Photos: ©2016 Kip Malone Photographer.
www.kipmalone.com.

One way to overcome the Big Box stores and other competitors is to ignore them, and concentrate on selling high-end products to wealthy customers. That’s exactly what Patio and Hearth Co., Albuquerque, New Mexico, has done, and it has paid off with an average annual 15% sales growth in each of the last five years.

“We stick to offering quality rather than selling on price,” says William Esch, co-owner with his wife Cindy, “and we will not lower our quality standards. We know this causes us to deal with a smaller segment of our population, but this philosophy has kept us growing and profitable even through the slower times.”

While Cindy “gets ready to fight” when she sees a competitive ad, William ignores it. “In my 18 years in this store, I honestly haven’t cared about competition. If I do the best job I can possibly do, and offer the best products, that speaks for itself. I’ve never had an issue with competition.”

That philosophy carries over to William’s lack of concern regarding Big Box stores. “They are good to have. People can see the ‘quality’ they offer, and then my staff can show the customers why our products cost more; it’s because our high-end products have a higher quality, added features and details.”

Cindy and William Esch are all smiles; they’re on track to have their best year ever.

Patio and Hearth Co. today is a far cry from what it was when the original owners started the store in 1989 as a pool and spa operation. In 1997, the previous owners decided to expand into outdoor furniture and grills; they hired William to manage that expansion, and eventually added hearth products.

Cindy was a college graduate designer, and William was a graduate illustrator. After nine years of retail experience, she settled for property management, and William was working in the high-end furniture market. Both had discovered that art degrees offered few job opportunities.

William grew the business for eight years, and when the owners decided to retire, in 2005, Cindy came on board and they purchased the store.

“We decided to go full force into patio, barbecue and hearth, getting rid of all the pool and spa stuff, and we changed the store name to Patio and Hearth Co.,” William explains. Today half of Patio and Hearth Co.’s sales are in patio furniture, while hearth products total 40% of the business and grills are 10% of sales.

New Mexico is not an easy state in which to do business, according to William, with a statewide economy ranking 48th in the U.S. “It’s a rough place,” he says. “There are a lot of people here who have a hard time getting by. People joke that if something good or bad happens in the nation, New Mexico is usually two years behind.”

Like the rest of the country, New Mexico was hit hard by the 2008 recession. “It took New Mexico a bit longer to recover, and it also took us a little longer to climb out of it,” says William. “But because here in Albuquerque we’re dealing with higher-end customers who had some disposable income even during the hard times, we were able to get through it. We’re still climbing back.”

Key to Albuquerque’s economy is that 75% of Patio and Hearth Co.’s customers either work for the state or national government, the military or a research and development facility. These include an Air Force base, the Sandia National Laboratories, and Los Alamos Laboratories.

“Through the downturn, there were some furloughs at the labs and the base,” he says, “but we were lucky that most of those folks kept their jobs, and they are still buying from us.” In addition, Patio and Hearth Co. has lost some competition, including a high-end patio furniture store in Santa Fe, 60 miles away, so the Eschs picked up business in Santa Fe.

The store is bright and well designed, with ample room for customers to browse and see everything.

Now William is considering a second location in Santa Fe, featuring patio furniture. “Santa Fe is missing this type of product,” he says, “so that’s a possibility for us.”

Luckily, Patio and Hearth Co.’s clientele tends to be higher end, according to William. “We joke around here that we’re willing to bend over backwards for the customer, listen to some weird ideas they may have, and see if we can make their dreams come true. But our competition is quick to dismiss people without giving those dreams a shot.”

The Eschs deal with homebuilders, but they are the high-end, custom homebuilders rather than the volume or tract builders. Most of that business comes through the architects and designers the Esch’s court. “We deal with the homeowner a lot more than with the contractor,” he says. “So it becomes more of an emotional purchase rather than what is the cheapest fireplace they can put in. Most of the homeowners we deal with are those doing a large addition or remodeling a home, and are looking for high-end products.”

The Eschs don’t really go after builder business, instead they rely on word-of-mouth referrals. “Our distributors and our customers are really good at pointing builders toward us,” he says, “and referrals bring many of the really good builders to us.”

Patio and Hearth Co. has 7,500 sq. ft. of showroom space, much of which is used for outdoor furniture. “We also have a 7,000 sq. ft. warehouse attached to our store, so we are able to keep merchandise in stock year ’round,” William says. “I have a full stock of patio furniture in by January, and we’re able to make nice early-buy purchases because we have plenty of display space in the store and good warehouse space.”

The Eschs have doubled their showroom space since purchasing the store, taking over space adjacent to the original store. “With this, we ended up with a really huge, nice, big, open, patio furniture display area that I designed,” says William. “Between Cindy and me, we do all the purchasing and the showroom floor layouts. It’s kind of a hands-on thing for us as owners.”

Cindy suggested a large showroom hearth section remodel a couple of years ago, adding more burning models. “That really pumped up our business,” says William. “I would definitely suggest that dealers show plenty of burning models. If the customer can see it burning, you’ll get a heck of a lot more business.”

The hearth section of the showroom is entirely separate from the outdoor furniture displays. “When you walk into the store, to the rear and left are all fireplaces and wood stoves with a display of our grills,” says William. “To the right is about 5,000 SKUs of patio products. And we display some portals, a Spanish-styled, open posted, patio covering, and a pergola.”

Hearth products represent 40% of the company’s sales.

The Eschs used to separate the showroom with dividers, but they found that it caused some areas of the showroom to become dead spots where most customers just didn’t go. “Now we leave it a bit more open, getting more natural sunlight throughout the store. Customers are now able to see the whole showroom, and that makes it more interesting for them.”

The showroom is also designed so that when a customer sits in any of the patio furniture, she gets “one of the best views of the Sandia Mountains you can get in Albuquerque. Most people just sit there and ask for a margarita or an iced tea,” William adds. And, no, the Eschs don’t serve margaritas – yet.

With 7,500 sq. ft. of showroom space, William still wishes he had an outdoor display area, especially in the temperate climate of Albuquerque. But he has found that products displayed outside have a tendency to “walk off” on their own.

The company used to build outdoor kitchens on site. No more. That business went away with the recession. It still sells a lot of components for outdoor kitchens, and is finding that more customers are walking in looking for installed outdoor kitchens. Luckily, the Eschs found a business in their strip mall that works with contractors, architects and designers; it is able to build outdoor kitchens and fireplace enclosures for Patio and Hearth Co. “Now I can walk my customer over to meet a designer and contractor right next door,” he says.

Cindy and William keep things as lean as possible, which adds to their bottom line. They have five full-time employees, and part-timers as needed. Karen Robison is the store’s number-one salesperson. Another very important employee is Glenn Snelgrove; the store’s installer is a certified HVAC contractor and a chimney sweep.

“Karen for years has been a really big help and is very dedicated,” says William. “Glenn has worked for us for 10 years and is really important to our success. All of our employees are important, but it would be hard to get by without Karen and Glenn.”

Glenn, however, is not an employee, but an exclusive subcontractor for installations and service. “He has his own licensing and insurance and has full run of our operation. He also gets commission on products he sells.”

While most of Patio and Hearth Co.’s advertising is television spots in Albuquerque and Santa Fe, Cindy and William are moving more toward social media and digital promotions, working with a local TV station on the digital promotions.

“Facebook has been really big for us,” says William. With seven to eight percent of annual gross sales dedicated to advertising, an amount much greater than most hearth and/or outdoor furniture dealers designate, Cindy explains that the large amount has just been for the last two years as they have expanded promotions to cover Santa Fe and as much of the state as possible. “It’s been a big few years sales-wise, so we’ve put a lot of money into advertising,” William adds.

Barbecue grills represent only 10% of sales, but the company carries a strong line-up of brands, such as Big Green Egg, Napoleon, and TEC.

Patio and Hearth Co.’s website is also important for the Eschs. “But it’s almost a dedicated full-time job to keep up with it,” William says. “It’s been a real challenge for Cindy and me to do the everyday working of the store and then take time to work on the website.”

He advises dealers first to always be friendly. “The aura around a store can make a big difference on how a customer feels. Having a very upbeat, smiling, friendly staff that takes the time to truly understand what the customer is looking for is critical to the sale.

“Second, get good product lines and stick to them. When the recession hit, many dealers dropped high-end products and went for price leaders. That didn’t work for most of them.

“We hope this will be our biggest year ever,” says William. “Our patio furniture sales are up this year, and we actually sold furniture in October. We’re right on course for a strong hearth season, but we’re still hoping for snow in the mountains to really pick it up and give us another great year.”

SNAPSHOT

Store Name: Patio and Hearth Co. Address: 11030 Menual N.E., Albuquerque, NM 87112 Number of Stores: One Owners: William and Cindy Esch Key People: Karen Robison, sales; Glenn Snelgrove, installer Year Established: 1989 Web site: www.patioandhearthco.com E-mail: cindy@patioandhearthco.com Phone: (505) 294-4430 Number of Employees: Full time – 5 Part time – depends Sales % by Product Category: Patio and Outdoor Rooms – 50% Hearth – 40% Barbecue – 10% Square Footage: Showroom – 7,500 Warehouse – 7,000 Lines Carried: Patio – OW Lee, Summer Classics, Woodard, Breezesta, Treasure Garden, Galtech Fire Pits – OW Lee, Woodard, Regency Barbecue – Big Green Egg, Morsø, PGS, TEC, Traeger, Napoleon Hearth – Regency, RSF, Morsø, Rais, HearthStone, Ravelli, Pacific Energy Advertising % of Gross Revenues: 7-8% overall, 75% of which is television spots.