Matt Anderson, manager of Roseau Ace Hardware/Titan Machinery, displays Central Boiler's CL6048 Classic hydronic stoves outside his store in Roseau, Minn. "Consumers drive the market, and that's what got us into outdoor boilers," he says.
If dealers are thinking of dedicating floor space to them, there are a few things they need to know.
First off, your father's wood stove - a cast iron box with a door and a chimney - has gone the way of the 8-track tape player. Today's homeowners are lining up for "biomass stoves" that burn wood pellets, corn, sunflower husks, cherry pits, rye grass, wheat and other material. Biomass stoves also burn cleaner and more efficiently than vintage stoves.
What's been driving all this innovation? Two things: consumer demand and government clean air regulations.
Wood stoves rose in popularity in the late 1970s when home heating oil prices skyrocketed. Before then, many homes had fireplaces, but they were used for ambience rather than survival. An open fireplace is notoriously inefficient when it comes to spreading warmth throughout a home.
Those early, 1970s-era stoves tended to be of poor quality. "It was not a strong industry. A lot of stoves were made in somebody's garage and sold locally," says Don Johnson, director of market research for the 4,000-member Hearth, Patio and Barbecue Assn. (HPBA), the trade group that has represented the industry since 1980. "Those stoves didn't get the best word-of-mouth advertising."
The market for wood stoves improved in the 1990s, when more sophisticated manufacturers became involved. "A lot of things came together in that decade," says Johnson. "Tighter environmental rules and higher heating costs were major drivers."
Existing and pending emissions regulations motivated stove makers to develop clean air re-burn designs that sharply reduced particulates. Also introduced was the pellet stove, which burns compressed pellets commonly made of sawdust. The pellets are typically stored in a hopper, and fed mechanically into the stove for a controlled, even burn. Pellet stove sales have skyrocketed over the last decade, culminating in a pellet shortage in 2008.
Johnson calls wood and pellet stove sales the most volatile sections of the industry. "Sales are predicated on the price of heating your home. When homeowners perceive home heating as expensive, then sales of wood stoves shoot up, and sales of pellet stoves shoot up even more. When the price of home heating is perceived as affordable, sales of both wood and pellet stoves decline - pellet stoves more so than wood. That's the way the industry works."
When times are good, gas stoves are the big movers. "They fit the modern lifestyle," says Johnson. "You turn the dial and the heat comes on. You don't have to carry wood or lift a 40-pound bag of pellets." So how does an equipment dealer break into the wood-burning stove market?
Know Your Market
Stove customers are a diverse bunch with varying lifestyles, circumstances and motivations to purchase. John Crouch, public affairs director for the HPBA, says this diversity keeps the category firmly in the hands of small, specialty retailers.
"Every house is different, and every stove works a tiny bit differently. That works well for a specialty retailer because Wal-Mart will never enter this business," he says. "This is an area where a small business owner builds up a body of knowledge over time, and it's that knowledge that wins."
Scott and Rhiannon Sisson, of Sisson's Chain Saws and Stoves, offer a full line of hearth appliances in Bolivar, N.Y., in addition to outdoor power equipment. "We service everything we sell," Rhiannon says. "That's how you stay in business."
The down side to wood stove sales, says Crouch, is the absence of a parts business. Despite recent innovations, wood stoves are still simple. Pellet stoves, on the other hand, are far more complicated, with 2-3 motors and blowers per unit, switches, and for most models, a computer board. "That makes them more complex than most grass equipment," says Crouch.
"You need to understand that going into the business. Some dealers start with pellet stoves because it brings the repeat business of selling parts and pellets."
In Bolivar, N.Y., Sisson's Chainsaws and Stoves, sells a full range of indoor wood, gas, coal and pellet stoves. "It's a good business to get into if you do it right," says Rhiannon Sisson, whose family began selling chainsaws in 1978 before offering stoves several years later.
Hearth sales, she says, help smooth out the business cycle, since power equipment sales tend to slack off in the autumn, just as interest in stoves pick up. She says stove sales at her business are nearly equal to power equipment sales.
"People always need to mow their lawn and they always need to heat their homes," she says.
Learning the Lingo
Alternative heating appliances are hot in more ways than one. But if you want to get in on this fast-growing business, dealers will need to understand the terminology.
Biomass stoves: In the old days, stoves burned wood - period. Today's high-efficiency stoves also burn wood pellets, corn, sunflower husks, rye, wheat and other agricultural products.
Outdoor boilers: A biomass stove that is parked outside and used to heat water, which can be used to heat a home, barn, workshop, etc.
Best-burn practices: A set of instructions the cover practical tips for building a fire, reducing emissions, safety, and selecting the right biomass at the best price. Read about them at http://www.epa.gov/burnwise.
BTU: British Thermal Unit, or the amount of heat energy needed to raise the temperature of one pound of water by one degree Fahrenheit. A stove's BTU rating is important in determining how may cubic feet of living space can be heated.
Sisson says dealers are wise to take safety seriously. "With wood stoves there's always a safety angle. So it's important to only sell quality products, and to be professional about the way you install."
That means staff training.
Lots of Training
"We do a lot of outside training. My husband takes the lead on education, and he's continuously going through classes and training, and educating the sales staff," says Sisson. Her shop is certified by the National Fireplace Institute, which she strongly recommends for all hearth retailers.
Choice of suppliers is also crucial to success.
"We've had great success with the Travis Industries. We've found over the years that the companies that back us up and give us the support that we need are companies to stay with," says Sisson.
During its 4 decades of business, Sisson's has seen competitors come and go. She credits fair pricing and dedication to service for her store's success.
"We service everything we sell," says Sisson. "That's how you stay in business." A successful stove retailer needs back up its products with a promise that if something goes wrong, the seller will be there to make it right.
"You can't just give products away, either," she adds. "Most people want a good price, but they also don't want to throw away money on something that's not going to last. We have to walk a fine line - sell quality products but not scare people with high prices that make them walk away."
Outdoor Wood Boilers
Matt Anderson, manager of Roseau Ace Hardware/Titan Machinery, in Roseau, Minn., has been selling wood and pellet stoves since 1974. Three years ago his customers started asking about outdoor wood boilers, a specialty niche product with a hefty price tag. Today, he sells products by Central Boiler, a leading manufacturer of these devices based in Greenbush, Minn.
"People started coming into the store inquiring about those products, and it just sort of forced our hand," says Anderson, who also sells Case IH and New Holland farm equipment. "Consumers drive the market, and that's what got us into outdoor boilers."
Wood boilers, also called hydronic heaters, use wood or some other biomass to heat water, which is then pumped into a home for heating or hot water, or both. A boiler and associated parts can cost about $8,000, plus installation.
Anderson displays his hydronic heaters in the parking lot in front of his store, where they are clearly visible to traffic on busy Highway 11. "They are front and center, and people either come into the store to ask about them, or call me."
Roseau is 90 minutes from the nearest interstate highway and just 10 miles from the Canadian border. The residents are a resourceful bunch. "Most people, when they call or drop in, have a good understanding of what they want," says Anderson. "They know what they're getting into. When they come to me I have to be specific on installation and pricing."
He says most customers will install stoves themselves, or do most of the work and let a contractor finish up. "These are very capable, hands-on people who like to do things themselves. The contractor will get involved to whatever extent the customer needs."
Educated, street-wise customers keep Anderson and his staff on their toes. "They already know a lot, so it's important to know what you're talking about. If you start hemming and hawing, you won't do very well. Fortunately, we have a couple guys who are very knowledgeable about plumbing and heating so they can really assist customers."
Anderson says he carries a broad range of free-standing wood stoves, but few people in his area are installing them in their primary residences. "Most will be purchased for a hunting cabin, or a workshop," he says. "That's because people are concerned about 'bringing fire into their house' or possible insurance restrictions on the devices."
Know the Regulations
Currently, regulations of biomass stoves are left to a hodgepodge of state and local laws that a smart retailer needs to research. Several states limit wood stove emissions, and many localities institute "burn bans" during periods of high air pollution.
Incentive for Buyers: Federal Tax Credits
Here's an important selling point for dealers who sell high efficiency biomass stoves. Homeowners who purchase and install a stove to heat a home or to heat water by December 31, 2010 may qualify for a tax credit worth upto $1,500.
Qualifying products must have a rated efficiency of 75% or better. Buyers who qualify can receive up to $1,500 in the form a tax credit, or 30% of the stove's cost, including installation and labor costs. The cost of the fuel is not included.
The IRS defines "biomass fuel" as any plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plant (including aquatic plants), grasses, residues, and fibers.
See http://www.energystar.gov for more details.
The U.S. EPA stepped in with the first stove emission standards in 1988. The so-called Phase 1 standards limited the devices to 8.5 grams of particulates per hour, compared to the 40-60 grams emitted by vintage wood stoves. All wood stoves retailed after July 1, 1990 were required to meet the new standard.
At the same time, all stoves manufactured after that date were required to emit no more than 7.5 grams per hour, under Phase 2 standards. The new standards resulted in homeowners burning less wood for the same amount of heat, and cleaner air. When Congress revisited the Clean Air Act in 2000, it let the Phase 2 rules stand, and they remain today.
For now, that is. The HPBA's Crouch says the EPA intends to reduce emission standards to about 4.5 grams per hour in the next 2-4 years, although nothing is certain. Most biomass stoves emit that much now.
"Any new standards are still years away, and shouldn't influence the decision to enter this market," says Crouch.
Things to Think About
Consumers have a wide variety of options when choosing a hearth appliance and a would-be retailer must be familiar with what's available, and product pros and cons.
Wood stoves are higher-margin items with no moving parts, and thus offer little in the way of aftermarket sales. Wood is easy to find for many rural customers, which makes it either a cheap or free source of heat for a home. Sales of wood stoves spike when the price of fossil fuels increase, but drop dramatically when energy prices are perceived as affordable.
Pellet stoves have motors and blowers, and give customers a reason to return to your store to buy parts and pellets. But the stoves are unpopular in areas of the country affected by the pellet shortages of 2008. Also, pellets are more expensive to burn than wood. Sales of pellet stoves are even more volatile than that of wood stoves.
Gas stoves are easy to operate, and fit the modern lifestyle. Sales tend to go up in good economic times, and go flat when the price of fossil fuels increase.
Outdoor hydronic heaters are a niche market, and are more popular in some parts of the country. Half the hydronics sold today are in the Great Lakes region, according to the HPBA. The price tag for an outdoor heater is high, but new models have 95% efficiency, so they burn less wood.
Dealers should expect to spend time educating themselves and their staff, at least for the first couple years. Laws pertaining to biomass stoves vary by state and municipality, and the industry is fast changing, with new models and features announced regularly.
Choose your suppliers wisely. Do they back up their products with a warranty? Do they reimburse dealers for service calls on failed units? Do they make themselves available when needed? Do their stoves meet EPA Phase 2 standards?
Be prepared for sales fluctuations. Wood and pellet stoves rise and fall with the price of fossil fuels. Product and installation costs are higher than what most people will want to pay during economic downturns.
"The market for stoves swings like most products," says Todd Strem, sales manager for Northwest Industries, Inc., a Minnesota stove manufacturer. "The upfront cost is high, and during a down economy people are more concerned about where their money goes."
Still, many are eager to break their dependency on fossil fuels, whether for the cost savings, future security or to satisfy a longing for independence from the gas company.
"I just came from a state fair," says Strem, "and people were coming up to me and saying 'That's it, I'm getting a stove this year, because gas prices aren't going up, but they're not getting any cheaper either.' "