Hearthlist 8/96

As already reported, Huntington Indiana was hit by a flash flood on Thursday, July 19, 1996. Majestic received heavy flooding throughout all manufacturing. Damage is in the millions, however Majestic is insured for any losses. Majestic began recovery immediately after the water receded on July 20th. It's a tribute to the heart of The Majestic Products Company and its employees who worked around the clock to clean-up in just half the time originally estimated. There is still much to do before Majestic will return to normal. Majestic plans to get back in business as quickly as possible, and far sooner than the "experts" said we could. Products will be brought back on line based upon both the availability of materials and equipment needed and the demand for those products in the marketplace. Majestic intends to be at full manufacturing capacity by mid-August. Majestic would like to thank all of their distributors who offered their support during this recent ìchallenge." Majestic will post an update to HearthNet in a week to report further progress.

End of digest

8/6/96

1. Wood and coal better than hot air ?

2. Reply to above

3. Pellet Stove Economy

4. Macworld in Boston

1. Wood and coal better than hot air ?

To: [email protected] Date: Tue, 6 Aug 1996 16:18:33 PST

Subject: Wood & coal better than forced air X-Juno-Line-Breaks: 4-8 From: [email protected] (Jonathan A Harman)

I heard the tail end of a radio news story that talked about a study done in another country that found wood and coal burning appliances were better than forced air heating systems on indoor air quaility, if I heard it correctly. Has anyone heard the full story? Or has it been in one of our trade journals and I just missed it?

Jon The Hearthside, Yucaipa, CA

2. Reply to above To the above, Craig Issod ([email protected]) replies: For five years I imported HS TARM boilers into the US. During that time, I visited Denmark twice and was surprised to discover that Hot Air heat is almost non-existent in Europe.I had to explain the concept to the engineers, and they laughed when they heard about it ! Bottom line, the radiant and convective heat from either a stove or a hot water heating system feels more comfortable than air blowing into the home. I personally cannot live with hot air heat, and I've spoken to many customers who feel the same. By the way, if you need more info about those neat HS TARM wood burning or multi-fuel boilers, contact the folks at Tarm USA ([email protected]) or visit http://hearth.com/tarm/hs.html

3. Pellet Stove Economy [email protected]

To: [email protected] Date: Tue, 6 Aug 1996 16:13:25 PST Subject: Another Gem X-Juno-Line-Breaks: 6-9 From: [email protected] (Jonathan A Harman)

How many of you remember Dan Melcon's article "Pellet Stove Economy is a Myth But There are Plenty of Other Reasons to Sell Them"? Even though our pellet stove sales made up to 5% of our stove sales and dropped to 0% last year ( thanks to gas ),I still read this article now and then. Once again Dan has written another gem. Check it out in the August 1996 issue of Hearth & Home magazine. It starts on page 10. I think we should pay close attention to the parts about loyalty. Thanks Dan.

Jon The Hearthside, Yucaipa, CA

4. Macworld Boston (from Craig Issod, [email protected])

Well, it's that time again. Over 60,000 faithful , including me, will be treking to Boston to see the latest and greatest in all things Mac. It's been said that "Windoz 95 is Mac 89", so it's always neat to see what the brains at Apple and the other vendors have been thinking up. Just think, we Mac users have had long filenames (26 character with no ".") since 1984 !

If any on the lists are heading that way, please email me and maybe we'll meet up !

8/15/96

1. Back from Boston

2. Needs help with financing Ideas

3. On Dan Melcon's Article "What's Fair ?"

1. Back from Boston ([email protected])

Well, I'm back from Macworld, and full of all kinds of new ideas. It's more than amazing what folks are doing with Macs (and PC's as well). My cup runneth over. There were amazing tools for improving web sites and tying sites in with databases.The big thing now is what Apple calls "Opendoc" and what Microsoft calls "OLE". This involved breaking all the overblown software (like Microsoft office) into componet parts. These parts are much smaller and faster, and you can use them inside of other programs. You can also buy new "parts" for your existing software to enhance it.

It may seem a bit conceptual to the everyday user, but here's an example or two:

1. You are in your drawing or painting program and need some formatted text. Your favorite word processing "part" is called up and your create the text right inside the graphic window.

2. You are in your email program, and click on the address of a site that someone suggested you visit. A netscape "part" (not the full application) opens insode your mail window showing you the site.

Anyway, this "componet based" software is definitely the way to go ! Who needs Microsoft Office weighing in at 100 megabytes to write a memo ?

3. Needs help with financing Ideas (note, please email this gent directly, not to the list)

Date: Sat, 10 Aug 1996 13:42:14 -0700 From: [email protected] (Brett Trusko) Mime-Version: 1.0 To:[email protected] Subject: Inventory and consumer finance

Dear Hearth Experts, I am working on my Masters' Thesis, and also work for Whirlpool Financial Corp (WFC)in the New Business Division. As my employer has paid for my MBA, they have asked that my thesis topic be the research of a new industry for WFC to enter in 1997. WFC has been in business since 1947, working with manufacturers to finance their inventory into the distributor, work with the distributor to finance the inventory to the dealer, and finally, create innovative programs to attract customers to buy the prodcuts from the dealers. We did $3.88 billion in volume last year, which made for some very happy manufacturers, distributors, dealers, and ultimately customers. I would like to research the 'hearth industry': wood stoves, gas, pellet, and the related accessories. Where can I find a research source to answer the following questions:

1. gross sales in this industry for 1995, and projected trends for the next 5 years.

2. average ticket sale of the stove itself.

3. average purchases of support items (fuel, accessories) per owner per year

4. demographics of consumers

5. geographic dispersal of sales (ie...do these sell well in the midwest and not at all in the southwest?)

6. names and addresses of trade associations for this type of product (ie. where retailers and manufacturers meet)

7. manufacturers list, perhaps ranked by size 8.information on whether other finance firms are already supplying inventory and consumer finance for this industry, if so whom, and under what terms.

Since WFC entered the music industry last year, manufacturers and dealers have seen their sales rise markedly. And the consumers are happy because they are often able to purchase the items they want at no interest or at a greatly reduced rate. WFC works to develop a partnership with manufacturers that causes a win-win chain reaction.I truly hope that you will take a few moments to direct me as to how to start my research. My professor is only giving us 5 weeks to have all of the preliminary research completed. Any help you can provide would be greatly appreciated! Sincerely, Kirsten Trusko

3. On Dan Melcon's Article "What's Fair ?" - The M Word

From: [email protected] Date: Thu, 8 Aug 1996 11:56:24 -0400 The M word

I have just finished reading and analyzing an excellent article in the August issue of Hearth & Home entitled "What's Fair?", dealing with the issue of manufacturer / retailer exclusivity and territory. It is a well written, balanced commentary on the state of the hearth industry's current controversy. The viewpoints of both the retailer and the manufacturer were well represented and this article goes a long way in helping to understand everyone's position on the subject. Our industry is fortunate to have Dan Melcon's journalistic efforts. It is a "must read" for all of us that are caught up in the problem.However... (The sound you hear is that of the other shoe dropping) there is a point from a hearth retailing professional's view that was not addressed and is, I feel, germane to the whole controversy.Most successful retailers that I know do not fear competition. In fact, they tend to think of it as a positive force that helps them be their best and that, because of increased advertising, gets more public awareness for our products. The issue isn't the fact that more businesses will be selling gas products, the issue is The Margins.Most of the secondary lines that manufacturers are developing are being aimed at arenas where price is the most important aspect of the product. Installing distributors, mass merchants, HVAC contractors, etc. are being targeted as outlets to increase manufacturer production and market share. This in itself is not necessarily a problem. It's just more competition.

The problem is based around The Margins and our Word For The Day... Differentiation. Some manufacturer's secondary lines are so similar to their primary lines that product differentiation is not possible. A good (or bad) case in point is Vermont Castings Wonderfire line. When introduced, as Dan's article says, in 1993 by Dennis Dillon, the dealer network was told that it was a separate and different line. Now that it is into the market place, only one stove, the Radiance equivalent, is different. The smaller Stardance is identical as are the fireplaces. Poor differentiation turns the product into a commodity and commodities are price driven, not Margin driven. The Specialty Retailer many times (but not always!) loses, as most consumers are price driven, not service driven.

Back to the M word. It is generally agreed that the Specialty Retailer doesn't just deserve but needs strong margins. The specialty retailer is relied upon by both the manufacturer and the consumer to be a wealth of product knowledge and a source of extraordinary customer service. The Margin gets eaten quickly by the costs of this knowledge, training and service. Many times the Specialty Retailer is caught between the customer, who feels the problem should be taken care of by a warranty, and the manufacturer who says the problem wasn't theirs.

And that really is what we Specialty Retailers are for: Taking care of The Problem. But it cost big bucks, and we need to have The Margin to make it work. There is a bigger reason than declining sales for why so many hearth retailers have gone out of business in the past several years, and it is the lack of proper consideration for the M word.

My final point is directed to all manufacturers that have read and enjoyed Dan's article. Please add to it this point: Differentiate your product well so that the Specialty Retailer can continue to make The Margin that allows him to be a strong buffer between the consumer and the problems that can arise that might otherwise sour consumers towards your products (And our industry).

Skip Stahmer Sierra Timberline Grass Valley, CA

End of digestSend Posts to [email protected]

Hearth Digest 8/13

In this digest:

1. More Comments on "What's Fair?"

2. Trouble brewing at Mendota ?

3. Great Web Newsletter and Advice

1. More Comments on "What's Fair?"

From: "Thomas P. Oyen" <[email protected]> To: "'[email protected]'" <[email protected]> Subject: What's Fair Date: Sun, 11 Aug 1996 19:19:16 -0700 Mime-Version: 1.0

Re: Dan Melcon's informative and well-written (as usual) article in August Hearth & Home, and Skip Stahr's excellent comments in the August 11th Hearth Digest.

Our company has yet to be victimized by Mass Merchandiser marketing of any of our "bread & butter" product lines in this trade area, but we have had several experiences in our 20+ years as a Hearth Products Retailer involving Manufacturers and Distributors who have tried some variation of the multiple-dealer approach in an effort to boost sales. We hope that sharing a couple of these stories and their outcomes might help stem what we perceive to be a potentially disastrous marketing trend in our industry.

Some years ago, we had just received our initial order of a then-new, budget priced stove line when we stumbled across the same stoves at the local Fred Meyer, offered at a significantly lower price. Not able to be competitive at that price, and unwilling to develop a reputation as the high-priced store among comparison shoppers, we immediately dropped the line (as did Fred Meyer, soon after, leaving that product line with no local representation).

A few years later, a now-defunct stove manufacturer we'll call SMS (for Saturation Marketing Stoveworks) decided that we, as exclusive dealers in our area, weren't moving as much product as we should. In a misquided effort to increase sales, they opened another dealership (a discount furniture store) across town. We immediately began to lose sales to the new "dealer", whose simple two-part marketing approach was (a) a suggestion to shoppers that they visit our showroom for product comparison info and an in-home evaluation, and (b) an offer to beat our price by fifty bucks. Our efforts to combat this marketing strategy by lowering our prices resulted in a further reduction in price by the discounter. This downward pricing spiral continued until it reached the point where we were reluctant to show SMS stoves to potential buyers, not just because of the risk of losing the hard-earned sale to the can all pretty much be summed up as follows;

1. Supplier perceives potential for increased sales in particular market area;

2. Decides insufficient Dealer representation is at fault;

3. Notices Popeil seems to sell a lot of those Pocket Fishermen;

4. Sees no reason why Hearth Specialty Product sales production can't benefit from similar Mass Marketing approach;

5. Offers product (or virtually identical knockoff) to either (a) strong competitor in same market area, or (b) every Smilin' Jack's Discount Emporium & Drive-Thru Espresso Stand within 100-mile radius;

6. Finds additional sales (if any) more than outweighed by tremendous increase in customer dissatisfaction and negative product perception due to inevitable price gouging and/or lack of product knowledge and after-sale service so necessary in this business;

7. Watches sales plummet as Buying Public inevitably equates friend/relative/neighbor/co-worker's Bad Experience with Bad Product;

8. Loses original Hearth Specialty Dealer, who soon tires of servicing appliances he didn't sell (or derive any profit from) in an effort to protect the Good Name of "his" product line in the face of declining sales:

9. Winds up facing the task of trying to rebuild goodwill (and Market Share) by re-establishing exclusive dealership status with Hearth Product Specialty Dealer.

Manufacturers and Distributors who may be reading this, you KNOW that today's wood, pellet and gas products are complicated pieces of equipment that require knowledgable product support every step of the way, from showroom presentation through installation, setup, operational instruction, maintainance, troubleshooting and repair. You're not selling lemonade here: a sidewalk stand with a cardboard sign simply isn't going to work for you, no matter how many street corners you commandeer, how big your sign is, or how much traffic goes by.

Today's Hearth Products marketplace (particularly the gas products division) is heavily populated with a growing number of strong players: if your market share is stagnant or declining, take a hard look at your product lines and support policies before making rash dealership changes. Are your existing Dealers able to offer a dependable performer with the features the Buying Public wants, at a reasonable price? Are you providing adequate advertising / marketing help and after-sale support to your dealers? Does your product stand out on a crowded showroom floor, or does it look and "feel" just like several competing brands, any of which may have a slight edge in marketing support, value for the dollar spent, or consumer appeal? If the honest answers to any of these questions make you feel uneasy, changing or adding dealers is probably not going to bolster your sales, and might just cost you the market share you have now.

Don't alienate the Specialty Retailers who attract, qualify, and advise the retail buyers, steer them gently through the sales and installation process, and provide after-sale troubleshooting, information and support: when they're gone, you will miss them.

2. Trouble at Mendota (from Craig Issod, [email protected])

Seems as if you can't go in the water today without getting bitten...rumor has it that big changes are in store for Mendota. Apparently, this company is removing all it's key folks, including Greg Iverson, an HPA board member and long-time industry leader.

Mendota has sold it's Minnesota Stores to a large company, closed it's offices there and fired most of the staff. As a Mendota dealer ourselves, the exit of Greg from the company seems to bear bad tidings. He was truly the "face" of Mendota..it will be interesting to see if the company can retain a "personality" and good dealer relations without Greg at the helm.

As usual, this shakeup provides lots of opportunities to the stronger and nimbler manufacturers. The weak get eaten quickly these days, and I'm sure the sharks (read that agressive companies) will be looking hard at Mendota dealers.

Greg is a founding member of HearthNet - the first one to place a bet on this medium - and also a long-time member of this list. He can be reached at [email protected] (Greg Iverson).

3. Plenty of great Net advice - Free ([email protected])

I subscribe to an email newsletter that I highly recomend to any of you folks looking to broaden your Net horizons. It's written by a priest - who also happens to be in the business of writing web sites.

To subscribe send the message SUBSCRIBE WEB-MARKETING to [email protected]

To unsubscribe (if you must) send the message UNSUBSCRIBE WEB-MARKETING to [email protected]

Back issues are archived at http://www.wilsonweb.com/wmt/

Here's a great article from his last one: ------------------------------------------------------------ BILLBOARD OR BRANCH OFFICE? by Dr. Ralph F. Wilson ------------------------------------------------------------

A Web site is all in your mind. The usefulness of your Web site can't outgrow your own mental concept.

So how do you see it? The on-line equivalent of one of those eighth-of-a-page display ads which appear near the back of magazines? A headline, a few words of text, a special, perhaps a splash of color and a phone number? Are you hoping a reader will spot your ad as she finishes an article which concludes near the back of the issue and give you a call? Maybe she'll miss your ad altogether. Web site as small display ad.

If you're a Fortune 500 company maybe you'll have a large, splashy, Shockwaved Web site, on-line equivalent of a one- or two-page spread near the front of the magazine. Striking image, catchy phrase, company logo, and no telephone number. Web site as large display ad.

But the Web can be more than a glorified billboard if you can grasp a new concept, make a paradigm shift (to employ a well-worn but still current expression). Many businesses are coming to see their Web site as a new locus for doing business, a branch office in cyberspace.

There was a time when people went out to a fast food restaurant, sat down at red plastic-topped tables, and ate their fries and burgers on colorful paper placemats. Then some hare-brained restaurant owner invented the drive- through window. My local Burger King manager tells me that nearly 50% of their food now goes out of the store through that window. I can hear the old fogies sputter "It's undignified!". Undignified or not, times are changing, people are busy, and they'd rather not cook, but neither do they want to dress up. Since they've outfitted their restaurants with drive-through windows, Burger King is reaching people who were never customers before, or retaining people who would otherwise go elsewhere. Half their business!

Try looking at your Web site as a drive-through window, a locus where you can do business with people as easily in New Orleans as in Bismarck.

What will have to change? Maybe your contracts will be in HTML rather than on watermarked paper. Maybe you'll need to supplement your cash register with shopping cart software. Maybe you'll develop a whole new way to relate to customers, stay in touch, provide product support, and let them know you care about their needs.

Put yourself in your prospective customer's place. What will she need? What will make him feel more comfortable? How can you design your system so ordering food through a two-way speaker becomes the way some people prefer to get dinner?

Paradigm shift? Yes. The scary unknown? You bet! But business people who refuse to be scared off will learn how to do business on the Internet. Maybe not today, maybe not tomorrow, but soon, and for the rest of their lives. And those of us who have the most to offer, who learn how to communicate effectively via this brand new medium, will have built national and international businesses two or three years down the road.

The stakes are high. Last week one of my clients called me: "Ralph, how can we translate our Web site into Chinese?" Times are changing. Today, I can buy egg rolls to go. Soon, who knows, maybe the Golden Dragon will offer a drive- through window on the Internet.

end of digest...send posts to [email protected]

8/16/96

1. Correction about VC Co-Branding

2. John Crouch Article - Read it !

3. Rural Gas/Wood Market ?

1.Correction about VC Co-Branding

From: [email protected] Date: Wed, 14 Aug 1996 18:37:57 -0400 To: [email protected] Subject: Correction

This afternoon I received the following handwritten fax from Bill Mathewson of VC regarding my post about The Margin and Dan Melcon's H & H article:

"Only the fireplaces are the same. The gas insert and the Stardance/Pinnacle are different. The Wonderfire distributor has shown little interest in fireplaces. To the best of my knowledge, we are the only (underlined 5 times) company to attempt product differentiation. So you picked a poor example." - Bill Mathewson

I'm sure that he wants me to share this and I'm glad to see that Bill is getting his Hearth Digest.

Skip Stahmer Sierra Timberline Grass Valley, CA

(Moderators Note - Vermont Castings has announced that they are completely changing their distribution policy RE: Wonderfire....They intend to turn Wonderfire over to Majestic so they can concentrate on their "Vermont Castings" dealers and products.)

2. John Crouch Article - Read it ! To: [email protected] Date: Thu, 15 Aug 1996 13:00:11 PST Subject: Article by John Crouch X-Juno-Line-Breaks: 2-3,6-7,12-13,16-19 From: [email protected] (Jonathan A Harman)

Have any of you read "Breathtaking, A tale of two cites" in the July/August issue of HPA News??? Its is located in the back on page 28.

If you haven't read it yet, THIS IS AN ARTICLE NOT TO SKIP. I personally am tired of doom and gloom reports, but this caught my eye and has my attention!!!

If you want an unbiased report of an issue the last place to go is the newspaper. I can just imagine the headlines, especially here in Calif. I am still getting people in here that "understand" that all wood burning stoves have to have a "cadillatic reverter" (catalyst) on them, which is not true, at least not here. Definitely READ THIS ARTICLE!!

I certainly do not want to be caught with my pants down. This is something that will effect our whole industry. I would like to ask John if he could please keep all of us posted and let us know what we can do.Jonathan Harman The Hearthside, Yucaipa, CA

3. Rural Gas/Wood Market ? X-Sender: [email protected] Mime-Version: 1.0 Date: Wed, 14 Aug 1996 16:28:09 -0700 To: [email protected] From: Christie Martindale <[email protected]>

Dan Melcon's articles is excellant. Once again Dan has told it like it is and I hope he suffers no repercussions from the Big Boys(manufacturers). Exclusivity will be a problem, even for those of us in a rural market. We've seen it with wood stoves, pellet fuel, pellet stoves and just about every new category. It seems as if the manufacturers don't get it. I can't service a product at a warranty labor rate, if I did not sell it! Bottom line, I won't do it. We live in the boonies. People here will go to the city(200 miles away) and buy a stove at one of the large building supply places(Home Depo, Contractors Warehouse, etc.). They expect me to honor the warrany, because I am the hearth dealer in the area. I've had one manufacturer tell me I have to work on their product because I am their local dealer, regardless of where the the customer bought the stove.

Another important article to look at is the 1995 Survey Results. Take a look at wood figures(stoves, inserts and what not). Have you seen any really new product coming down the pike for this category? I don't know why not. According to the survey, most of us still sell a fair amount of wood stoves. Everyone keeps trying to sell me propane stoves(no natural gas for 100 miles in any direction) and my customers are not that interested. They still like pellet and wood. My suppliers don't get it. I display the product and it dosen't sell. I've got an Avalon 700 free stand gas stove marked down to $1000.00 and I still can't sell it!

Christie Martindale

8/20/96

1. Manufacturers not thinking long term !

2. Comment on above

3. HearthNet hits 2000 Visitors/Week Milestone !

To: [email protected]

From: [email protected] (Noel Gilmore) Subject: More on "What's Fair"

From: "Thomas P. Oyen" <[email protected]> >Subject: What's Fair

Don't alienate the Specialty Retailers who attract, qualify, and advise >the retail buyers, steer them gently through the sales and installation >process, and provide after-sale troubleshooting, information and >support: when they're gone, you will miss them.

All of your comments are good ones and are relevant...in a world where manufacturers care about the long term. But in a world where players are buying what looks good with the intention, in 5 or 6 years, of selling for a big profit after they have built up the market share and the profitability any way they can, then being sensible about the future of their product is a waste of their time. The negative results of such policy will be for the next players (and us) to inherit, while the original players, pockets well lined, will be out doing it to someone or something else. It's a dramatically pessimistic scenario, I admit, so I'd enjoy having one of the big players step up to the mike and explain how and why I am wrong.

Noel Gilmore Autumn Moon Fireplaces Port St. Lucie, FL

2. Comment on above (from Craig Issod, [email protected]) I must reluctantly agree with Noels outlook, but must make the point that there are a lot of exceptions to the rule. Most small companies would harbor a dream of growing larger, and maybe being bought out or going public some day. I guess it's the attitude that matters.

I'm sure there are a lot of good examples of "long term" thinking, but a few that I have experience with can be mentioned:

1. I first met Alan from Aladdin (Quadrafire) at the HPA show, where he was setting up his booth bu his lonesome self. When I inquired why he (the boss) was there, he said " Craig, the day I'm not happy about waking up early and getting into work is the day I stop doing what I'm now doing".

2. The new folks at Jotul have impressed me with their way of thinking. Even though I have not sold any of their stoves for a few years, they've kept me on their dealer list and not opened any dealers near me - mind you, I never asked for this treatment... they seem to have learned from many past mistakes, and are looking to slowly re-establish a positive mindset in the marketplace.

3. Temco, one of our vendors who have come from the "Building Industry" part of the fireplace business (you know that part where everyone else is trying to go to now !) came into my store the other day. They said they have changed their thinking and understand they are in the "Hearth and Customer" business...and are changing their policies to reflect this. Even they state that "time will tell", but as I mentioned, it's attitude and direction that count.

4. Travis Industries has always taken a conservative approach to new products, even refusing to sell their Pellet Stove except in their local area until it had proven itself for a year or two ! Result - a stove that is among the most reliable in the industry..and a large savings in $$$ to them for not having to run all over the US fixing early "bugs".

I am not a Quadrafore or Jotul dealer (maybe I should be !).....

I'm certain there are lots of other such stories out there.

3. HearthNet reaches milestone.([email protected] - [email protected])

We are pleased to announce that HearthNet has seen over 2000 seperate visitors this past week. We are well on the way to our first goal of 10,000 visitors per month. After that, the sky is the limit.

For those interested in such things, each visitor to the site examines a average of 6 documents.

For more information on marketing and promotion on HearthNet, please contact: Charlie Page - Jumpstart Marketing - [email protected] Craig Issod - CHI Associates - [email protected]

Hearth Digest 8/22/96

Note from the Webmaster: Martha and I have just returned from a trip to Stove Mecca (Vermont) where we were playing a little tennis and cruising around. We stopped in to see our friends at VC as well as visited with Charlie Page and Dan Melcon and Annie (his wife). The nice trip to the mountains gave me some time to think....and WOW, I saw a cool Moose hanging out in the forest this morning. Anyway, the following thoughts have popped up.

1. I'm really glad I don't work for a large company cause the shareholders and others would be really mad at me for goofing off as much as I do !

2. The Industry changes that have been the buzz on this list are accelerating. On the drive back, in northern NJ, I passed and stopped in a new Hearth Shop and was very suprised to see that their major line was the same as a another "long time" dealer 10 minutes down the same road ! It was an 8.5 mile distance, about as far as the new Dealer opened up near my Medford shop. So, it appears that "exclusivity" has come to mean a 4 or 5 mile radius.

3. Dan Melcoms article "what's fair?" has summarized a lot of the topics surrounding this subject. When we passed these two "competitive" shops, Martha (my wife) commented " You know, it was nice in the old days when most stores had their own decent territories, and the dealers could cooperate and help eachother to some degree. I thought for a moment and answered " Ever since the first farmer set up his stall in the local town marketplace selling his veggies.....as soon as another farmer saw him making out well a second stall was opened..and then more..and then more.... So, we can't be too romantic about this stuff...as the former President of Commodore Computers said " Business is War !" . I somewhat agree...but like to look at it more like a good Chess Game. After all, it's not our health involved (maybe our mental health !). Anyway, Commodore Computers is now defunct, so my friend at the top there lost his game.

4. In my chats with Charlie and Dan, we do speak fondly about the old "feel good" attitude of many in the hearth industry. We all agreed that this feeling is still in parts of the industry, and perhaps this forum can be used to further this goal..no losers...we can all benefit from increased communication.

By the way, my store managers and wife may think I'm bonkers .. they are , of course, very worried about our close new competition with the large showroom and big budgets. I'm not concerned in the least. If we continue to do what we do best, we will prosper..I'm sure of it. I hope you all prosper also.

In this digest:

8/21/96

1. Ventless in California - Does it make sense ?

2. Leads for manufacturers

3. Mendota - The rest of the story

1. Ventless in California - Does it make sense ? From: [email protected] Date: Wed, 21 Aug 1996 17:41:59 -0400 To: [email protected] Subject: Air pollution

The latest large scale controversy in The Golden State concerns a new program called Smog Check 2. If you haven't heard about it, you will. It is a severe constriction of vehicle emission standards that effects every vehicle operated in California. Initial testing has shown that 2 out of every 3 vehicles fails the new smog check and requires expensive modifications. It is expected to have a strong impact upon virtually every car owner, especially on lower income families who drive older cars. This is all being done in the name of cleaner air. Many of you know that California already has the strictest vehicle emissions laws in the country, but the 1994 legislature has decided Californians need cleaner, healthier air, no matter what the cost.

These same legislators have recently approved ventless gas products for use in living areas for these same citizens. WOW! Is this a crazy world or what?!!

Skip Stahmer Sierra Timberline Grass Valley, CA

2. Leads for manufacturers Ok, guys, heres some leads..please respond directly to them. (I'll take 10% after the first one million $$$ ) - Craig :-) ________________________________________________________ We retail wood/coal burning stoves in the United Kingdom. Looking to expand into France, Belgium and Holland. Would be interested in any stoves that are produced in the stat's that are not avalible in Europe can you help.

Regards

Jim Hinds Date: Tue, 20 Aug 1996 21:25:49 +0000 From: JIM HINDS <[email protected]> Radiant Heating 6 High Street Wigton Cumbria UK

Tel: ++44 16973 45765

Fax: ++44 16973 49303 ________________________________________________________ From: Julius Johansson <[email protected]> Mime-Version: 1.0 To: [email protected] Subject: Pellets stoves

Good Morning!

We are very interested of pellet stoves, to be introduced at the Swedish market. So if You have that intention, pls let us now, and You will have an presentation of ourselves and the growing Swedish market.Best Regards.Åke Berntsson Manager ________________________________________________________

3. Mendota - The rest of the story (Craig Issod, [email protected])

As previously mentioned, changes have been afoot at Mendota. The major changes are the sale of their retail stores in the St Paul area and the termination of "key" members of the staff, Greg Iverson and Larry Nelson. Barney O'Donell, president of Johnson Gas and Mendota has explained these changes as follows:

1. The sale of the stores was inacted due to the fact that the stores were not part of their core business (manufacturing), and they were not profitable.

2. The company felt they could no longer justify the employment of Greg and Larry since the retail stores were a large part of these employee's work load.

3. Mendota has claimed that all senior management, engineering, local sales reps and office staff will remain the same as before this downsizing.

Greg Iverson has explained the parting of ways as a basic disagreement over the direction of the company and it's relationships with it's customers.

Dealers with any questions can contact: Johnson Gas 1-800-553-5422 Greg Iverson - email [email protected]

IN this digest:

8/24/96

1. More on Ventless in California

2. Electric Logs and Fireplace

Date: Sat, 24 Aug 1996 10:32:24 -0700 To: [email protected] From: Christie Martindale <[email protected]> Subject: Ventless in California

1. All California dealers better read the text of the new bill regarding ventless appliances in California. The provisions of the new law pertain only to natural gas. Propane ventless appliances are still not allowed!

2. We may lament the new Smog Check program, but I also find my self in a Catch 22. In Mammoth Lakes every time a home goes through escrow the stove or fireplace must be upgraded to a clean burning technology. I personally benifit from the pollution regulation. Regulation has been good for business and you can bet that the mechanics and the auto makers fully support the Smog Check program! I know I support the stove regulations in my area. I find it ironic, that we, as a nation, have told our government that we want clean air, water and what not. When they finally enact regulations to acheive this, we scream bloody murder! It has finally come down to personal cost and we just don't like it. "Regulate them", we cry, "not me, I didn't do it!"

Christie Martindale Bishop Woodstove Bsihop, CA

2. Electric Logs and Fireplace

From Craig Issod ([email protected])

We are looking for the best line of electric fireplaces and logs for our store. I am familiar with Dimplex, the neat looking unit show in Charlotte. I've also heard of Rustic Crafts and Ready-Built.

Anyone have any experiences, good, bad or indifferent with these vendors or others ?

Plese email either directly to me ([email protected]) or to the list if you'd like to share your info.

End of Digest - Send posts to [email protected]

In this digest:

8/25/96

1. Help with Winston Pellet Stove

2. The Mass Merchant Experience

1. Help with Winston Pellet Stove Someone please see if they can help this guy (Craig)

From: [email protected] Date: Sun, 25 Aug 1996 12:00:13 -0700 To: [email protected] Subject: Winston Pellet Stove

I recevtly sold a home with a Winston Pellet Stove. The stove does not work, apparently because of a problem with the circuit board. Local checks indicate that no power is coming out of the board. Off line checks indicate that all other systems (fan, etc...) work. Because Winston is now out of business I cannot find a circuit diagram to have the board repaired. Can you point me in the right direction to try and chase down this information. Thanks.

2.The Mass Merchant Experience (By Craig Issod, [email protected])

Why Mass Merchants will not take over this Business.

OK, another Sunday, time to go to Home Depot and buy some cheap carpet for some of the displays I am building at our shop. While I'm there, I think I'll go to CompUSA (Computer Superstore) and get another Zip Drive for one of my computers.

First, I enter the computer store. The customer service desk (returns, etc.) is located to my right, and it is mobbed. At least 10 deep with computers, modems, etc in hand. It will be a very long time until these folks are taken care of. I remembered reading that one of the mass merchnats received one out of three computers back as a return, and wondered what my friendly hearth vendors would say if I tried to return this many products.

Onward to buy the Zip Drive. Instead of having them stacked up in the store so i could pluck one up, they are behind a counter. Folks are about 10 deep here also, and each is taking a long time to get outfitted with hard drives, memory, etc.

I leave the store with no Zip Drive, figuring I'll just buy it mail order and save the tax and frustration.

Onward to Home Depot to the carpet department. After I find the right zip code within the giant store I notice I am second in line to be served.Not bad...except the first folks have been sent here from another Home Depot far, far away to get the Royal Blue carpet that was supposed to be in stock here. Being as this carpet color and style was not even in their catalog or stock, the Home Depot sales guy was very confused "They really sent you up here?" and other dumb questions were all he could say. The couple kept pushing him and crying about how much time they wasted. Since they would not let the salesman go, he did what any brilliant person would...said he'd go call the other Home Depot and see what the story was. Now comes the good part...he never returned ! Meanwhile I waited for the carpet.

If any customers value their time, they would almost never buy at such places. An example...I needed a 250 foot roll of electric wire the other day. It was $46.00 at the local lumberyard....but $24.00 at Home Depot. Home Depot is 25 minutes from me, so it would take me AT LEAST an extra hour to save the $22.00, plus gas, and wear on my car and my head. Even my contractors, who cost me $20. to $50. an hour would not make the trip economical. Most folks who are on this list should calculate their time value at $35.00 to $100.00 per hour (or more for you lucky dogs !)

So it is with our customers, Ms. and Mr. Josephine and Joe Hearth. They are busy people, most of whom have families and lots of responsibilities. By serving these folks well, you can surely have your share of the expanding markets.

End of Digest - Send posts to [email protected]

In this digest:

8/26/96

1. Danger Ahead, Part II (Craig Issod, [email protected])

Exploding gas appliances...sharp glass shards being propelled into peoples faces, backs, arms, etc. Sound sensational....but it's happened quite a few times and is continuing to happen. The latest incident was the result of the improper installation of a direct vent stove. Seems not everyone is familiar with the importance of proper and balanced installation of Diect Vent appliances.

Travis Industries sent a bulletin to all their dealers explaining this potential problem, and has also agreed to share some of their findings with this list early next week. in the meantime, I have written a long article about gas safety problems. Instead of posting it on this forum, I have located it in the clubhouse at:

http://hearth.com/news/club.html

This way, folks can read it at their leisure. Lets get a dialog going on gas safety, and see if we can up the ante on ourselves to provide our customers with the best and safest products available. !

End of Digest - Send posts to [email protected]

In this Digest:

8/27/96

1. Thoughts on Mass Merchants - From Chris Caron, Vice President of Marketing Duraflame, Inc.

From: [email protected] Date: Mon, 2 Sep 1996 00:57:10 -0400 Subject: Re: Hearth Digest

Craig,

I enjoyed your post about your experiences buying from Mass Merchandisers. I think your experiences and comments about buying value added, service intensive products are right on the mark. As a marketer to the mass merchandiser trade I thought I might share a few constructive thoughts on this subject with the list.

I have never understood the Hearth dealer's fear of the Mass Merchandiser. They have existed for a long time and they have never done a very good job of marketing high value, service intensive products. In fact if you ask their management and buyers they will tell you that they really don't want to sell service intensive items, because the extra service cuts into their margins, as do the handlling of returns of such items that occur once consumers take them home and find out they can't install them themselves. Alot of consumers figure out that they need the service of a specialty dealer after they have purchased an item from a mass merchandiser. Many times out of frustration they take the product back and decide to purchase the item from a specialty or service providing dealer. This creates an extra handling charge which mass merchandisers hate, and in fact they often charge back or return the product to the manufacturer.

While some manufacturers are experimenting with distribution in mass merchandisers, many of them will learn that the appeal of potentially large volume orders will come with many unforseen costs: including invoice deductions for P.O. or invoices discrepancies, chargebacks for product damaged while on display or returned to the store, excessive fees for display allowances and cooperative advertising, and late shipment fees just to name a few. They will also find that many mass merchandisers show little loyalty to vendors and will discontinue the item if another vendor comes along with a better price.

I really don't think the mass merchandiser trade is the menace to the hearth specialty dealer which so many in the industry claim. Sure Mass Merchandiser's will sell alot of builder boxes, low end wood stoves, gas logs and accessories, but most of these products are not the real margin drivers for the hearth specialty stores. And most of the items that the mass merchandisers sell are inferior quality to whats offered in a specialty store.

If Home Depot were so good at servicing and selling high value products you wouldn't see any more kitchen and bath shops, lumber yards, garden centers, plumbing supply houses etc. The fact is they do a great job selling fast moving, DIY project related items, and no one can compete with them on these type of products because of their size and efficiency . On the contrary they do a poor job selling high value service related items and if you shop theirs stores carefully you will find that there prices aren't unbeatable on high value, slow turning items.

The biggest threat to hearth specialty dealers are there own business practices. In order to thrive in the changing economic times of today specialty stores have to reinvest in merchandising and marketing their stores. Specialty dealers who just wait for someone to look for their store in the phone book are going to have a hard time surviving in a world where there is tremendous competition for consumer discretionary income. Dealers need to blow their own horn and find ways to get consumers to visit their stores. Taking advantage of some of HPA's Fireworks advetising programs is just one of the many ways to achieve this. And once the consumer comes to the store they better not find a dark black hole with a bunch of stoves lined up in a row. The store should be warm interesting and fun to shop. Dealers should also consider stocking unique but affordable accessory / decorative items that generate an impulse purchase. Odds are if a consumer enjoys shopping the store and finds some interesting item which they don't really need, but purchase on impulse, they will have had a chance to experience the stores service and they will come back when they are ready to make the big purchase.

I am not an expert on this subject, certainly there are many savy specialty dealers on this list who understand the issues I have addressed and are already executing these concepts in much more creative ways than I could imagine. I'm just tired of hearing people continually complain about the threat of mass merchandisers when there are so many advantages that the specialty retailer can use to out market the warehouse giants.

One closing thought instead of fearing the warehouse or chain retailer in your market area, it might be a good idea to make them an ally. Go see the store manager of the local Wal Mart, Home Depot, Builders Square, etc.. and introduce your store to them. Tell them about the broad product line and service you provide and leave behind pamphlets and cards for your store. Tell them you regulary refer people to their store for items that you don't sell or can't compete with them on price and ask them to do the same for you. You might be surpised by their willingness to work with you. This idea might sound far fetched but I have already heard stories of savy hearth specialty dealers establishing these kind of mutually beneficial relationships across the country.

Perhaps my rambling paragraphs won't end the complaining about mass merchandiser competition but it would sure be nice if the readers of this list took time to share some creative ideas to turn the potential threat into a business building opportunity.

Regards, Chris Caron Vice President of Marketing Duraflame, Inc.

End of Digest - Send posts to [email protected]

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