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You're getting warmer ... and cooler: promoting energy savings, smart promotions help retailers excel.

Energy users are demanding new, reliable ways to keep indoor temperatures right where they want them. And retailers are thriving by providing tools and systems to let them do it.

The 2014 State of the Smart Home Report, released by home management system developer Icontrol Networks, shows 80 percent of surveyed consumers believe managing heating, ventilation and air conditioning is integral to reducing utility bills and becoming more environmentally friendly.

In addition, almost half of surveyed consumers say they are very interested in replacing their thermostats with ones that automatically adjust when homes are unoccupied. Nearly two-thirds of consumers also named indoor lighting and ceiling fan control as a desired feature.

Bob Campo, an HVAC merchant for Ace Hardware, says zone comfort is a growing trend. Instead of focusing on whole-home heating or cooling, he says, consumers want compartmentalized control.

"Control the temperature of the room you're in as opposed to the entire dwelling," he says. "In the summer, raise the temperature of the central system and use a fan or portable air conditioner in the room you're in at that moment. The same goes for the winter months with single-room heaters."

Campo says demand is growing for whole-room air circulators, or fans able to cool an entire room, as well as mini-split systems, which cool single or small groups of rooms. Both are becoming features of newly constructed buildings or room additions.

Damariscotta Do it Best Hardware in Damariscotta, Maine, is expanding its business in mini splits. The store partnered with another installer to service its mini split installations and has units displayed in two areas at the store, so customers can see them in use.

"We have contractors lined up and we're hoping to develop the mini split business," says Albert Lawrence, assistant manager.

Dave Pagelkopf, merchandising director for United Hardware, agrees that consumers are making better use of personal zone heating and cooling units.

According to Brian Kalan, vice president of engineering for the energy management company Eco Energy in Clearwater, Florida, more consumers are demanding "smart thermostats," which adjust temperatures throughout the day based on Schedules or occupancy.

When consumers replace older units, they are requesting more energy-efficient HVAC systems, Kalan says. The smart thermostats in these systems work year-round to help keep costs down.

Pagelkopf and Kalan believe retailers should stock and promote items such as programmable "smart" thermostats and insulation products that help consumers help themselves.

"Do-it-yourself products really help consumers save energy and money," Kalan says. "It's all about educating the consumer on what products are available to them and showing them they can do most, if not all, of this themselves."

Kevin Day, merchandising manager for Do it Best, says many more consumers are becoming familiar with programmable thermostats that can be adjusted to suit their lifestyles. Wi-Fi thermostat units, for example, can be programmed from a consumer's smartphone through an application.

"Wi-Fi units are driving the growth in the thermostat category," Day says. "The Wi-Fi thermostats have been designed to be self-taught, which makes them attractive to consumers, because some programmable thermostats were considered difficult to use."

Citing Consumer Electronics Association forecasts, reports sales of connected devices, including smart thermostats, are expected to grow by 242 percent year-over-year in 2014, and by 108 percent more in 2015. Furthermore, association projections say these devices will contribute almost $5 billion to overall consumer electronics industry sales in 2014.

Thinking Green

As they emphasize user-friendliness, some energy systems are also stressing ecofriendliness. Tony Abate, vice president of operations at AtmosAir Solutions in Fairfield, Connecticut, says a heating and air-conditioning trend is adding green, clean indoor air quality devices to HVAC systems.

These devices eliminate mold, dust and odors; control bacteria and the spread of airborne viruses; and reduce airborne particles and germs that get past normal filtration systems. They also reduce energy and air-conditioning demands and their associated costs.

"These devices easily fit into existing heating and air-conditioning systems and provide mountaintop clean air in a home or business," he says. "Adding bipolar ionization air purification devices in a home results in significantly healthier indoor air quality."

According to Abate, poor indoor air quality can be a hazard in offices, breeding germs and airborne viruses that can cause illness and spark absenteeism. Indoor air quality devices result in significantly better and healthier indoor air quality in the workplace.

Copper tube technology advances have helped spur ecofriendliness. Nigel Cotton, MicroGroove team leader for the Copper Alliance, a trade group, says tubes inside air conditioners have been slimmed down to half a centimeter. The smaller tubes provide better heat transfer and have enabled the use of ecofriendly refrigerants and the development of more efficient air conditioners and heat pumps.

Stove Category Heats Up

Heating matters to consumers as much as cooling. This year's rough winter, when storms and power outages sent sales of heating projects up by double-digit percentages, showed how important it is for retailers to forecast needs and get products on the shelf, Day says.

Damariscotta is expanding its heating and cooling department and its focus on commercial business, Lawrence says, but marketing stoves to consumers remains a strong focus. The retailer will open a second location in 2015.

About 10 years ago, the store expanded its stove center, putting many models on display in an active demo area. Customers can walk around and see models in operation along with a fireplace design center. The demo area is set apart from the salesfloor to minimize danger to children and pets. Some products are demonstrated in the store's technology area so customers can observe them in a real-room setting.

"A lot of customers don't understand these products unless they see them working," Lawrence says. "They understand the concept, but they need to see it working.

"A stove is a big-ticket item and we need to engage customers immediately, so we always have staff in the department," he says of the stove center, which has a staff of three associates. "When we had a sign in the department to ask for service at the register, customers would walk out. If someone visits the stove department, they are most likely ready to make a purchase soon. We need to engage the customer and show them why they should buy from us."

Lawrence compares operating the department to a car dealership, explaining that he likes sales staff in the department ready to help customers.

Lawrence says many customers, as they age, are changing from wood stoves or pellet stoves to natural-gas stoves, which require less maintenance.

"Gas is attractive because no work is involved," he says. "At a certain point, many customers tire of carrying wood or pellets through snow and ice."

But in remote areas where natural gas isn't available, there is a lot more top-of-mind awareness for pellet-stove heating, says Pagelkopf. He's also still seeing a trend toward portable zone heating with an infrared heater.

Jeff Lobb, general manager of Oxford, Pennsylvania-based Cameron's True Value, says ductless installations are trending in his area because many older homes can't take aluminum ducting.

"Many of the older homes here don't have enough space in the walls for ducts," he says. "We are also seeing a higher-end clientele with special rooms and theater rooms. Rather than upgrading, homeowners are putting ductless units in the walls for less money and the same efficiency."

Important Ties

Whatever system customers buy, relationships matter. To boost customer loyalty, Damariscotta staff give customers information packets about the store's service department, which cleans and services the stoves it sells and follows up with customers after every sale. Lawrence says his store even services some stoves it doesn't carry, helping create new customers for future purchases. According to Lawrence, sending service techs to customers' homes has been a big asset: "This department is very service-intensive," he says.

Lobb says financial incentives are also driving some of the energy equipment trends. For example, some manufacturers are providing cash to customers if they upgrade their furnaces.

Excellent heating and cooling customer service starts with the right staff, Lobb says.

Cameron's True Value is in a rural area, and many of its customers are in homes without air conditioning or with heaters that need replacing or repair. Lobb says his store, which has a strong commitment to heating and cooling, boosted its business by hiring a new employee with an exceptionally strong HVAC background in 2008.

"Customers know we know the area and have the answers to help them in plumbing, heating and cooling," Lobb says.

The store installs new units, removes old units and relies on its in-house rental department to serve heating customers.

Lobb says he builds market share through customer service, which includes a 24-hour call line for customers and through the store's service trucks, which function as mobile billboards.

Promoting products and services on an exterior LED sign has helped draw in customers and increase sales, he says. "Within 10 minutes, 1,000 cars drive by the sign. We also use signage on the store floor to promote that we install air-conditioning systems."

Manufacturer displays and incentives of any kind help draw attention to the department and earn customer loyalty.

Hurst General Store Ace Hardware in St. George, Utah, devotes a considerable amount of floor space to its heating and cooling department, including swamp coolers, motors, filters, cooler pads, air-conditioning units, fans and humidifiers. Oil-filled heaters, electric heaters and propane patio heaters do well year-round.

Offering an expanded selection of heating and cooling products and helping customers save money by offering discounts for volume purchases helps the store earn repeat customers, store manager Vera Novak says.

"We will promote 10 percent off filters if you buy a case, and we also offer a volume discount on swamp cooler pads," she says, adding that the store offers a huge variety of filters. "Our customers respond to volume discounts."

Smart Placement--and Promotion

Retailers stressed the importance of merchandising seasonal products prominently on endcaps and near related projects to spur sales.

Damariscotta displays grills and grilling products next to its stove center and constantly cross-promotes. Dehumidifiers are also a big seller, especially in summer months. "Since we have such a big focus on our stove center, we constantly need to find opportunities to engage customers in the summer season," says Lawrence.

When planning displays, Lawrence stresses the importance of using manufacturer co-op dollars for heating and cooling products. The store relies on manufacturers to provide displays and sometimes gets assistance with promotional fliers.

Lobb says he works closely with vendors and uses vendor-supplied displays on the salesfloor to promote heating and cooling products. "We use an active display with a fan in it. This display is a training tool we can use with customers."

Novak regularly switches out endcaps and drives aisle displays to promote seasonal products. "Fans are big sellers, and they often tend to be impulse buys," she says.

Hurst General Store Ace Hardware and Damariscotta both say effective merchandising is important when selling fans and supplemental heaters. Hurst regularly runs fan promotions on endcaps and does a big business in supplemental heaters and ceramic heaters.

Damariscotta staff line the center aisle with low-priced box fans to promote awareness and offers higher-margin window fans and pedestal fans nearby.

Direct mailing fliers and special offers, email marketing and advertising on a highly targeted radio show are effective marketing strategies, Lawrence says.

"We do direct mail based on our own database and do flier programs through the stove manufacturers," he said. "Radio is not a big part of what we do, but we do two spots on a Saturday radio show.

"We see a nice response from people looking for alternative heating solutions," he says. "If we are going to try radio, we need to be very targeted. This show fits the market."

By Ruth Furman, Contributing Writer
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Author:Furman, Ruth
Publication:Hardware Retailing
Date:Oct 1, 2014
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