Hearth Specialty Retailers - U.S.

3,083

Specialty Retailer Gross Revenues – Hearth products and accessories

U.S.

Percent of total hearth revenues represented by hearth accessories

11%

Average Target Gross Margin for 2014

40%

Average Actual Gross Margin for 2014

38%

Percentage of retailers equaling/exceeding average target gross margin

28%

Indoor selling area (median sq. ft.)

3,100

Indoor selling area devoted to hearth products in season (median sq. ft.)

1,812

Percentage of retailers who opened a new store in 2014

4%

Percentage of retailers who plan to open a new store in 2015

7%

Percentage of pellet appliance retailers selling pellet fuel

39%

Average tons of pellet fuel sold by pellet appliance retailers in 2014

629

Average U.S. wholesale price of pellets in 2014

$211

Average U.S. retail price of pellets in 2014

$264

Average number of units on the

Average number of years retailing hearth products

24

An average of 12 percent year-to-year growth may seem like a mediocre performance, but just remember that 2013 was also a very good year. This is growth upon growth.

After the struggle that was the recession/downturn, it seems somewhat surprising that 42 percent of hearth retailers still haven’t expanded into patio and/or barbecue products.

Thirty percent of hearth specialty retailers service market areas in excess of 250,000 people.

Forty-seven percent of hearth retailers have total sales of all products in excess of $1 million.

Only 23 percent of hearth dealers have sales of hearth products in excess of $1 million.

The following four charts show 2014 specialty retailer sales to retail customers, new housing contractors and remodeling contractors for the indicated products.

Average Wholesale Price

$211

Average Retail Price

$264

Average Margin

20%

In 2014, the average wholesale price of pellets increased by $14; the average retail price increased by $16 dollars, and the average margin declined by one percent.

Sixty-one percent of hearth dealers do not sell pellet fuels.

Approximately half of retailers who sell pellet fuel were not able to secure sufficient amounts.

For the average hearth retailer, Vented Gas Appliances represent 41 percent of his/her hearth business; Wood Appliances 27 percent, and Pellet Appliances 19 percent.

Compared to 2013, more (+6%) hearth retailers plan to increase their marketing dollars, and by an average of 14 percent.

In 2014, accessories accounted for no more than 10 percent of hearth revenues for 75 percent of hearth specialty retailers.

For 71 percent of responding retailers, new installations accounted for more than 50 percent of their hearth appliance sales in 2014, which is almost identical to 2012 results.

Only slightly more than a third of specialty hearth retailers offer service contracts to their customers.

Over the past 10 years, the percentage of installations handled by the retailer and the retailer’s subcontractor has ranged from 82 to 88 percent.

The last five months of the year in 2014 set records for the number of days hearth retailers were backlogged on installations.

Replacing vent-free products accounted for 15 percent of hearth appliance sales in 2014, which is a whopping eight points above the 2012 number.

Surrounds, mantels and/or entertainment systems were part of 60 percent of fireplace sales in 2014, which is 33 percent higher than in 2012.

The average hearth retailer reaps 73 percent of hi/her gross revenues from the hearth category, a dramatic difference from patio and/or barbecue retailers.

There are few surprises in the data above, however, it’s interesting to note that electric fireplaces now have penetration into 67 percent of the specialty hearth dealer network.