Hearth Specialty Retailers - U.S.

3,107

Specialty Retailer Gross Revenues – Hearth products and accessories

U.S.

Percent of total hearth revenues represented by hearth accessories

9%

Average Target Gross Margin for 2016

40%

Average Actual Gross Margin for 2016

37%

Percentage of retailers equaling/exceeding average target gross margin

34%

Indoor selling area (median sq. ft.)

3,000

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

2,000

Percentage of retailers who opened a new store in 2016

5.3%

Percentage of retailers who plan to open a new store in 2017

9.6%

Percentage of pellet appliance retailers selling pellet fuel

36%

Average tons of pellet fuel sold by pellet appliance retailers in 2016

890

Average U.S. wholesale price of pellets in 2016

$185

Average U.S. retail price of pellets in 2016

$242

Average number of units on the

Average number of years retailing hearth products

26

During the past two years sales of hearth products have shown little growth, due primarily to climate warming and relatively low prices of fossil fuels.

At 62%, there are far too many hearth retailers who have not diversified, but still sell only hearth products.

Sixty-six percent of hearth retailers are in market areas with population under 250,000.

Seventy percent of hearth retailers have total retail sales of under $2 million.

Thirty-one percent of hearth retailers have sales of hearth products and related accessories over $1 million.

Average Wholesale Price

$185

Average Retail Price

$242

Together, the Northeast and Midwest regions accounted for 95% of pellet fuel sold in 2016.

Average number of tons sold by Dealer
890 tons

Percent of pellet retailers
able to secure pellet fuel
100%

Median Years Selling Solar
8 Years

Average percent of business
that solar represents annually
13%

Average percent of business
solar represented two years ago
9%

The four charts below show 2016 specialty retailer sales to retail customers, new housing contractors, and remodeling contractors for the indicated products.

In the hearth specialty retail channel, sales of vented gas appliances are approaching 50% of total hearth sales.

When selling a hearth product as a replacement, 55% of those sales are to replace either an inefficient wood fireplace or a pre-EPA stove.

Only 17% of hearth retailers remain open seven days a week.

Installation backlog days were greater in both 2015 and 2014 than in the past year (2016).

Electric fireplaces and electric stoves have made considerable progress in dealer penetration. They are now carried by 53% and 23%, respectively, of hearth retailers.

There appears to be only slight interest in fireplace surrounds (18%) and mantels (14%) to accompany the sale of a fireplace.

The average hearth retailer receives 25% of his/her revenue from outdoor products – barbecue, patio furnishings, spas, pools, and lawn and garden.

Similar to last year, 62% of hearth purchases by retailers are made in the last half of the year.

Gas will remain king in 2017, although wood will make a minor come-back.

Clean-burning fireplaces are the most expensive hearth products, while vented and vent-free gas logs, and electric fireplaces, are the least expensive.

It wasn’t a great year for hearth products, but it was a horrible year for pellet appliances; pellet stoves were down 14% from 2015 (which was a bad year), and pellet inserts were down 11%.

In 2017, 29% of hearth retailers plan to increase their marketing dollars, and by an average of 19%.