong in special orders,” she said. May brought cold, rainy weather and caused some lost sales momentum. “We struggled a little.

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July and August came back really well. On the whole it was a very good year.” Sales were up by single digits for Jack Wills, which has locations in Tulsa, Oklahoma, and Springdale, Arkansas. Bad weather wasn’t a factor this year. “Our bread and butter is OW Lee and Tropitone,” says Jack Wills III. “We do real well with those manufacturers.” OW Lee and Tropitone are domestic manufacturers that cater to the special order business, and customers of Jack Wills have responded in kind. Special orders account for 80% or more of the store’s business, Wills said. “It’s absolutely crazy,” he said. Special orders are “way, way, way up.” A category not faring well for Jack Wills is resin wicker. “I got hammered,” Wills said. The challenge is demonstrating to customers the quality difference between, for example, a $5,000 group on the floor and a similar looking group online or in a catalog with a dramatically lower price. It’s easier to convey the quality difference with metal furniture, he said, whether aluminum or steel. Regardless of the construction materials, customers prefer cleaner lines and comfort. Comfort can be more important than price, Wills said. The store had a casual sofa on the floor for $1,299 this year “and we just could not get rid of it. We’re stuck with it. And it’s just due to the comfort factor,” he said. The corollary is that it’s easy to sell a comfortable sofa for $2,500 and up. Jack Wills had a “phenomenal year in umbrellas,” Wills said. Longtime vendor Treasure Garden was supplemented with products from Frankford Umbrellas. “Our Frankford numbers were through the roof,” he said. The retailer also carries TUUCI umbrellas. Back in Illinois, CopperTree Outdoor Lifestyles has restructured its business following a showroom fire in 2014 and in response to the state’s ongoing fiscal crises. McWilliams said the state’s economic malaise has caused the middle-income market to shrink and make her outdoor furniture business more dependent on the higher-income households. The catch is that large numbers of upper-income Springfield area residents have elected to move away in recent years.

People who can afford to flee “left the state in droves,” she said. That trend seems to have slowed somewhat this year. McWilliams’ husband operates CopperTree Landscaping, and they serve many customers with turnkey design/ build/furnish services for patios, Outdoor Rooms, and outdoor kitchens. Projects often range from $25,000 to well over $100,000, she said. CopperTree projects often include custom fire features built into mortared stone walls. “Our landscaping company is doing very well,” McWilliams said. And sales on the outdoor furniture side of the business already have exceeded those of 2017. She’s hopeful that sufficient numbers of higher-income households have chosen to “dig in and hunker down” to sustain the family business. “We’re fond of building relationships and taking care of people over the long term,” she said. “There’s still business to be had here, taking care of people.” West Patio Wrap-up Today’s Patio CEO Chad Scheinerman put into words what many casual furniture retailers are already thinking. “If you’re at single-digit increases or flat, it’s a win,” he said. “The days of being up 10% to 15% in a year are not realistic at this point and shouldn’t be something anyone’s expecting.” Scheinerman’s six stores in Arizona and California, plus a clearance center, were slightly ahead through October. The final two months of the year typically are important ones for his business as the Southwest welcomes returning Snowbirds. “This is what we call our Second Season,” he said, warily. “We’ll see how it turns out.” The political climate, tariffs, and international relations currently may be more important variables than the weather or economy as 2018 closes out. Those factors “definitely have a psychological effect,” he said. Business was relatively flat for Hauser’s in San Diego. And that was just fine with owner Jeremy Hodges. A longtime Hauser’s employee, Hodges and his wife, Elsa, purchased the business from former owner Doug Wheat less than two years ago.

“This year was all over the place,” Hodges said. Months that were typically busy were slower, and months that historically have been slow were up. “We didn’t know what was going to happen,” he said. “We just had to sit back and wait.” At Fruehauf’s in Colorado, president Mariah Maydew was relieved that sales remained on par with those of 2017 following the company’s move from Boulder to Westminster. The shift puts Fruehauf ’s about halfway between Boulder and Denver. “We were lucky that the move didn’t disrupt sales,” after 40 years in Boulder, she said. In Salt Lake, Leisure Living enjoyed “a real balanced year,” said Michelle McDonald-Ross, whose family owns the store. Wicker, deep seating, and dining sold well, she said. “Fire pits are still big, and umbrellas were great.” Mixed-media products with wood accents sold a little better than solid wood furniture, she said. Umbrella shoppers gravitated to cantilever models. “They give you a lot of flexibility,” McDonald-Ross said. Growing numbers of purchasers of large umbrellas this season opted for permanent installation rather than choosing wheeled, portable-base models. The summer was hotter than normal, which may have helped spur umbrella sales. Did prices on large umbrellas generate any buyer resistance? “None,” she said. “Price wasn’t an issue for us.”

Jack Wills Outdoor Living, Tulsa, Oklahoma. INSET: Jack Wills.

www.hearthandhome.com | DECEMBER 2018 | 45

| Patio Sales: Past & Future |

Hauser’s, San Diego, California. INSET: Jeremy Hodges.

Leisure Living offers umbrellas by Treasure Garden and Sun Garden. Fruehauf ’s sells umbrellas by TUUCI and ARTiculatedshade in addition to Treasure Garden products. “Treasure Garden is our bread and butter,” Maydew said. Sales of fire pits remained strong, she said. OW Lee is an important vendor in the category. “It gets bigger and bigger every year,” she said. While fire pits remain “very strong,” Hodges sees the category plateauing as lookalike competitors proliferate at mass‑market outlets. Hauser’s is experiencing growth, he said, in bar‑ and balcony‑height sets. The store is located within five miles of downtown San Diego, which is experiencing a boom in high‑density residences. Towers are going up, and condo and apartment dwellers need furniture that fits their petite balconies. “We’re seeing the request from customers,” Hodges said. “They just need smaller groups.” Aluminum and cast‑aluminum furniture remained the leading categories at Patio Connection in Tucson. “The trend has been in deep seating,” said Mike Moon, one of the owners. “Lounge pieces are driving the market for us.” Wood outdoor furniture has never caught on in the Tucson market, he said, and the wide disparity in price points for woven furniture just confuses customers.

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Plus, he noted, “There’s so much woven out there, it’s hard to compete.” Likewise, the availability of inexpensive sling furniture in Big Box stores puts pressure on the demand for the better‑quality sling from Patio Connection. The store offers sling furniture by Tropitone and Hanamint. Padded sling, however, is less widely available and gives the store an exclusive edge. “It’s done extremely well for us,” Moon said. Plastic/poly/HDPE furniture is important across the board. “We do well with Telescope’s MGP mixed with aluminum,” Maydew said. Fruehauf ’s also carries the Breezesta brand. Patio Connection sells furniture by Poly‑Wood and has seen “a big increase,” Moon said. Doug Wheat, former owner of Hauser’s in San Diego, is known for having developed a significant contract and hospitality business. “Doug laid a very good foundation,” Hodges said, which he aims to build upon going forward. Most of Hauser’s contract sales are in the greater San Diego area. Hauser’s has two national contract accounts, one of which purchases “hundreds of umbrellas every year. And each one has our name on it, of course.” Contract sales account for between 25% and 35% of Hauser’s volume, Hodges said. Retailers interviewed in western states generally are optimistic about the prospects for 2019. “We are definitely expecting a bigger year,” Maydew said. Fruehauf’s is counting on its new location attracting a larger Denver customer base. Hodges, who calls himself “a glass half‑full kind of guy,” said he expects 2019 “to be a great year.” He’s implemented some changes at Hauser’s, including a cut‑and‑sew operation that should streamline the delivery process and add to the bottom line. Scheinerman, ever cautious, is enlarging his clearance center from 4,000 sq. ft. to 7,200 sq. ft. and plans to keep his operation lean and efficient. “The thought of ordering a six‑month supply just makes my skin crawl,” he said. He’s worried that he might make a poor decision and choose slow‑selling products. He prefers to order stock when he needs it and, more importantly, “Always rely on the winners.”

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“Call Me Crazy!” Somehow, for 35 years, Brett Freiberg has been able to retain his enthusiasm for the business of selling patio furniture (and there’s no sign that he’s going to change). By Tom Lassiter

rett Freiberg has been at this game for more than 35 years, but he still gets excited when shipments of new products arrive at American Leisure Patio’s warehouse. “When a truckload comes in,” he says, “I’m the first one out there.” Another storeowner might let his warehouse and delivery crew handle such a basic task, but not Freiberg. He opens boxes so the crew can check out

the season’s new color combinations. He pairs cushions with chairs and has the warehouse staff try them out. “Sit on this,” he says to them. “What do you think?” He’s looking for feedback, a reaction. How will the other seasoned pros on his team respond to the new looks? Do they think shoppers will feel the same excitement, and desire this set for their home? Freiberg can’t explain why he still gets

so psyched by every truckload of new casual furniture. It’s just who he is. “I don’t know,” he says. “I don’t know. It’s in me. “I grew up building furniture and stuffing cushions, and here I am at 52, still doing it.” Still doing it with enthusiasm. Still engaged with every aspect of the business. Still energized by a passion for casual furniture.

The views from above on these two pages provide a sense of the variety of products on display at American Leisure Patio.

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A Curated Strategy Late on a weekday afternoon just before Halloween, American Leisure Patio’s San Jose store is quiet. But Freiberg, as usual, is jazzed up about the casual furniture business. It’s the tail end of the season in the greater San Francisco Bay Area, and the bestsellers are missing from the floor of his flagship store, sold out and replaced by slower-selling sets pulled from the warehouse and attractively priced. Freiberg’s second store is in nearby Santa Cruz. “I bring in what I want to get rid of, what’s not going to be around next year,” Freiberg explains. “The Box stores are now out of furniture; anybody who does seasonal patio furniture is out. So your pickings are a little more slim.” Freiberg’s eyes smile. “It’s a great time,” he says, a great time of year to be a patio retailer. Because if a homeowner is in the mood to furnish an Outdoor Room, he says, “There are not a lot of places to go” besides his stores.

Freiberg visually inventories the showroom as he strolls through, commenting on almost every set. The merchandising style is eclectic by design. At this time of year, vignettes are few. Products tend to be grouped by function and category in the eye-pleasing, easy-to-navigate showroom. Dining tables frequently are paired with chairs from a different manufacturer. It’s a multipart strategy, he explains. Pairing products by different sources presents a challenge to the shopper who comes armed with a list of product names and online prices to use as a bargaining chip. An apples-to-apples comparison is almost impossible, giving the retailer an edge. And, to the shopper’s benefit, pulling in dining chairs by a different manufacturer often lowers the overall price, reducing sticker shock and raising perceived value. Among the options are woven dining chairs made just for American Leisure Patio. The store also carries woven deep seating with custom-specified elements. Freiberg tweaked an Asian factory’s design

with a custom weave and higher-grade of faux-wood resin accents to enhance quality and raise perceived value. Plus, there’s nothing else like it in the Bay Area or anywhere else. He applies the mix-and-match approach to teak products. The store carries some of the best-known names in teak; it also offers teak furniture that Freiberg buys direct from factories in Indonesia. The strategy offers shoppers choices from a variety of quality manufacturers, he says. It also gives the store a price and profitability edge. Freiberg explains: “In order to bring in the imports, get a good margin, and have them be of value, you have to have the Tropitone and Brown Jordan and the Gloster to make them worthy.” The top-shelf brands, he says, actually make the imports worth more. Freiberg’s always looking to refine his offerings. “One of the things I got from my father is, ‘Don’t ever be a me-too patio store.’” He’s counting on the teak

Brett Freiberg, owner, American Leisure Patio, San Jose, California.

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www.hearthandhome.com DECEMBER 2018 | 49 friendly reading| experience

| Retailing |

The store carries products from 17 furniture manufacturers.

presentation to be even better next season. “I’ve found an amazing manufacturer,” he says. “I’m so excited about it.” Freiberg relishes devising custom products and pairings, creating what he calls “a curated look.” When he attends Casual Market Chicago and other trade shows, he’s constantly comparing and contrasting individual products, looking for the pairings that will create something totally unique in his showrooms.

Like a sommelier who uses vast knowledge of foods and wines to find the most pleasing combinations, Freiberg applies his lifetime of experience to mix and match outdoor furniture products that set his stores apart and captivate customers. “I can’t wait for Chicago, for the show,” he says. “I’m like a kid in a candy store. I can’t wait to see the new goods. I bring stuff home all the time, catalogs, or on the Internet.” He

On the second floor, consumers will find a wide selection of pillows, cushions, and pads.

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shares the new product information with his wife, Heidy, a sales associate at the Santa Cruz store. He’ll ask, “What do you think of this, at this price-point?” The process of turning the vision in his head into the freshly curated look he desires takes months. Freiberg’s passion keeps him focused on his goal. “You will not find what I’m talking about in a picture online,” he says. “You will not be able to. I’m going to be mixing vendors, and it’s going to all mix together.” Some of his vendors are industry leaders. Others are lesser-known factories he’s sought out in Indonesia and Vietnam. Some are current suppliers of American Leisure Patio; others will be new for 2019. The materials in the new furniture presented next season will include stainless steel and teak, as well as synthetic wicker, often in mixed-media combinations. Though the reality of getting this curated look on the floor is still weeks away, Freiberg has assembled almost all the elements in his mind. He can visualize it. To him, it’s as vivid as metal artwork adorning the walls. He has the passion to see it. “I’m really big on this curated look for next year,” he says. Entrepreneurial Roots Freiberg pulls a laminated printed page from beneath the sales counter. It’s from a 1981 issue of Venture, a local business magazine. There’s a photo of a man grinning broadly, seated on the beach in a patio chair constructed of PVC pipe. It’s Fred Freiberg, Brett’s father. Teenage Brett was on the beach that day and remembers it well. Fred Freiberg’s business at the time was Pipe-Made Furniture West. “We were solely a factory, opening new dealers,” his son explains. By the late 1970s, Fred Freiberg already was a successful entrepreneur. As the owner of Quality Electronic Service, he was one of Santa Cruz County’s largest employers, building electronic circuit boards and wiring components for other manufacturers. When he was a teenager, his family had traveled from Germany to the United States as refugees from post-war Germany. He had seized the opportunities offered by his adopted home and built his own version of the American dream.

The shift from the electronics industry to casual furniture can be summed up in a word: opportunity. The Freiberg family had been on a trip to Florida when they saw PVC pipe furniture for sale by the roadside. “Stop the car!” Freiberg remembers his mother saying. His dad instantly understood the potential offered by what was then a unique product, perfect for California’s outdoor lifestyle. “He bought the rights to the western half of the United States, as well as the Philippines and somewhere else,” Freiberg recalls. Teenager Brett already was adept at assembling and soldering circuit boards for Quality Electronic Service. For his father’s new venture, he learned how to build pipe furniture frames, and how to use a foam-blowing machine to fill cushions. The elder Freiberg opened retail accounts up and down the California coast and in other Western states. Once he got his driver’s license, Brett delivered pipe furniture to ships bound for Hawaii retailers. “When I say this is what I’ve done all my life,” he explains, “it’s pretty much true. Eventually he opened a factory showroom in Santa Cruz and another in Cupertino. Then the evolution started, slowly.” The family’s relationship with casual furniture evolved with the industry, which then was entering a period of rapid growth and innovation. “I credit my dad for everything,” Brett says. “He was always an entrepreneur. He brought in (molded) resin furniture when prices were way up. I was 18. We were doing containers of that back then.” Cast-aluminum patio furniture soon was added to the retail lineup at what became American Leisure Patio. “That’s when I started becoming important at the store level,” he said. “I realized we needed more.” Brett, then a young adult, took over the Cupertino retail location. He tried to land some of the biggest casual furniture brands of the day, without success. “We couldn’t get Homecrest,” he remembers. “We couldn’t get Tropitone. They were already taken” by other patio retailers in the area. Even so, the Cupertino store did well. “My goal was to work there until it hit a million dollars,” he says. “And it did.” The closing of a patio store in Stockton

provided the opportunity Freiberg needed to land Tropitone products. Freiberg put an American Leisure Patio store in that city, a two-hour drive northwest of Santa Cruz, just to secure the Tropitone brand. (As a multi-store chain, American Leisure Patio could then introduce the Tropitone line in all of its stores).

workers aren’t prime patio furniture customers) and the time-sucking commute from San Jose convinced Freiberg to close the Cupertino operation. Meanwhile, Fred Freiberg continued to build relationships with Asian vendors of furniture and other goods. He sourced artwork, such as stylized suns and lotus

A tropical wall mural is the perfect backdrop for a sectional sofa and fire pit.

The Stockton store only lasted a year (“It was a terrible market”), but American Leisure’s relationship with Tropitone has thrived ever since. “Tropitone is our No. 1 vendor,” Freiberg says. “I would never give Tropitone up. We sell it through the roof.” Not coincidentally, Tropitone manufactures in California, shortening the pipeline from factory to Freiberg’s showroom and those all-important special-order customers. Orders promised in four weeks usually arrive in three, he says. California-based OW Lee is another high-volume brand at American Leisure Patio. “In Silicon Valley, special order is key,” he says. Not long after Freiberg shepherded the Cupertino store to $1 million in annual sales, that store was shuttered. Cupertino, then as now, was in the heart of Silicon Valley and booming. Changing demographics there (young, single tech

flowers, from metal artisans in Indonesia. “He had reps selling them all over the country,” Brett says. Similar products can be found today at American Leisure Patio, where they decorate the walls and “still sell very well.” Organized by Design Shoppers no longer find barbecue grills at Freiberg’s stores. Nor are there counterseasonal products, such as Christmas goods. “I think it’s the worst business ever,” Freiberg says. “No, thank you!” The emphasis is on casual furniture, every day, even in Northern California’s short and usually wet winter. “We do business,” he says. “It’s just not like we do in the summertime.” Mounted over the sales counter is a Solair awning. “What a great business model!” Freiberg exclaims. “Zero floor space. I love it. It’s a great add-on. Every sale’s about $5,000.”

www.hearthandhome.com | DECEMBER 2018 | 51

| Retailing | He expects to sell a dozen or more awnings this year, his fifth as a Solair dealer. Installation is handled by a third party in an arrangement set up by Solair. Illuminated showcases, much like those that display stemware and fine china in an upscale home décor store, span the wall near the sales counter. Tumblers and dinnerware are featured there, with colors catching the eye and luring shoppers for closer inspection. Many of the casual dinnerware products bear the Merritt brand. “Do you remember Stotter?” Freiberg asks. He recalls the name of the Stotter rep who used to service the store’s account. “I was just a kid, but I helped pick all the designs. Those were good days.” The stores exited the dinnerware business for a time before returning to the category “on a smaller scale.” Two years of solid growth convinced Freiberg that “we needed to do something special,” so he invested in the lighted cabinets. Store manager SuzAnne Sikk uses a handheld remote to flip the lights on and off. Like Kenneth Moore, general manager of Retail Sales, she’s an experienced casual industry veteran. She says the one thing that absolutely differentiates American Leisure Patio from the competition is customer service. “We’ll spend an hour helping a customer with replacement slings, or looking up glides for a chair they didn’t buy from us,” she says. “It’s just what we do.” That kind of service builds and enhances the store’s reputation. The real payback comes when a customer calls days or visits after a sale to say thanks for the terrific shopping experience. It happened on the day when Hearth & Home visited. A customer called to put in a good word about Kenneth Moore for his assistance with replacement slings for a set of Tropitone furniture. Calls like that are one reason Freiberg is so grateful for his staff. “I try to take care of them to the best of my ability,” he says. “People try to steal them” (hire them away). “But Kenneth loves us and tells me he’s not going anywhere.” In addition to reslinging seating, service at American Leisure Patio includes custom-made replacement cushions,

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strapping, powder-coating, and repairing welds. The store also repairs fire pits, even those made by brands the store doesn’t sell. The work used to be done in-house, but now it’s all outsourced. The repair business is managed by Fred Freiberg, now 76. “We had to divide what we do to be good business owners; we now bump heads,” the son explains. “He does that part, and it really adds to the bottom line. It’s his passion, too.” Service is elemental, Freiberg says. “We want to service our customers from top to bottom. We’ve had a lot of stores send people to us for service because they didn’t want to deal with them. And now,” he says, “we’ve won a customer.” Freiberg’s passion for the business

makes him a hands-on owner-manager involved in every aspect of the business. The store recently introduced a stylish new logo. Freiberg produced the concept and worked with a graphics professional to refine the finished product. He looks at every sales ticket. He creates photo labels for every box of product in the warehouse, listing the model number and vendor name. “I spend way more time doing things than I should,” he says. “I’m in the warehouse. I’m in the stores. I set the floor. I do all the buying. It’s a lot of work, but I want it done a certain way. “And,” he says, “I love every bit of it. Call me crazy.”

Store Name: American Leisure Patio

Number of Employees: Full-time, 8; Part-time, 4

Number of Stores: Two Address: 1118 Ocean St., Santa Cruz, CA 95060 3550 Stevens Creek Blvd., San Jose, CA 95117 Owners: Brett Freiberg, Fred Freiberg, Kathi Freiberg Key Executives: (see above) Year Established: 1980 Web site: www.americanleisurepatio.com E-mail: cs@americanleisurepatio.com Telephone: Santa Cruz – (831) 423-2425 San Jose – (408) 446-9350

Square Footage: Showroom – 7,000 Warehouse – 10,000 Outside Area – 3,000 Lines Carried: Patio – Agio, Berlin Gardens, Brown Jordan, Galtech, Gensun, Gloster, Grosfillex, Kettler, Kingsley Bate, OW Lee, Patio Renaissance, Solair, Sunset West, Telescope, Treasure Garden, Tropitone, Woodard Hearth – Heaters only – AEI, Outdoor Order

% of Annual Gross Sales for Advertising: 2% Radio – 10%; Newspapers – 30% Magazines – 35%; Other – 25%.

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By Lisa Readie Mayer

any barbecue retailers and manufacturers report that 2018 was a good year. The category is benefitting from a consumer base that’s eager to learn about and experiment with different types of outdoor cooking, and willing to upgrade to better-quality grills. There is continued interest in Outdoor Rooms, and the desire to enjoy outdoor living and entertaining at home is spreading along a much broader budgetary continuum. Growth in new-home construction in some parts of the country also has had a positive impact on grill and outdoor kitchen sales. The year, however, was not without challenges. Rainy weather was hard on retailers in certain regions. Online competition and showrooming are problematic for some, while finding qualified employees is becoming an

issue for others. And there is universal, industry-wide concern as tariff-related price increases on grills, parts, and accessories begin to take effect. Hearth & Home spoke with a number of retailers and manufacturers who shared insight into these and other trends that emerged in the barbecue category this year, and predicted what might be in store for 2019. Here’s what some of them had to say. Tom Nitz Modern Home Products and ProFire Grills “Our business has been very consistent for the past couple of years, with very steady sales in both grills and aftermarket replacement-parts,” says Tom Nitz, senior vice president for Modern Home Products (MHP) and ProFire Grills. A particular

bright spot this year was replacement parts for premium grills. “There is a trend emerging where people are repairing high-end grills built into outdoor kitchens,” he says. “It can be difficult and expensive to replace built-in grills, so replacement parts look a lot more attractive, and we saw very strong growth.” He says the mood among dealers is dependent on location. “In the Northeast the weather has been terrible. It’s helped on the hearth side, but it has had a negative effect on the barbecue business in that region,” Nitz says. “In places like Texas and Florida, we’re seeing a better business climate and more optimism. There is more homebuilding there, and people are buying new products in the aftermath of hurricanes. Of course, it’s terribly sad that people are hurting after natural disasters, but the reality is it boosts business in those areas.” The company introduced infrared grills about 14 years ago, and despite initial success with the category, Nitz says the infrared business is currently in transition. He says sales of all-infrared grills have “died off,” but some customers are still opting for hybrid models with two traditional burners and one infrared burner. “But the best seller is an infrared sideburner with a sear-magic grid that’s mounted on the side of the grill,” he says. “It adds costs, but offers high-heat searing without monopolizing the main cooking area. It sells well.” MHP will introduce a new grill line called Dragon Fire in 2019. The line will be positioned between the company’s cast-aluminum MHP grills and its upper-end ProFire line. “We realized we had a gap in the hottest segment of the market. This new line should fill a niche.” Nitz says the company’s outdoor kitchen business has been very steady. Sales of built-in grills outnumber carts on its premium ProFire line. The new Dragon Fire line will be offered with the option of a cart or as a built-in, but Nitz is not sure how those sales will ultimately break out. “I anticipate strong demand for builtins, but in the upper $1,000 price range, a lot of people still buy cart grills,” he says. The company also recently introduced a “Grand Cart” option for MHP grills; previously, those models were mostly sold with columns, posts, or leg bases.

He has concerns about how tariffs will impact business and is “cautiously waiting” to see what happens in the coming year. After getting hit with price hikes on the aluminum imports from Canada, MHP raised prices late this year. Nitz says the move might boost sales in the short term as dealers rush to place orders before the increase takes effect, but he believes tariffs will ultimately have an adverse effect on his business and the economy overall.

Dragon Fire by ProFire Grills. INSET: Tom Nitz.

“Manufacturers can only absorb so much on top of other increases on insurance, property taxes, and labor costs,” he says. “At some point you can’t continue absorbing, and the increase ultimately gets passed along to the consumer.” Nitz says if the 25% tariff takes effect in January as planned, he expects it will impact prices, margins, and ultimately sales. “It could really hurt business,” he says. “There are a lot of unknowns.” Brian Eskew Twin Eagles Brian Eskew, who handles Sales, Marketing, and Brand Development for Twin Eagles, reports the company and its dealers had a good year in 2018. He says the outdoor kitchen category is “not explosive, but still thriving, and everyone seems to be doing well.” He says the fact that “so many more consumers want an outdoor kitchen than currently have one,” bodes well for continued growth in the category. Click here for a mobile

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| Barbecue Sales: Past & Future | According to Eskew, consumers now have a “high level of understanding” about what an Outdoor Room can be – knowledge that comes, in part, from more dealers displaying vignettes that help customers imagine an outdoor space in their backyard. “Dealers are getting better and better at merchandising and selling the outdoor lifestyle,” says Eskew. “They’re not asking customers, ‘Are you looking for a grill?’ but instead are asking, ‘What are you looking for in an Outdoor Room?’ It starts a conversation and potentially broadens the sale to other appliances, beverage stations, outdoor heaters, fire pits, furniture, shade features, and more.” He says when dealers talk about lifestyle instead of Btus or gauge of metal, consumers get excited. According to Eskew, successful dealers focus on outdoor entertaining when talking with customers, asking questions about how they entertain, how and what they like to cook, and how they might use their outdoor space daily for watching television, cooking breakfast on weekends, having a cocktail at the bar. “It’s all about lifestyle,” he says. “Space and budget are mitigating factors, but consumers are building bigger, more fully-featured outdoor spaces to suit how they want to live and entertain. A lot of backyards behind mid-priced homes have a full gamut of entertaining amenities.”

Twin Eagles Premium Grill and Outdoor Kitchen Equipment. INSET: Brian Eskew.

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He credits the growing number of “premium-value lines” for opening the outdoor kitchen concept to a broader base of homeowners with a wide range of budgets to create their aspirational outdoor space. “Our mid-level Delta Heat line might be for people with $10,000 to spend on an outdoor kitchen project, while Twin Eagles is for someone with a $25,000-and-up budget,” he says. Another emerging outdoor kitchen trend is that early adopters are already starting to remodel their outdoor kitchens. He has noticed a growing preference for more contemporary looks, but says interest in sleek, modular outdoor cabinetry appears to be regional. “People don’t necessarily want their outdoor kitchen to look like indoors; they want a more organic look,” he explains. “They might go for contemporary cabinetry but finish it with stone end-caps. They’re combining a sophisticated indoor look with organic, natural materials to soften it up.” He says the company’s introduction of a new pellet grill this year has generated a lot of buzz among dealers. “We officially launched (in October) and had an incredible number of orders on the first day,” he says. “The industry is experiencing the same level of enthusiasm and excitement around pellet grills as we saw around kamados 10 years ago. Pellet grills are less intimidating than kamados. A pellet grill is so easy to use and results exceed expectations every time; you can’t screw it up. Our unit is the most expensive pellet grill on market, but it’s justified in terms of craftsmanship, a wide standard feature set, and performance.” Eskew says charcoal, pellet, kamado, and gas grills all have a place, but he believes most people building an outdoor kitchen will choose either a pellet or kamado grill as a companion to the gas grill. “The look is important to outdoor kitchen consumers,” he points out. “We think consumers will want that companion product to match the gas grill, so it looks nice.” Although the company has seen growth in both its value-priced and entry-level grill lines, it still sees strong interest at the premium price point. Next year it will introduce a super-premium

line positioned a step above its Twin Eagles gas grills. “The new Eagle One line is designed for consumers who desire a more fully-featured grill,” says Eskew. “This will give us four lines. It’s important to give dealers something to talk about. Brands can’t become stagnant; we have to keep it fresh and exciting.” He says tariffs and resulting price increases are a potential fly in the ointment for next year. “We’re planning an increase for 2019,” he notes. “We believe it won’t stop a high-end, premium purchase, but we may see an impact on the lower end of the category, where it’s more price-sensitive. It’s unfortunate, because, at the end of the day it’s the consumer that’s impacted most.” Debbie Schaeffer Mrs. G Appliances Lawrence, New Jersey Overall, business was “fantastic, way up” in 2018, according to Debbie Schaeffer, the Chief Customer Officer and thirdgeneration owner of Mrs. G Appliances. Grill sales, however, were somewhat flat, hampered by rainy weather that delayed the start of barbecue season. “Weather, without a doubt, drives business, and the weather was really bad this year,” she says. “If people don’t buy a grill by the end of June, many tend to put it off a year, so I think that happened somewhat.” For the same reason, outdoor kitchen sales also were “a little flat” this year. However, Schaeffer is seeing more people including two grills in outdoor kitchen projects – typically a luxury gas grill, with either a built-in charcoal, pellet, or kamado grill, although one project this year combined a gas grill with a solid-surface EVO grill. “We talk about it all the time with people,” she says. “It’s like having multiple appliances in an indoor kitchen, and we see this trend growing.” She says recessed infrared heaters, fireplaces, and fire pits are an “essential” component of the outdoor living space in the New Jersey climate. Another growing trend is sheltering the outdoor space with a solid roof. “More people are putting a roof overhead, and many people are surprised when we recommend including an outdoor-rated vent hood,” she explains. Gas grill standouts this year include the

Napoleon line. “It has been exceptional for us. You get a lot of grill for the price,” Schaeffer says. “We’ve been Weber dealers for a long time, and we have very strong, loyal Weber customers, but Napoleon has been a great brand to diversify our floor and offer other options.”

Mrs. G Appliances, Lawrence, New Jersey. INSET: Debbie Schaeffer.

The store also added Hestan grills recently, and Schaeffer says the bright orange display unit attracts a lot of attention on the sales floor. Both the premium Hestan grill line and its more moderately-priced Aspire line have been popular with customers. “We believe it’s important to offer a wide range of price points,” she says. “People come in with a budget and we’ll work within it, but sometimes they’ll see features they want and move up. All the brands we carry are finding their niche in our store.” Other bright spots in the barbecue department include kamados and pellet grills. Mrs. G started carrying Big Green Egg and Traeger a few years ago, according to Schaeffer, and the brands are “bringing in lots of new customers.” She says the store’s comprehensive selection of accessories and fuels for these brands is also helping to attract new customers who may have bought their grills elsewhere. Pizza ovens have become another “extremely popular” category in her store. Mrs. G offers options ranging from large, pricey wood-fired ovens to smaller, countertop gas models. “It’s a very good area for us,” she says.

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| Barbecue Sales: Past & Future | Schaeffer says it’s becoming difficult to find skilled workers for the installation and service side of her business. “They say it’s because kids are not going into tech school, but I also think it’s because the people who are doing these jobs now, don’t want to take on apprentices,” she says. Online competition is another challenge. “Pricing is not the real issue; it’s the convenience of shopping online,” Schaeffer explains. “We work really hard to be able to deliver products as quickly as possible, because people want the grill immediately – often for a party that weekend. If we can deliver it the next day, we will. We provide great service and people see that. They also like that we are part of the community and we give back. If we can get them in the store, they’ll usually buy from us.”

Goodwood Hardware & Outdoor, Baton Rouge, Louisiana. INSET: Trent Boyd.

Trent Boyd Goodwood Hardware & Outdoor Baton Rouge, Louisiana “Overall, it’s been a fair year,” says Trent Boyd, owner of Goodwood Hardware in Baton Rouge, Louisiana. “One thing we’ve noticed is that more people are fixing their grills. Our parts business is up and we’ve had more calls for service than ever. I guess people are being conservation-minded. They’ve had their

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high-end grill for 10 years and realize how much it would cost to replace it, so instead of throwing it away, they decide to repair it. As grills last longer, this could become a whole new market for the retailer.” Boyd says another big trend is “grills and gadgets that can be controlled by smartphone.” He theorizes that interest in Wi-Fi-controlled thermometers, pellet grills, and other high-tech barbecue products may be “a result of Millennials coming into the market,” but says it’s also because the technology makes it “easy to cook remotely while you’re at the pool or the lake.” He attributes flat grill sales to a wetterthan-normal start to the year, followed by extreme heat. But, he adds, “it’s getting easier to get things shipped online, so it seems we’ll have to figure out how to compete in an Amazon world,” he says. “The high-end grill market in Louisiana has pretty much gone to the Internet. It’s easy to spot (a showrooming) customer. They want model numbers, take pictures of the products in the store, then leave and go buy online. If they find a retailer online that doesn’t charge tax, they’re saving 9% or 10% right off the top. We’ll play the price game on some stuff, but when you play that game, you don’t make any money. It’s having an effect on our sales.” Boyd says he has sold more pellet grills in his store than ever, but some of those sales are coming at the expense of charcoal-fueled smokers and kamados. “Now, customers are often deciding between a pellet grill and a kamado; that didn’t happen before,” he says. “Traeger does a lot with infomercials and social media to get their name out there. There is a lot of buzz around pellet grills right now.” He says outdoor kitchens have been “pretty hot in Louisiana for a while,” but this year he noticed a leveling off of bigticket projects. “People have gotten more conservative,” Boyd says. “They used to want the biggest and best of everything, but lately they’re sticking to the basic outdoor kitchen elements.” One notable exception: pizza ovens. He says pizza oven sales have been growing in his store, as people look to include them in outdoor kitchens.

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| Barbecue Sales: Past & Future | He says he has backed off on traditional advertising in favor of more targeted social media campaigns and promotional events. The store hosts cooking demos with local chefs and barbecue experts who have appeared on the Food Network. It also has a trailer outfitted with Bull grills and outdoor kitchens that he takes to local microbreweries and other locations to do tie-in events. And every Christmas and Father’s Day, the store hosts major, in-store events with cooking classes, a car show, demonstrations, and other fun activities. “We’ve found it’s a better way of marketing than just throwing money into newspaper advertising,” says Boyd. He calls tariffs the biggest challenge facing the store right now. He has already seen price increases from some manufacturers and is in “wait-and-see mode” on others. Boyd remains mostly optimistic about next year. “The hardware industry predicts a 4% increase in holiday spending,” he says. “That would be a good way to close out 2018, and a positive start to 2019.” Tracy Berg Best Barbeques & Islands Scottsdale, Arizona Tracy Berg of Best Barbeques & Islands says 2018 was the store’s best year since 2007. She attributes the growth to a strong economy and a lot of new-home construction in the area. “A lot of builders and contractors are including an outdoor

Best Barbeques & Islands, Scottsdale, Arizona. INSET: Tracy Berg.

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kitchen as part of the package, and they send the homeowners to us to pick out appliances,” she says. Likewise, the store is benefitting from a wealth of new condo and apartment developments, which typically include multiple outdoor kitchens in poolside common spaces. Berg is seeing a preference for premium grills and outdoor kitchen elements this year. In the past few years, including two grills – usually a ceramic cooker or stainless-steel smoker along with a gas grill – has been trending in outdoor kitchens. She says interest is growing in pellet grills, but ceramic cookers remain much more popular in the store. “People see them as more versatile,” she says. Interest in pizza ovens has been spiking. “Customers have asked about them more in the last three months than in the last three years – they really seem to be taking off,” she says. “Yesterday, a gentleman was asking about one because he wanted to make pizza with his grandkids. I can tell people that a ceramic cooker is good for making pizza, but people seem to want a true wood-burning pizza oven to create that experience.” Berg also has noticed an increase in patio heater sales; the category was jump-started due to a cold snap in September. “Usually, we don’t do much in heaters until January or February, but we’re selling more this year than ever.” She says fire pits and fireplaces are up too, as people look for “ambiance on the patio.” Berg says escalating freight costs are adding to the expense of getting product shipped from manufacturers. The situation has become particularly problematic with lump charcoal. “It seems all the charcoal brands our customers are asking for are based in the Midwest or East Coast, so shipping it to us in Arizona adds a lot to the cost,” she explains. In addition, she says grill prices have increased “a lot” in the last few months as manufacturers introduce 2019 pricing. “It’s difficult,” she says. The retailer has scaled back on large-scale events at the store after determining they have not been effective in the past. “It seemed like during big events, people were looking for deep discounts,” Berg says. “Our profit margins are already slim, so it’s not worth the effort.”

Dan Hathaway The Kansas City BBQ Store Olathe, Kansas “We see growth every year,” says Dan Hathaway, manager of The Kansas City BBQ Store. “This year it wasn’t tremendous, but it was good. The fall season around American Royal (a barbecue competition in Kansas City) was huge. We have a big turkey brine display in the store and are seeing strong sales of charcoal cookers for Thanksgiving.” He says business has received an unexpected boost thanks to the Kansas City Chiefs’ winning season, and an uptick in people tailgating or hosting watch parties at home. “Saturdays have been great because of what the Chiefs are doing, but on Sundays it’s a ghost town in the store,” Hathaway jokes. “We saw the same thing when the Kansas City Royals were winning.” He says pellet grill sales have been growing in the store for the past couple years, and the category is “going crazy right now.” But Hathaway says it’s the store’s online business in sauces and rubs that “drives the ship in the wintertime. We have a huge selection that people can’t find elsewhere. On any given day we ship out 40 to 50 orders. We don’t sell many grills online, though, because it’s hard to compete with free shipping.” Although they have promoted outdoor kitchens in the past, including displaying vignettes on the sales floor, the concept never caught on with customers. “It’s not a big market for us, and when we recently moved our store location, we did away with the displays,” says Hathaway. “It looked cool as a store trophy, but didn’t generate business for us. A (masonry center) nearby does a lot of the local outdoor kitchen business with contractors.” This year, the store acquired the space next door and developed it as a classroom and event space. To date, most classes have focused on competition-style barbecue, but Hathaway expects to get into more “backyard-grilling classes” next year to attract a broader base of attendees. He cites growing competition – both from other brick-and-mortar dealers and online – as a challenge, but says the business is weathering it well. “In the last couple of years, it seems specialty barbecue products are on every corner,”

Hathaway says. “Other stores may sell the stuff, but people know we are the experts, so it’s not that hard to compete when our guys know what they’re talking about. We are the only dedicated barbecue store in Kansas City – we don’t sell hearth – and we have really unique products here.

The Kansas City BBQ Store, Olathe, Kansas. INSET: Dan Hathaway.

“The other good thing is, more people are interested in barbecuing and grilling,” he continues. “They’re watching the Food Channel and seeing how fun it is. They want to try new techniques, cook with their buddies, try a local competition. Fortunately, there are plenty of customers to go around, especially here in Kansas City.” Matt Federico Country Stove, Patio & Spa North Royalton, Ohio Barbecue sales got a late start due to the weather, but when conditions improved sales “came on strong and we had a good year,” according to Matt Federico of Country Stove, Patio & Spa. Gas grills are the best-selling barbecues at the 16,000 sq. ft. store, about half of which is devoted to outdoor cooking and patio products, and the rest to hearth. Federico says sales of Napoleon and Broilmaster brand grills have been strongest this year; the store also carries Weber, Fire Magic, and AOG gas grills. Natural gas units outsell propane grills 60% to 40% in the store.

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| Barbecue Sales: Past & Future | He is seeing a trend emerge in which people are increasingly willing to upgrade to higher quality, higherpriced grills. “They have gone through several Big Box grills and want to trade up,” he says. “The Napoleon Prestige line is our best seller; you get a lot of features, including high Btus, a rotisserie, infrared burner, and more, for $1,400. It’s a good value.” The retailer has seen pellet grills “really catch on” in the last year or two. Green Mountain Grills are selling well in the store, according to Federico, “because you get a lot for the price point and people like the Wi-Fi capability.” He says pellet grills appeal to customers who want to get more serious about barbecuing but don’t want the “mess, hassle, or learning curve” involved with cooking over charcoal. “People come in very informed about the pellet category,” he says. “They’ve done their research online and sometimes

Country Stove, Patio & Spa, North Royalton, Ohio. INSET: Matt Federico.

even come in looking for a specific model.” He’s observed that the kamado category has “cooled down a bit” in the store over the past year or two. The business sells Outdoor Room products and offers custom design-build services, including on-staff masons and construction crews to create the outdoor living spaces. According to Federico,

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stone finishes and rustic looks are the most-requested design aesthetics. He says that, although sales in the category are “decent, the concept is still not very popular in our area. Customers question whether it’s worth spending five figures on an outdoor kitchen in Ohio when they can use it only a few months of the year.” He says increasing competition from other retailers and online websites is an ongoing issue. “We’re trying to combat it by offering promotions for free assembly and sometimes even free delivery, especially on products like Weber and Big Green Egg. You can get these products in a lot of places, so we have to be competitive. When we look at lines to carry, we consider the level of exclusivity they offer and where else consumers can get these products. But there is a balance to weigh. Weber is everywhere, but it also has great brand name recognition that brings people in.” Mark Wrench Fireplace & Grill Shoppe in Kalamazoo, and All Seasons Fireplace & Grill Shop in Benton Harbor, Michigan At Mark Wrench’s hearth and barbecue stores, sales of gas grills were off, but sales of solid-fuel grills were up this year. The retailer is seeing “significant interest in the pellet and kamado categories.” He carries Kamado Joe, Big Green Egg, and Traeger, and is considering taking on Green Mountain Grills next year. He credits Traeger’s “strong, impactful, and positive marketing program” for helping to grow awareness of the pellet category and driving customers to his stores. Wrench also carries gas grills from Weber, Fire Magic, Broil King, and Summerset at prices ranging from $399 to $16,000, in an effort to “offer quality products at every price point.” But he points to hard evidence that drives home the importance of carrying specialty, solid-fuel grills. “My average transaction is $1,050 for gas grills, but it is $1,200 to $1,400 for solid-fuel grills.” Wrench has noticed a decline in overall outdoor kitchen sales, but says 75% of projects now include two grills – typically a high-end, stainless-steel

gas grill and a kamado. He says 80% of the stores’ outdoor kitchen projects are custom, created in collaboration with landscape architects and masonry partners, but there has also been a spike in sales of prefabricated table surrounds for kamado cookers. “We sell a significant number of table surrounds for Big Green Egg and Kamado Joe grills,” he says. “With a table surround, you can get an outdoor kitchen island experience for under $1,000.” He says fire pits and fireplaces also are trending for Outdoor Rooms, with “sales increasing nicely.” For the past four or five years, Wrench has held a “grilling university” event, bringing in a local chef who cooks on three or four different types of grills. “It’s interactive, so guests can stand with the chef and work the grills,” he says. “The event lets customers experience the products to help decide which is best for them. It’s a lot of fun.” Wrench says online sellers offering lower prices, free shipping, and liberal returns are impacting both grill and fireplace sales. He does his best to level the playing field by offering a knowledgeable staff, quick turnaround, assembly, delivery, cardboard removal, and other services. He says his stores also gain customers and grow sales when people who purchased their grill online come in to buy accessories and fuel. “Those secondary transactions expose people to our fireplace business, and we have gotten fireplace sales as a result,” Wrench says. “Amazon is bold, amazing, and disruptive,” he continues. “We won’t beat or defeat Amazon or other Internet sites, and people will always showroom, but many still want an in-store, personal buying experience. It’s all about developing relationships. With all we bring to the table, I know our store is better than Amazon, but I must sharpen my salesmanship to compete.” To that end he has started experimenting with a hybrid retail concept that blends the at-home convenience of the Internet with the knowledge, expertise, and personal service of shopping in his store. “We will go into the customer’s home

with our iPad and laptop and show them options,” Wrench says. “The latest design software allows us to design a fireplace right in front of the customer, and help them make decisions in the comfort of their home. The business concept was originally developed for our fireplace sales, but once we are in the home, we can also turn the conversation to the backyard and outdoor kitchens.

Fireplace & Grill Shoppe, Kalamazoo, Michigan. INSET: Mark Wrench.

“The average fireplace transaction is around $5,000 installed. We’re not off by far from what the customer can get online. But we can provide an expert to go to their home, look at where the fireplace should go, determine how we should run the gas line, and ensure it will all work. They will know exactly what they’re getting into – no surprises. That doesn’t always happen when you buy a fireplace or outdoor kitchen online. “In fact, we get calls all the time from people asking if we will install something they bought online. If it’s a brand we represent, we will install it, and we’ll even honor the warranty if they have problems down the line. It’s not worth alienating someone and having them write a bad review about our company. Bottom line, we hope this new blended concept changes the retail game.”

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| Retailing |

FUELED

PASSION

Premier Grilling is on a quest to be the best, and don’t bet against them. By Lisa Readie Mayer

ccording to the dictionary, the word “premier” means “the best.” That is precisely what Premier Grilling is striving to be – the best barbecue retail operation in the USA. The Dallas-area business was founded by lifelong friends Dan Ferguson, Jason Mohl, and Brian Rush. The three had successful careers in the mortgage industry, but lived for the weekends spent grilling and barbecuing for family and friends in each other’s backyards. When the mortgage business collapsed

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in the economic recession of 2008, each of the men was laid off. The three friends saw the unfortunate event as an opportunity to reboot. “People used to tell us we should open a restaurant,” says Ferguson. “We knew we wanted to leave the corporate world to do our own thing, and if we could find a way to make a living cooking, hanging out, having fun, and doing something we loved, we were all in.” They found a way to do just that. In 2009, they pooled their money and started a business designing outdoor kitchens and

backyard living spaces for homeowners, builders, and landscape architects, and selling the grills and equipment they specified in the designs. “We opened in a closet-sized office in a converted house in downtown Frisco (Texas),” Ferguson recalls. “For the first six months we mainly worked out of a laundromat because it had free Wi-Fi. It was risky to open a business during the rock-bottom of the recession, but we figured there was only one way to go and that was up. We believed our passion, enthusiasm, and excitement for the industry would lead us to success.” The business partners realized their clients needed a one-stop-shop showroom to better envision outdoor living possibilities and to select appliances and elements for backyard projects. So, in 2012, the trio opened a 4,500 sq. ft.

outdoor-living retail store and showroom in Plano, Texas, stocked with everything a tricked-out backyard might need. Initially, the partners enjoyed steady growth, but then inexplicably, sales

plateaued. By 2015, they knew they needed to do something to jump-start their business, and once again tapped into the enthusiasm that inspired them to found it in the first place.

L to R (Back): Glen Fountain, CEO; Brian Rush, COO. L to R (Front): Jason Mohl, President; Dan Ferguson, CBO.

“We made a strategic decision to start hiring people who were passionate about outdoor grilling and cooking, not just good salespeople,” says Ferguson. “You can teach people how to sell, but you can’t teach them passion for the industry. Our business is about embracing the outdoor lifestyle and the experience of outdoor cooking; it’s not just about selling grills and hitting numbers.” Today, the company is made up of people who passionately love to grill. The employees live the lifestyle, walk the walk and talk the talk; some are even on competition teams. They have been known to stop by on their days off to hang out and chat with customers about what they’ve cooked or plan to cook. “You can’t fake that kind of sincerity or passion,” Ferguson says. None of the employees at Premier Grilling’s three stores (in addition to the Plano location, there are stores in Frisco With a vast variety of all things barbecue, Premier Grilling is a one-stop shop for outdoor cooking.

Click here for a mobile

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| Retailing | and McKinney) is paid on commission or incentivized with spiffs (a monetary bonus paid by a manufacturer to push a product). “We sell what the customer needs, not what we want to sell them,” says Ferguson. “We want customers to always leave happy and satisfied.” Some customers were so happy and satisfied, in fact, that they actually started working for the company. Case in point:

The outdoor kitchen business, on which Premier Grilling was originally founded, is thriving. Ferguson says the company’s three construction crews regularly work on eight to nine projects a week in season, and to date, have completed over 1,000 outdoor kitchens. All projects are custom and start with a site visit to discuss the customer’s wish list, assess the space, and take photos.

says. “In new construction, people used to dump money into media rooms and other spaces inside the house, but over the last few years, the trend is to allocate money to outdoor spaces. “Builders provide the pad outside the back door and send the homeowners to us to create a custom outdoor living area. We work hand-in-hand with builders on where to run utilities, so the day the

There are two in-house, professionally-trained chefs on staff, and a large classroom in which they conduct classes.

Glen Fountain. He purchased a grill at the Plano store in 2015 and joined the team as a consultant that same year. He became a co-owner and CEO in January 2016. “I’ve had a blast ever since,” he says. Fountain, who previously specialized in growing tech startups, has a diverse business background that includes experience in digital commerce, retail, and construction. He has been instrumental in propelling Premier Grilling to the next level. Year-over-year revenue increased 109% in 2016, was up 42% in 2017, and is expected to be up by 36% this year. By 2019, Premier Grilling’s annual sales are predicted to exceed $20 million. A Broad Spectrum of Business Segments The company has diversified into multiple key business areas, including brick‑and‑mortar retail sales, outdoor kitchen design‑build services, plus cooking classes, wholesale distribution, e‑commerce, and service.

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After the meeting, the salesperson uploads photos, notes, and rough sketches to an in‑house team that uses a CAD program to create a design proposal. “We have a very fast turnaround on quotes and designs – usually 24 to 48 hours,” says Fountain. “We create plans that bring our customers’ dreams to life.” He says those dreams increasingly include large, lavish, and customized spaces featuring outdoor kitchen islands with multiple built-in appliances; fireplaces or fire pits; televisions; and comfortable furnishings. “The family kitchen and dining table has moved outside along with the mess and heat,” Fountain says. “The outdoor living space is where the family unit gathers today. It’s a definite trend.” In addition to working with homeowners directly, the company has a robust corporate sales division that targets homebuilders, pool builders, and other trades. “The construction boom in Texas is insane right now,” Fountain

home closes, we can start transforming the backyard. Builders like the service we provide and feel comfortable handing off the project to us.” Upon completion, Premier Grilling hosts a demonstration party in the Outdoor Room for the homeowners and their neighbors. “By the time we’re done, all the neighbors want one – and usually a bigger one,” says Fountain. On the retail side, Premier Grilling stocks a vast selection of gas, charcoal, infrared, and pellet grills, smokers, ceramic kamados, and pizza ovens from a number of brands at a wide range of price points. The business also carries refrigerators, kegerators, bar centers, and other outdoor kitchen components; outdoor fireplaces, fire pits and patio heaters; and a comprehensive offering of charcoal, cooking woods, tools, accessories, sauces, seasonings, and other gear. “We are a one-stop-shop for outdoor living and cooking,” says Fountain.

“We are continually bringing in new products to keep the merchandise exciting and fresh.” He says pellet grills are the stores’ fastestgrowing category. “They are fantastic for our industry because they allow anyone to put out great food,” Fountain explains. “Ten years ago, pellet grills didn’t (perform as well), but the manufacturing and technology have come a long way. Ceramic kamado grills have always been great and will always be popular, but pellet grills are easier to use and are not intimidating. And you can get one for a comparatively low price. When people get pellet cooking down, they are ready to move up to live-fire cooking on ceramic grills. We’re seeing customers buying a ceramic grill after they’ve owned a pellet grill; it used to be the other way around.”

grill-cleaning and maintenance services. In addition, the company acts as a wholesale distributor for several brands. According to Fountain, Premier Grilling’s e-commerce sales division has grown “exponentially” over the past two years. The company sells through its own website with online orders filled and shipped out of the company’s 15,000 sq. ft. warehouse. It’s an exclusive, authorized Amazon seller of some of the products it carries. Fountain says although the Internet is becoming an important sales channel, it also brings challenges. The company has dealt with counterfeiters leeching onto some of the products for which it has exclusive sales rights on Amazon. He says another troublesome issue is when manufacturers sell product on

Classes are held twice a week, with tuition ranging from $25 to $149 per class.

In keeping with the adage that everything is bigger in Texas, at 8,000 sq. ft., Premier Grilling’s Frisco store is one of the largest specialty barbecue stores in the country. The company’s soon-to-open Southlake store, on the west side of Dallas, will be a similar size. Each of the other two locations is between 4,500 and 5,000 sq. ft. The stores are supported by a busy service and repair division, with multiple trucks on the road. The business is an authorized warranty service provider for a number of grill brands, and also offers

Amazon but, through a practice known as “brand gating,” restrict or prevent dealers from selling that brand’s products on the marketplace. “Manufacturers let you sell their product on your own website, but lock you out of Amazon because they are selling on Amazon,” Fountain explains. “They ostensibly sell it at the retail price, but in reality, with Prime, consumers can have it delivered free in two days, they’re not paying sales tax, and Amazon will assemble it free using a third-party assembly service.

“A customer will say, ‘I’d like to buy this grill from you, but you’re charging me assembly, delivery, and sales tax, and I can get it for less online.’ We don’t make money on those charges, but they cover our expenses. If we give (assembly and delivery services) away free, we lose money. “Some manufacturers are using (our stores) as showrooms to see and touch the products, and our trained employees to educate consumers,” he continues. “Some manufacturers are being greedy and are competing against us. They will put mom-and-pop retailers out of business. We have dropped lines because of it, and have formed a coalition of other dealers to litigate over it.” The animosity does not carry over to consumers who need help with product bought online. “If we can take care of it we will, no matter where they bought,” says Fountain. “Once they come to our store and experience our service, culture, and employees, we’re confident we’ll develop a relationship with them and they’ll buy from us and take our classes.” Cooking classes, in fact, have become an increasingly important part of the business, according to Fountain. Classes take place at the Frisco store in a 75-seat classroom with large windows that front the sales floor so shoppers can check out the action. Classes are usually held twice a week, with tuition ranging from $25 to $149 per class, or $499 for an annual VIP pass for unlimited classes. Besides instruction, food, and fun, attendees receive a 10% discount on after-class purchases (grills excluded). Classes are taught by the store’s two professionally trained, in-house chefs, as well as a rotating roster of guest instructors that includes some of the country’s top restaurant grilling chefs and barbecue pitmasters. Once-a-week evening classes focus on grilling basics, while the “Saturday Chef Series” is geared to more seasoned enthusiasts and covers topics such as Big Green Egg 101, grilling the Thanksgiving dinner, and competition-style barbecue. The classroom also is available for private parties, corporate team-building, meetings and events, with Premier Grilling providing the chefs, demo instruction, and food.

www.hearthandhome.com | DECEMBER 2018 | 67

| Retailing | Marketing Machine The retailers invest extensively in marketing to build awareness around their brand and excitement in their stores. An in-house marketing department creates all advertising, social media, videos, pointof-sale materials, and promotional flyers, bag-stuffers, and more. The team utilizes traditional marketing tools including print and direct-mail advertising, commercials on sports-radio stations, participation in local charity events, and weekly emails to its comprehensive customer database. Also effective is text-message marketing, and a company-website “hotline” continually monitored by a staffer who fields questions on everything from equipment to techniques. This year, Premier Grilling installed between 10 and 14 high-tech television monitors throughout each store, running in-house-created content that promotes products, classes, outdoor-kitchen construction, grill cleaning, and other services, on a continuous loop. Its latest and most unconventional effort is a large box truck mounted with video screens on three sides. The screens play Premier Grilling’s advertising and promotional videos while the truck drives on area roadways or parks in visible locations, such as Dallas Cowboys’ pre-game tailgates at AT&T Stadium. “It’s incredible,” he says. “We’ve been running the truck about six months and get calls all the time from people saying they saw it. It attracts a lot of attention.” But, despite the try-anything attitude toward marketing and promotions, Fountain and Ferguson say the real secret to success is back-to-basics staff training. Each store has a weekly food budget so salespeople can take turns cooking lunch for the staff every day, using one of the 35 different burn units. “It’s important to demo for customers, but it’s just as important that our employees learn to cook different foods on all the grills we carry,” says Fountain. “They take it seriously and it gets very competitive. They even post what they’re cooking to Instagram under ‘#pglunchtime’ so customers can follow.” For more in-depth practice, Premier Grilling’s “library” program allows

68 | DECEMBER 2018 | www.hearthandhome.com

A large box truck is equipped with video screens advertising the store’s program and offerings.

employees to borrow a burn unit for a month. “Our delivery trucks do musical grills all the time,” Fountain says. “We believe you have to really know the products to sell them. Our employees have a real interest in learning about the brands we carry and are committed to improving their outdoor cooking skills. It’s like Apple geeks becoming employees at the Apple store – that is our exact model. Our employees feel like they work

in a toy store. We hear all the time from our manufacturers and reps that we have the best sales training there is. “A visit to our stores is an experience; you can clearly see we love what we do,” he continues. “It’s about the cooking and the fun – and, we gotta sell some stuff to pay bills. It’s the American dream and the reason we’re successful. This is proof that you can love what you do and make a good living doing it.”

Store Name: Premier Grilling

Number of Employees: Full-Time, 40, plus three Outdoor Room construction crews that vary seasonally

Locations: Plano: 1801 Preston Rd #A, Plano, Texas Frisco: 4775 Eldorado Pkwy #300, Frisco, Texas McKinney: 2050 W University Dr #140, McKinney, Texas Owners: Dan Ferguson, Jason Mohl, Brian Rush, Glen Fountain Key Executives: Glen Fountain, CEO Year Established: 2009 Web Site: www.premiergrilling.com Phone: (855) 744-7455 Number of Stores: Three (a fourth store will open by early 2019)

Gross Annual Sales: Approximately $20 million Sq. Ft. of Building Space: Showroom: Frisco – 8,000, Plano – 4,500, McKinney – 5,000, (soon-to-open Southlake location – 8,000) Warehouse: 15,000 sq. ft. warehouse; 5,000 sq. ft. corporate office Lines Carried: Barbecue: Alfresco, American Muscle Grill, Big Green Egg, Blaze, Broil King, Bull, Chicago Brick Oven, Good One Smokers, Green Mountain Grills, Kamado Joe, Lynx, Memphis Wood Fire Grills, Napoleon, Saber, Summerset, TEC, Twin Eagles Fire Pits/Fire Tables/Heaters: DCS, Infratech, Lynx, Twin Eagles

OUTDOOR. ELEVATED.

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VOLUME 23, NUMBER 6

Journal

A P u b l i c at i o n O f T h e H e a rt h , P at i o & B a r b e c u e A s s o c i at i o n

Membership has its privileges… Your HPBA membership can pay for itself if you take advantage of the cost savings benefits that are available to you.

Lower hotel costs? Cash rebates? Discounts on subscriptions

Our affinity partners offer all of this and more to HPBA members. We add new partners all the time in response to our members’ needs.

Bookingcommunity.com – our new travel partner, offering exclusive access to unpublished hotel rates that are up to 70% less than any other travel or hotel direct website. They offer over 800,000 hotels and an easy-to-use search and booking process.

and services? CVC Coaching offers all HPBA members a 10% discount on subscriptions to their CVC Base Camp Learning Platform. This is an education program that offers training using virtual presentations available 24/7.

Good Marketing Group – members receive up to 20% off of marketing, advertising and web design services from an agency that specializes in our industry. This helps our members keep their advertising consistent and professional.

Hearth, Patio & Barbecue Education Foundation will give you a 33% discount on HE@RTH Online Training classes and subscription. HomeAdvisor is a popular source for homeowners researching service professionals. They offer our members a 7% quarterly rebate on all that they spend on the site. This helps maximize our members online presence. National Fireplace Institute offers a 33% discount on all NFI exams and manuals, including the new ones being rolled out in 2019! TSYS helps our members with processing their credit cards payments. They provide products and services that are customized to help members accept credit cards quickly and easily. They’ve been helping our members for more than 10 years.

Interested in joining HPBA to take advantage of these offers as well as all the benefits available to members? Go to www.hpba.org/ membership to find your Affiliate and learn more.

UPS Member Saving Programs – make the most of your HPBA membership and save up to 34% on UPS shipping services, plus a special bonus of 50% off select services for up to four weeks after you enroll.

HPBA members can visit www.hpba.org/costsavings to find out more about our affinity partners and their offerings. We are in active negotiations with potential partners, so be on the look out for new offers.

The HPBA Journal is intended to provide in-depth information to the hearth and outdoor products industries. Statements of fact and opinion are the responsibility of the authors alone and do not necessarily reflect the opinions of the officers, board, staff or members of the Hearth, Patio & Barbecue Association.

Copyright ©2018 by the Hearth, Patio & Barbecue Association. All rights reserved. Reproduction in whole or in part without written permission of the Hearth, Patio & Barbecue Association is prohibited. Direct requests for permission to use material published in the HPBA Journal to media@hpba.org.

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www.hearthandhome.com DECEMBER 2018 | 71 friendly reading| experience

| Industry News |

Las Vegas

ARKET

NEW PRODUCTS

Summer Classics RATANA

Sprinkle a little Caribbean charm to your outdoor living with this St. Martin-inspired tropical getaway collection. The St. Martin Collection ensures comfort and quality with aluminum and resin framess covered in weather-resistant fossil grey wicker and Sunbrella fabric cushions, which offer strong durability and lightweight design. All sectional pieces come with interlocking systems for ideal placement and accommodation. If you can’t go to St. Martin, having this collection really does bring St. Martin to you. Visit showroom C1235.

Skyline Design

Cultivated beauty and taste is what the Cube Daybed will bring forth to your social gathering or as a statement piece in your landscape design. This dazzling ensemble is done using a beautiful twill style of weaving, with fibers by Viro, over an aluminum frame with four openings to get in and out. It’s all weather-proof and suitable for residential or commercial settings. Visit showrooms C1284 and C1278.

Sink into the cloud-like comfort of the Montecito Collection that features oversized proportions that add to this collections’ intriguing aesthetic design. New for 2019, Montecito is inspired by the art of handwoven basketry; the large wicker weave offers a relaxed look and feel to this low, linear profile frame. The plush, ultra-dense, Trillium Cloud cushion offers optimal comfort as it mimics the characteristics of natural down, but is entirely hypoallergenic. Montecito is finished in UV resistant, N-Dura resin wicker for a worry-free experience with the look of natural materials. Visit showrooms C1388 and C1396.

Treasure Garden

A unique shade solution by Treasure Garden, the Stardust boasts a contemporary star-shaped canopy inspired by geometrics as well as celestial bodies. The 10 ft. pop-up umbrella serves as an outdoor work of art delivering as much drama as shade. An easy to use “pop up” lift system with a stainless-steel pin makes the Stardust attractive to hospitality and residential buyers alike. The umbrella’s eight ribs extend to the canopy points creating the star design. Visit showroom C1215.

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Outdoor by Ashley

The Paradise Trail Dining Collection is a mix of cushioned aluminum with hand-woven resin wicker – all with Ashley’s exclusive Nuvella high-performance fabric. Visit showrooms B14 and B15.

OW Lee

The sleek modern lines of the new Studio collection were inspired by mid-century and contemporary design. This all-aluminum group makes Studio ideal for coastal locations, and is a perfect fit in any contemporary space. Visit showroom C1301.

Zuo Modern

Poly-Wood, LLC

Three tables are better than one. This set of three modern nesting tables with their removable tray tops and open-air construction are perfect for small spaces. Place them in front of the sofa or scatter them about the room as needed. Nest them back together when not in use. For indoor and outdoor use. Visit showroom A442.

Treasure Garden

For 2019, Treasure Garden introduces the 13 ft. Starlux AKZ Plus Cantilever umbrella featuring built-in rib lights. This elegant and multi-functioning cantilever umbrella sets the industry standards for fashion and design, for both daytime and evening. Visit showroom C1215.

Here’s a new finish, but with the same genuine POLYWOOD material. Inspired by wire-brush textures, POLYWOOD’s Vintage finish evokes the richness and character of matte-painted wood – it’s a crisp finish that’s easy to clean and will endure anything nature throws its way. Available in White and two new lumber colors, Coffee and Sahara (pictured is the Newport 22 x 36 inch coffee table in Vintage Coffee). Visit showroom C1238.

Treasure Garden

RATANA

The San Sebastian Collection takes guided inspiration from the Spanish coastal city, renowned for its golden beaches, breathtaking lush hill sides, and grand architectural design. Sit back into pure comfort with deep modular seating with triple brown wicker resin finishes wrapped with immaculate precision over strong yet light aluminum frames. Drawing on the picturesque beaches framed with tall brown lush palms, RATANA has created a collection that complements the breathtaking natural surroundings with nothing but the best in outdoor seating luxury. Visit showroom C1235.

Jardinico Cosy Tables are constructed of a metal mesh-like surface and can be used as an occasional table, a small stool, an outdoor lantern or as storage for blankets when turned upside down. Crafted with designer style and a variety of high quality materials for residential and contract applications, these Cosy Tables will enhance outdoor entertaining and coordinate with the designer shade products also available from Jardinico. Visit showroom C1215.

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www.hearthandhome.com DECEMBER 2018 | 73 friendly reading| experience

| Business Climate |

OCTOBER SALES

In early November, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, patio, and barbecue products, asking them to compare October 2018 sales to October 2017. The accompanying charts and selected comments are from the 232 useable returns.

RETAILER SALES - U.S. AND CANADA October 2018 vs. October 2017

11%

26%

19%

HEARTH

63%

14%

17%

26%

15% 8%

BARBECUE

PATIO

SPAS 77%

69%

55% Retailers Up

Retailers No Change

Retailers Down

Spas and Hearth products are on a roll! Sixty-three percent of Hearth retailers and 77% of Spa retailers were either UP or the Same in October.

13-MONTH YEAR-OVER-YEAR RETAIL SALES October 2018 vs. October 2017

BARBECUE

HEARTH 9% 11% 10% 8% 9% 10% 8% 10% 6% 7% 3% 2%

19% 4%

4% 8% 5% 1% 4% 3% 0% 1%

3% -1%

-2%

-3%

10/17 11/17 12/17 1/18 2/18 3/18 4/18 5/18 6/18 7/18 8/18 9/18 10/18

PATIO

SPAS 8% 5%

6% 2%

16%

27%

25% 7% 2% 2% 5% 5%

-5%

10%

8% 5% 3%

12% 13% 2%

21% 5% 5% 7%

-6%

10/17 11/17 12/17 1/18 2/18 3/18 4/18 5/18 6/18 7/18 8/18 9/18 10/18

In October, Hearth retailers posted a 19% increase over the same period in the previous year; Spa retailers beat that with a 21% gain.

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RETAILER COMMENTS NORTHEAST Connecticut: (Hearth) “Much better October than last year. Big push once cool weather came. Traffic still strong. Should end the year strong.”

WEATHER REPORT

For the following weather charts, the numbers for each state reflect the temperature ranking for the period since records began in 1895.

STATEWIDE AVERAGE TEMPERATURE RANKS October 2018

Connecticut: (Hearth) “Sales were slow

in August and September, but it picked up last month and we are ahead of last year.”

New Hampshire: (Hearth) “We’ve been

hit with two price increases for appliances during the month of October 2018. Sure, there are tariff costs and, more likely, rumors of tariff increases than actual happenings. Smells like just a convenient reason to jump ahead with already high prices. We have always stayed with products that are not available online, however, lately service and repair parts are taking a hit from aftermarket components selling for less than our cost. We will continue to provide the best in service and products – just as long as we can.”

80 62 52 94 80

39 36

94 34

Much Below Average

New York: (Hearth, Patio, BBQ) “Business

is fantastic! Big increase in wood stoves and gas fireplaces this year. Business has been booming since the 2016 election.” New York: (Hearth, Spas) “The dismal

weather here in the Northeast, combined with rising propane and fuel oil costs, have spiked hearth sales in October. Pellet stoves are doing better than last year, but natural gas inserts are still king. We are also feeling the effects of Internet vendors in our hearth accessories department (fireplace tools, kettles, log hoops, etc.), but thankfully most Internet vendors haven’t figured out how to facilitate home delivery of wood stoves – yet. “Challenges continue to be with employees’ absenteeism, don’t give a crap-itis, and difficulty passing pre-employment drug screens. The business climate in our state is difficult, with minimum wage hiking up to $15/ hour, meaning wage increases for all employees at every level in our organization.

57 36

61 39 35 61 Below Average

52 52 74 81

81 101 17 52 74 114 94 114 22 89 110 52 51 18 112 52 12 96 14 117 74 57 33 7717 81 118 13 36 104 111 81 91 1241 == Coldest Warmest 19 88 101 40 17 11252 74 114 94 114 121 89 110 51 18 112 96 117 33 Data Center/NESDIS/NOAA 77 National Climatic118 1 = Coldest 104 111 Much Near Above Record Average 40

Average

112

STA

124 = Warmest Above Average Warmest

121

Five states – Florida, Georgia, South Carolina, Virginia, and Delaware – experienced Much Above Average temperatures in October.

New York: (Hearth) “NYSERDA rules

backlogged installs – four weeks.”

6234

Record Coldest

National Climatic Data Center/NESDIS/NOAA

Record Much Coldest 87 Below Average

Record 108 Warmest 115 117 46 23 56 123 116 77 97 122 STATEWIDE AVERAGE TEMPERATURE RANKS 28 95 109 121 120 88 August 2018 - 67 October 2018 124 120 42 102 112 124 120 121 108 117 108 114 122 115 99 37 95 121 113 87 117 46 23 112 56 122 123 116 49 8977 97 105 122 112 122 28 95 109 113 116 121 88 120 1241 == Coldest Warmest 67 124 120 75 42 112 117 102 124 120124 108 121 117 114 122 99 37 95 121 113 112 122 49 89 National Climatic Data Center/NESDIS/NOAA 105 112 122 113 116 1 = Coldest Record Coldest

Much Below Average

Below Average

Near Average

Near

75 Average

Above Average

117

Much Above Average

STA

Much 124 =Record Warmest Above Average Warmest

124

STAT National Climatic Data Center/NESDIS/NOAA

111 Record 100 Warmest 107 115 85 78 109 90 77 123 Delaware, and Florida experienced New Jersey, Record Warmest temperatures in 107 the 71 116 94 112 84temperatures. three-month period, while98 20 other states posted Much Above Average 76 105 57 70 68 54 110 58 84 118 111 108 40 89 100 93 53 53 Click here for 90 a mobile 122120 107 115 85 42 reading| experience www.hearthandhome.com DECEMBER 2018 friendly 78 93 90 109 33 3877 123 96 107 100 77 71 116 40 41 94 112 84 1 = Coldest 98 Record Much Coldest120Below Average

Below Average

Near Average

Above Average

Much Above Average

58 STAT

93 | 75

40 60 58

Year Ago 6 Months Ago Dec ’13

Jan ’14

Feb ’14

1985 = 100

| Business Climate | Workman’s comp rates for installers are now around $27 per $100. OUCH!”

CONSUMER CONFIDENCE

New York: (Hearth, BBQ) “Four units

The Consumer Confidence Index

shy of doubling last year’s October sales. What a month, it’s hard to get caught up.”

134.7

increased again in October, following a modest improvement in September. The

126.2

135.3

137.9

128.7

Index now stands at 137.9 (1985=100),

SOUTH Arkansas: (Hearth) “Great month for

hearth retail sales for wood stoves and chimney systems. Buyers finally started spending some money and thinking about winter. Vent-free gas fireplaces were also fairly strong. October sales put our YTD ahead of 2016 and 2017, and November bookings are already ahead of 2017. We hope to have a good 2018 overall.” Tennessee: (Hearth) “It appears sales

have moved backwards in the calendar 4-6 weeks. October was a warmer than usual period and sales reflected that.” Texas: (Hearth, Patio, BBQ) “Retail sales

numbers feel really good, but hearth is taking a big chunk of that pie! The big, expensive products are driving the dollars. Tickets of $30,000 drive up the totals quickly. They’re no more hassle than the $2,000 – $3,000 tickets! Grills are OK, furniture is OK, as always, gas service is the stress point to handle!”

“Very, very busy! In my 27 years in this business, I’ve never been as busy as I am now. Sell, sell, sell, and sell.”

— Virginia

Virginia: (Hearth, Patio, BBQ) “Temps

in the high 70s and low 80s late in the season have crushed our preseason sales of hearth products. It seems everyone is waiting to see what the weather brings. Sales of larger ticket items such as gas and wood inserts are down by 85%. We are very busy with service calls; that is the category that is carrying us at this point.

up from 135.3 in September. “Consumer Confidence remains at

110

levels last seen in the fall of 2000 (September 2000, 142.5),” said Lynn Franco, senior director of Economic Indicators at The Conference Board. “Consumers’ assessment of presentday conditions remains quite positive, primarily due to strong employment growth. The Expectations Index posted another gain in October, suggesting that consumers do not foresee the economy losing steam anytime soon. Rather, they expect the strong pace of growth to carry over into early 2019.”

A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth. The Index is based on a probability-design random sample conducted for The Conference Board by The Nielsen Company.

We hope that the first REAL frost will excite these customers.” Virginia: (Hearth) “About mid-October,

the weather finally started to get better and drier. New home construction started to pick up, as did sales and annual service calls. And it hasn’t slowed up even a bit. In fact, at this writing there has been a steady increase. Hallelujah! Bring on the cold temps and snow!” MIDWEST Illinois: (Hearth, Patio, BBQ) “It was a typical October; weather was pretty good, and we’re still getting some barbecue sales!” Iowa: (Hearth, BBQ) “We’re currently

up around 10% for the year, but we SMASHED our monthly sales record in October!”

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Year 6 Mo. Aug Ago Ago 2018

Sept Oct 2018 2018

1985 = 100

Illinois: (Hearth) “The end of September

and the month of October were just crazy. Many, many service calls. Log sales are way up. October was up more, which helped the year totals.” Illinois: (Hearth) “Too much nice weather!

Need a cold snap to wake them up!”

Michigan: (Hearth) “Early-buys with

homeowners and new construction contributed to the increase in sales for the most part. I do believe the economy has had a part in increased sales. It’s been the busiest I have ever been!” Minnesota: (Hearth, BBQ) “Our worst

summer and fall ever.”

Ohio: (Hearth, BBQ) “While we closed

on some large fireplace projects, overall sales were rather flat. We’re trying to

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