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HPBA Retailer Survey Results – Inventory and Retail Sell-Through Trends 

Prepared for the Hearth, Patio & Barbecue Association 

By Charles Page 

Homewarmth, Inc. d/b/a JumpStart Marketing 

May 1, 2014 

 

HPBA Attachment 7
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I. Introduction 

The Hearth, Patio & Barbecue Association (“HPBA”) believes that the U.S. Environmental 

Protection Agency’s (“EPA’s”) proposal to revise its regulation of new Residential Home Heating 

appliances under Section 111 of the Clean Air Act, 79 Fed. Reg. 6,330 (Feb. 3, 2014), does not provide for 

enough time to allow for the channels of trade to clear for units that were previously certified, 

grandfathered or otherwise approved or were previously unregulated. The proposed rule would 

provide only a short 6-month sell-through period for some product categories regulated under Subpart 

AAA (what EPA calls a “sold at retail” provision) and does not provide for any sell-through period for

other product categories regulated under proposed Subpart QQQQ for Step 1 or subsequent regulatory 

steps. See 79 Fed. Reg. at 6,365. 

In order to determine the retail sell-through period that would reduce or eliminate financial 

hardship that would otherwise be imposed on hearth product manufacturers, distributors and retailers 

under the proposed rule, HPBA commissioned a retailer survey in the spring of 2014 that was conducted 

by Charles Page of Homewarmth, Inc. d/b/a Jumpstart Marketing, Inc. Mr. Page has 37 years of 

experience that spans the full range of product development, marketing and sales functions across the 

hearth industry. He is well recognized as a modern hearth industry pioneer and expert. His curriculum 

vitae (CV) is provided at the end of this report. 

This survey involved retailers across the continental United States. Retailers were selected from 

each of the major selling regions across the country. This includes the Northeast, Mid-Atlantic, Midwest, 

South Central, Rocky Mountain, and Northwest regions as well as California. A total of 26 retailers took 

part in the survey. Some have multiple store locations. There were 7 retailers from the Northeast, 3

from the Mid-Atlantic, 4 from the Midwest, 5 from the Rocky Mountain region, 3 from the Pacific North 

West, 3 from California and 1 from the South Central region. Retailers were selected based on 

recommendations of experienced factory representatives in each market area. The retailers had to be 

actively selling wood burning stoves, fireplace inserts and pellet stoves. The precise locations of those 

retailers are shown on the map below. Some retailers in the survey had multiple store locations and 

these are not shown on the map.

 

 

Locations of Retailers Surveyed
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In addition, information about the number of employees for each retailer is provided in Table 1 

as a way of further illuminating the business size range of the surveyed group. 

Table 1: Employees per Surveyed Retailer 

Participating retailers are referred to by codes in this report that refer to the region in which 

they are located: NE – Northeast, MA – Mid-Atlantic, MW – Mid-West, RM – Rocky Mountain, NW – 

Northwest, C – California, SC – South Central. Each dealer was assigned a number and, since the survey 

contains sensitive and confidential information, the names of the retailers are not being made public.

While the survey only included retailers, it is important to note that stoves are purchased by 

retailers from two sources – direct from the factory and through specialized hearth related distributors. 

Hearth distributors serve a very important function for certain manufacturers because they eliminate 

the need for employees and other overhead that would be required to sell and service individual small 

dealer accounts. While the survey was only given to Hearth retailers, all of the issues relating to 
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inventory purchases and control as they relate to the impacts of the NSPS are the same for both 

retailers and distributors. 

HPBA commissioned this survey to inform EPA and other stakeholders of the factors that affect 

buying patterns, inventory levels and inventory clearance periods (sell-through) in the hearth industry 

and the devastating impacts on manufacturers, distributors, and retailers (most of which are small 

businesses) if adequate retail sell-through provisions are not provided as part of the final rule. Dealers 

and retailers already face substantial uncertainty in determining which and how many models to stock, 

and the proposed NSPS revisions only increase that uncertainty. And their buying patterns, in turn, 

affect manufacturers. 

As a result, HPBA urges EPA to adopt an unlimited sell-through provision for all affected 

appliances that previously were either certified or grandfathered (based on previous certification or 

other approval statues) under the provisions of the revised regulation. All such models will have been 

previously approved as clean-burning in one way or another; any sell-through deadline will inevitably 

“strand” some inventory, and therefore do economic harm to some retailers, while having de minimus 

environmental impacts. Sell- through periods are also needed in some appliance categories for 

previously unapproved models, and were provided by EPA as transition relief when the current NSPS 

was promulgated. In those cases, however, time limits can more appropriately be imposed that balance 

potential economic harm against potential environmental impacts. 

After this Introduction (Part I), this report is organized into six parts that present and discuss 

survey results, followed by a conclusions and recommendation section. Those parts are summarized 

below. 

• Part II provides an overview of retail sales practices and an introduction to the hearth appliance 

marketplace, including how retailers stimulate sales in the off-season or when overstocks have 

occurred. 

• Part III discusses the difficulties for manufacturers, distributors and retailers in accurately 

forecasting sales in any given future sales year and then matching inventory at all levels to those 

historically unpredictable sales outcomes. 

• Part IV discusses impacts that inventory imbalances can have on sales and the financial 

consequences of “being wrong.” 

• Part V focuses on the other factors that influence distributor and retailer buying decisions 

including credit limits, early-buy programs, warehouse space limitations and the seasonality of 

the hearth business, all of which limit the amount of inventory that retailers can stock and make 

it highly unlikely that retailers will attempt to stockpile previously certified or otherwise 

previously approved and previously unregulated appliances prior to the effective date of the 

applicable provisions in the final rule that would prohibit manufacturers from introducing 

further units in a model line into commerce. 

• Part VI addresses potential outcomes to manufacturers, distributors and retailers caused by the 

various uncertainties imposed by the proposed NSPS requirements and what that means to 

retailers including challenges associated with knowing what to buy, how much to buy and what 

will happen to leftover inventory of “obsoleted” models. Dealers already are hesitant to 
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purchase models that may become stranded inventory, which in turn negatively impacts 

manufacturers. Moreover, retailers need time to sell their existing inventories after the new 

NSPS goes into effect. 

• Part VII contains conclusions and recommendations. 

II. Overview Of Retailer Sales Practices 

Retailer sales practices are governed in large part by the unique attributes of the hearth 

appliance market and retailers’ relationships with manufacturers. Retailers typically operate within a 

certain territory for each manufacturer that they promote. All manufacturers like to have some overlap 

in territories between dealers so that there are no gaps in representation. Manufactures decide how 

many dealerships there will be in a given market area, but usually there are no formal boundary lines. In 

theory, retailers can sell anywhere, although they are constrained by the need to service the appliances 

they sell, as discussed in greater detail below. Dealerships are technically not franchises, although some 

states treat them as such. 

Retailers use a variety of tactics to stimulate floor traffic in the off-season and to sell 

overstocked or slow moving inventory, including special manufacturer sponsored sales and retailer 

sponsored sales. Manufacturers typically do joint promotions with retailers where the costs are shared. 

For instance, there might be a free blower promotion where the retailer splits the price of the blower

with the manufacturer. The manufacturer offers a discount coupon on-line and in addition creates 

advertising materials that the retailer can use to promote the offer. The cost of the advertising will also 

be split with the manufacturer. Offering a “premium” like a free blower rather than discounting the 

stove is a lower cost method of stimulating sales of that stove model. 

Retailers also will advertise appliance discounts to increase floor traffic and sales like money off 

the list price of the stove, money off on the installation or even free installation. Sales are typically done 

prior to the start of the prime selling season in an attempt to pull the season forward a bit and get work 

for the retailer’s installers when things are typically slow. Inventory clearance sales are typically offered 

after the season ends. Having a sale is no guarantee that potential customers will show up, however. If 

the market is not there, no one shows up! There also is no guarantee that what the retailer has on sale 

will be what the homeowner wants. Retailer sales are necessary, but every stove that is sold at a 

discount is money lost. But sales can help by freeing up cash for making payroll or buying faster moving 

stoves as well as helping to keep installation crews busy. This is a balancing act that each retailer must 

face based on its own situation. 

Sales are successful when consumers are looking for bargains. It is common for homeowners to 

shop around with multiple retailers to find the best price. They also may visit a retailer 2 or 3 times 

before making the decision to purchase. This cautiousness has been fueled by a lackluster economy and

a trend to spend wisely and less often. Retailers, having been burned numerous times with overbuying,

are now very cautious. Most do not like early buy programs. Retailers want to reduce risk, but they also 

need to make a profit, so they take a gamble every year so that they get adequate margins to survive. 

Government sponsored change-out programs are also very effective in moving inventory. As 

part of those programs, consumers are given rebates for replacing older dirty burning stoves with EPA 

certified stoves. In Massachusetts, for instance, homeowners are being offered $750 standard vouchers

($2000 for low-income homeowners) toward the replacement of older non-EPA-certified woodstoves 
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with new, low emission, high efficiency wood or pellet fired stoves. These homeowners would not 

normally choose to replace their older stoves, but this rebate incentive gets them to take action. 

Another program which results in significant stove purchases is state-sponsored sales tax free holidays. 

Typical savings are around $300 – the same incentive that these homeowners would get if the stoves 

were on sale, but nevertheless this incentive works year after year and thousands of stoves are sold as a 

result of this program in Massachusetts. 

These kinds of sales tactics, however, have inherent limitations, such as how much stoves can be 

discounted. In addition, dealer territories and the location of adjoining retailers have the effect of 

restricting market areas. Retailers also face financial constraints due to the costs relating to servicing 

stoves in outlying areas that reduce profitability and discourage dealers from selling outside of their core 

market areas. Retailers also face substantial market uncertainty, as discussed below. 

III. Forecasting And Inventory Control Are Difficult, If Not Impossible Tasks, For The Hearth 

Industry 

It has always been difficult for manufacturers to predict how much inventory to build and for 

distributors and retailers to know how much inventory to buy. That uncertainty is not because of lack of 

experience or knowledge but is attributable to the fact is no one knows exactly how large the market is 

going to be in a given year or which models will sell well and which ones won’t. The manufacturers 

make educated guesses based on forecasts from previous years and general market conditions. 

Retailers rely on past experience, incentive programs offered by their manufacturers and in good part 

on their gut feelings. If their forecasts are wrong and their stove purchases are out of balance with

demand, the excess inventory sits unsold. This ties up resources, hinders cash flow and can ultimately 

lower profits. It is not uncommon for distributors and retailers to be stuck with slow moving inventory 

going into the next season and often for 2 years or more. 

As EPA has recognized, the hearth industry is dominated by small companies that don’t have the 

resources available to do sophisticated forecasting. And even if they did, there are so many factors that 

have to be taken into consideration that few would get it right every year. Most hearth-related 

companies have suffered in the past by either over-building (manufacturers) or over-buying 

(distributors/retailers) inventory. The industry is now more mature and careful about inventory control, 

but even so the nature of the business almost guarantees that there will be excess inventory at all levels 

– manufacturer, distributor and retailer. 

Some of the unknowns that the industry faces can make forecasting and inventory control very 

difficult include: the demonstrated volatility of the woodstove and pellet stove marketplace, the wide 

variety of models, finishes, and colors that retailers must stock to anticipate consumer preference, the 

fact that the percentage of sales by fuel type may vary widely over time, the inventory pressures caused 

by operating in a competitive marketplace, the fluctuating prices of home heating fuels, changes in 

weather patterns, and other changes in the marketplace, including natural disasters. 

A. Volatility In The Market 

The woodstove and pellet stove marketplace is notably volatile. The following chart tracks 

HPBA Reported Free-standing Woodstove and Pellet Stove Shipment Data from 1999 – 2013. It clearly 

shows that future market size has no correlation with previous year’s sales. For retailers this is a 

particularly vexing problem because they not only have to guess how many stoves to buy, but how many 

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The complexity of the problem of managing inventory increases in light of all of the various 

stove models that a retailer typically carries. For example, in the Northeast, the 7 dealers surveyed

offered a minimum of 8 brands of wood and pellet burning appliances and one of the largest dealers 

even offered 18 different brands. Each of these brands usually has 3 or more models of stoves. And to 

further complicate matters each model may be available in different colors or enamel finishes, all of 

which retailers must stock to provide a sufficient choice to consumers and to account for consumer 

preference. 

Table 2 shows the number of brands that each of the retailers offer for sale. In addition, the 

Table shows how many brands of pellet and wood stoves are purchased direct from the manufacturer or 

through a hearth distributor. 

Table 2: Number of Brands and Method of Purchasing
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C. Percent Sales By Fuel Category Can Change Over Time

Retailers also face challenges caused by the change in percent sales by fuel category from year 

to year. In the Northeast, for example, you find a mix of retailers; each may offer only specific fuel 

categories. In urban areas like greater Boston, many retailers will focus their efforts selling gas stoves, 

fireplace inserts and fireplaces. In other areas of the state, retailers will sell gas and wood appliances or 

a combination of gas, wood or pellet appliances. Other retailers just promote pellet stoves and central 

heating systems. The problem for these retailers is that there is no way of accurately forecasting which 

fuel category is going to dominate in a given year. In August 2013, 30 experienced retailers were 

interviewed to get their opinions as to which categories were going sell in the subsequent months and 

very few had any idea. Six weeks later it became apparent that, for those retailers selling both wood

and pellet burning appliances, the pellet models were going to take the lion share of stove sales. 

Another example of the difficulty of forecasting can be seen on the graph of U.S. Woodstove 

and Pellet Stove Shipments 1999-2013 Quarterly and Annual (Source: HPBA), Figure 1, supra. Looking 

at shipments of pellet stoves in the 2nd and 3rd quarter of 2006, pellet stoves spiked higher than the 

previous year, but then in the 4th quarter sales dropped precipitously. Manufacturers, distributors and 

dealers had bought inventory and yet the market dropped so fast and so far that it was difficult to sell 

stoves even far below suggested retail. 

D. Competitive Environment 

Retailers naturally face certain challenges as a result of competition. In any given year there will 

be “hot” sellers that will dominate business in a given market. Consumer preferences may be driven by

a number of factors including price points, appliance styling and performance advantages, weakness of 

other competitors in the market and special programs either offered by the retailer or in combination 

with incentives from the manufacturer. For retailers, the best-selling appliances can be difficult to keep 

in stock while the slow movers just take up space, tie up cash and decrease profits. There are also fickle 

consumers who buy stoves, then change their minds about making the purchase and want their money 

back. They may have found a stove they liked more from another retailer or found the same model 

available at better price. Most retailers will refund the customer or refund the consumer minus a 

charge for restocking, but they then have to keep these models until they can find another buyer. 

 

E. Price Of Home Heating Fuels 

Retailers are at the mercy of the fluctuating prices of home heating fuels. Heating costs, and in 

particular spikes in fossil fuel costs, do stimulate sales of alternative fuel products like wood and pellet 

stoves. Conversely, steady or decreasing fossil fuel costs can depress the market. In 2008, when oil

prices were high in the Northeast, the demand for pellet stoves outstripped manufacturer’s capacity and 

there was an acute shortage of stoves. The following year, after oil prices dropped, pellet stoves were 

no longer selling and everyone in the distribution chain was stuck holding inventory. The drop in 

demand happened very quickly and no one predicted it. 

 

F. Weather Related Factors

Weather also plays a significant role in creating consumer demand for wood and pellet 

appliances. Typically when there is a severe winter, the following selling season is good. But cold 

weather can also drive up the demand for wood and pellet fuel and also the price consumers pay for the
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fuel. For this latest selling season (2013-2014), for example, there is an acute pellet fuel shortage in the 

Northeast at the end of the season due to below normal temperatures. Will this dampen next year’s 

sales of pellet appliances or will it stimulate sales of wood or gas appliances? No one knows at this point 

and yet manufacturer’s early buy programs are being launched and retailers are making decisions that 

may ultimately load them with inventory that they may or may not need. 

G. Global Uncertainty

Finally, the general economic outlook, stock market swings, political unrest, and natural 

disasters influence our nation’s stove buying habits. It may not be one factor that stimulates or 

depresses sales, but a combination of global factors that are hard to predict. For example, after the

Hurricane Katrina disaster there was a fear that there were going to be oil shortages and spikes in homeheating oil prices in the Northeast. This caused a dramatic spike in pellet stoves sales. Stove shops were 

filled with customers and manufacturers could not keep up with demand. A year later, pellet stove 

demand had vanished. This is another case where many retailers and distributors were stuck with 

inventory that took multiple seasons to sell. 

As these factors demonstrate, the markets for wood and pellet burning appliances are 

unpredictable. It is almost impossible for the industry to know exactly what to build or buy. The size of 

the market varies each year and what sells is determined by a number of factors including the 

competition, styling trends, the price of home heating fuels, the weather and world events. Hearth 

retailers try very hard to order carefully and to judge market trends, but getting it right every year is 

very difficult to do, consequently dealers often carry unsold inventory from one year into the next. 

Because of the market uncertainty and fluctuations in the market, hearth retailers need more than one 

season to sell previously certified or otherwise approved and previously unregulated models under the 

proposed rule. If the market is down or a given product category is not selling, hearth retailers will face 

devastating financial impacts if the stoves they have on hand cannot be sold. They need adequate time

to bring their inventories down to zero. 

IV. There Is Pressure On Manufacturers, Distributors And Retailers To Make, Purchase And Hold 

Inventory And This Can Create Overstock Situations At All Sales Levels 

For both distributors and retailers, having stoves on hand or being able to get stoves quickly is 

very important. The market is competitive with multiple dealers offering different brands in a given 

market area. If a particular stove model is unavailable for immediate sale or has a long lead time, there 

is a good chance that the customer will go elsewhere for their purchase. A one-to-two week lead time 

may be acceptable but a three-or-four week lead time is probably not. This is certainly true during the 

peak selling season, October, November, and December. The need for having inventory is compounded 

by the fact that most retailers are showing numerous models of appliances in their showrooms. 

Manufacturers face a similar challenge trying to supply what the retailer wants in the shortest possible 

time. 

Having product available is the only way that a given stove model can remain viable. 

Distributors and retailers will not tolerate products that have long lead times and will drop stove models 

if they are hard to get. For most manufacturers, this means that they must have some buffer of stove 

inventory on hand and ready to ship or the needed parts in stock so that they can make stoves quickly 

when the need arises. This is a careful balancing act and it is common to keep more stoves in the 

warehouse than are needed, just so the sale will not be lost to a competitor due to backorders. 
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However, there are also disincentives to building any significant level of extra inventory of stoves unless 

there is a known and reliable demand in that year. 

A. Inventory Levels 

Hearth retailers have different ways of doing business and philosophies when it comes to 

determining acceptable inventory levels of wood and pellet burning appliances, but all are familiar with 

the impact of having inventory. For some retailers, having inventory on hand can give them a 

competitive edge by allowing them to make immediate sales, including sales to cash and carry 

customers as well as customers who will be having their stoves installed by the dealer. The retailer is 

able to schedule the customer’s installation and take them out of the market, capturing the sale. If the 

retailer had to order a stove, the lead time might allow the customers to change course and buy from 

another retailer. 

Many well established retailers feel that they can afford to invest in inventory. They take 

advantage of freight discounts for multiple stove purchases and manufacturers incentive programs. For

them, carrying inventory is just another cost of doing business. They maintain higher inventories just 

before and during the selling season and reduce inventories during the off-season. 

The Inventory on Hand Analysis Table 3 shows typical on-hand inventories for the retailers 

surveyed. Inventory size varies among retailers; some retailers hold a significant amount of inventory 

while others keep minimum amounts on hand. There are a number of factors that shape a retailer’s 

approach to inventory like past experiences with excess inventory and the resulting financial difficulties, 

the percentage of business they do cash and carry, their cash flow, their confidence level that their 

manufacturer (or distributor) can supply product in a timely manner, the strength and outlook of the 

stove market and the advice they receive from their accountants. 

Distributors face many of the same inventory control issues that retailers do, only the numbers 

of stoves on hand are often larger. Distributors serve an important function for retailers in this regard. 

They hold a buffer of stoves so that in peak selling periods they can provide quick delivery of product to 

retailers. Some retailers buy from distributors specifically for this reason – they can order small 

quantities of stoves – often 1 or 2 and buy their stove accessories from them as well, so they save on

freight costs. 
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Table 3: Inventory on Hand 

 Out of 26 retailers surveyed, 5 had less than 10 stoves on hand, 4 had 20 or less, 8 between 21 

and 50 stoves and 9 retailers had over 50 stoves on hand. These are important numbers because they 

show the kind of financial commitment that dealers are making in order to have inventory. The majority 

of retailers – 65% – had greater than 20 stoves on hand and 34% had over 50 on hand. 

 In addition to stoves on hand, retailers have showroom stoves and burning displays. Table 4 

Showroom Stoves and Burn Models below shows the number for each of the dealers surveyed. 

Showroom models have not been burned, so in theory they can be sold as new stoves, but in reality 
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some get damaged and scratched and stained in the course of being demonstrated, so they cannot be 

sold at full retail. 

Table 4: Showroom Models and Burn Models 

B. Discounts And Other Incentives Trigger Hearth Retailers’ Purchasing Decisions. 

 There are a number of marketing programs offered by manufacturers and distributors to entice 

retailers to purchase stoves early and/or to buy a greater number of stoves. Those programs include: 

• Column pricing – Most manufacturers offer discounts based on the number of stoves that are 

purchased. This is referred to as column pricing and it can be based on the number of units 

purchased on each order or in some cases over the year. While the bench mark margin is 40%, 

retailers can get a greater margin (up to 45%) and therefore make more money if they make a 

greater commitment to purchase and hold inventory. Manufacturers may also require that the 

retailer display a certain number of stoves, or devote a certain percentage of their floor space to 

their models. Additional benefits to retailers for buying more stoves may include an increased 

co-op advertising allowance. Manufacturers generally offer a 2% co-op allowance (based on 

monthly or yearly sales) but this percentage can be greater when the retailer makes a larger 

commitment. Most co-op programs will reimburse the retailer 50% of the cost for specific types 

of advertising and marketing efforts, but again the manufacturer can offer to pay a larger 

percentage to reward retailers who are making bigger purchases. 
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• Pre-buys or early buys – Most manufacturers offer incentives to purchase stoves before the 

selling season starts. The incentives may be in the form of a discount on the appliance, an early 

pay discount, a lock in of a current price before a price increase, a discount on freight, dating 

terms or a combination of these incentives. Almost all of the retailers surveyed participated in 

early buy programs. As a rule of thumb, most manufactures try to get their retailer networks to 

buy about a third of what they will need for the year in their early buy purchase. The survey 

indicated that there was a range of participation from a low of 5% to a high of 75%. In the 

Northeast, the average percent of stoves purchased by the 7 survey participants was 50% of 

yearly sales. Survey participants indicated that the pre-buys or early buys programs started in 

the first quarter of the year and the money was due between August and November. Since each 

manufacturer offers a different program, a retailer carrying multiple brands will have various 

program start dates and dates for when the invoices are due under that program. In the 

Northeast for instance, of the 7 retailers, three carried 8 brands of wood and pellet stoves, one 

carried 11, one 15 and the largest one 18. 

• Lead Time Discount Program – One of the largest manufacturers in the industry offers a 

program which increases the discount the retailer receives as the lead time before 

manufacturing and ship date increases. For instance, the retailer might receive a 6% discount if 

the stove is ordered 6 months in advance and a 2% discount if the retailer orders 2 months in 

advance. This has proven to be a popular way of buying because the retailer has some flexibility 

to add or cancel product orders to coincide with ups and downs in the market. 

• Special Sales - Manufacturers sometimes offer special sales to get rid of slow moving or soon to 

be obsolete appliances or just to stimulate sales in the offseason. Incentives are most often 

special freight discounts or free freight, dating terms or cash discounts for early payment. 

Sometimes a manufacturer will throw in an extra stove at no charge when the retailer buys a 

specific number of stoves. 

Over half of the hearth retailers surveyed took advantage of incentive programs in addition to 

early buy programs to purchase stoves in the hopes of increasing their profits. The reason 

manufacturers do this is simple; most cannot afford the expense of building and holding inventory for 6 

months in anticipation of selling it during the busy season nor can they afford the attendant financial 

risk that this scenario creates. Building pre-committed stoves in a measured way prior to the start of the 

season levels production requirements and reduces the chance of backorders during the season. Supply 

chain issues come into play as well. Stoves include many vendor-supplied parts. Vendor backorders or

shortages can halt production. Leveling production helps mitigate the risks of vendor part supply 

problems. Some manufacturers have space constraints as well. Manufacturers are willing to pay a 

premium to get hearth retailers to purchase early so that production delivery problems are minimized 

and the financial burden and risks are shared. 

In addition, the marketing programs offered by manufacturers provide a way to reward retailers 

who buy larger volumes so that they can make more money (in other words, get higher margins), and in 

turn will buy even more stoves.1

 Floor planning from finance companies, where the manufacturer is 

required to take back unsold inventory, is no longer available in the hearth industry. When a retailer 

 

1

See Cost-Effectiveness Analysis of Alternative Woodstove New Source Performance Standards, NERA 

Economic Consulting, May 2014, Appendix B. 

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time would be significant. For example, the total number of woodstoves for the 16 retailers that had 

10% or more of their inventory unsold at the end of the year was 730 stoves. 

From a nationwide perspective, the significance of unsold inventory if not allowed to flow 

through the distributor and retail channels could have dire consequences for the hearth industry. 

According to Richard Wright, the publisher/editor of the largest industry trade journal Hearth & Home 

Magazine, there are approximately 3760 hearth retailers in the United States. This number includes 

categories such as specialty retailers, hardware stores, propane dealers and others who may sell stoves 

as part of their businesses. Although the retailer survey sample size is very limited, it does represent a 

diverse sample. By looking at the average inventory held over at the end of the year and the average 

number of units sold by the surveyed retailers in Table 5, it is possible to estimate that, on average, 17% 

of units purchased by retailers are still in inventory at year’s end. By looking at total free-standing wood 

and pellet stove shipments per Fig. 1, and recognizing that the HPBA figures undercount total shipments 

by at least 10%, the total shipments of free-standing wood and pellet stoves in 2013 was about 140,000

units. If, on average, 17% remain unsold, about 24,000 are held over units. If approximately 65% of 

these units are wood burning with an average retail price of $2120,2

 the inventory of wood burning 

appliances would be worth at retail over $33 million. Using a similar estimate with pellet stoves which 

are approximately 35% of sales and have a higher estimated average retail of $2500, the inventory retail 

value would be over $21 million for a combined estimated value of over $50 million for both wood and 

pellet burning appliances. For the retailers in the survey, the average held over inventory has a retail 

value of nearly $110,000. The bottom line is this: No matter how the numbers are sliced, there are 

millions of dollars in unsold inventory within the retail network of hearth retailers at the end of each 

year. Not all of this, of course, would be potentially stranded inventory, but a substantial part of it could 

be, depending on how the various parts of the value chain react to the upcoming revisions to the NSPS. 

In short, there is real potential for devastating economic injury to the hearth industry here, which must 

be addressed with appropriate sell-through relief provisions. 

In addition, if showroom models were factored in, the cost of stranded inventory would be even 

higher. Retailers use a combination of static displays and burning models to demonstrate the features

and benefits of the products they sell. Display credits and burn credits are provided as a financial 

incentive to purchase and display these models. Display stoves have proven to be the most important 

sales tool a retailer has. The retailer needs a variety of stoves, including styling options, various sizes 

and heat outputs, price points and specific installation related options – like clearances and hearth pad 

requirements – to meet market demand in as many categories of stoves as possible. For every model 

on the showroom floor, there needs to be inventory somewhere in the system so that product can be 

made, sold and installed in a reasonable period of time after purchase. The number of wood and pellet

burning stoves on display can be significant. In the Northeast, for instance, of the 7 retailers surveyed 

the lowest number of units on display was 12 while one of the largest dealers had 49 units on display. 

The average for the 7 retailers surveyed was just over 30 stoves per showroom. (Four of the dealers had 

more than 1 location and this was factored in to determine average number of stoves per showroom). 

Refer to Table 4 Showroom Stoves and Burn Models for the number of showroom and burn model 

stoves of the HPBA retailers surveyed. 

 

2

 The weighted average retail price for free-standing woodstoves is $2120 according to the CostEffectiveness Analysis of Alternative New Source Performance Standards for Woodstoves done by the 

Hearth, Patio and Barbecue Association on March 20, 2014. See Cost-Effectiveness Analysis of 

Alternative Woodstove New Source Performance Standards, NERA Economic Consulting, May 2014, 

Appendix B. 
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The goal for most retailers is to have something for everyone without using too much valuable 

showroom space for very slow movers. In any given showroom there will be the hot sellers, medium 

sellers and slow movers. What sells is determined by market conditions in a given year as well as the

preferences and skill of the sales people. If the market is soft for a given product, no amount of 

salesmanship can turn a slow mover into a hot seller. 

 Retailers have to balance the benefits of buying inventory with the costs of keeping inventory. 

On the plus side, due to the programs offered by manufacturers and distributors, retailers make a 

greater margin the more they buy – this helps their bottom lines. Early buy programs usually start at the 

end of the selling season or at the beginning of the slow season however you look at it. Most are 

launched the first quarter of the year and have deadlines for purchasing by sometime in March, April or 

May. These programs allow the dealer to have stoves to sell during the weak sales months of April, 

May, June, and July. Having inventory also allows retailers and dealers to shorten their lead times and 

allows them to capture more cash and carry customers and lock in fixed and timely installation dates so 

that customers will not look elsewhere. Showing a variety of stoves in their showrooms is also a benefit 

– it allows retailers to have something for every segment of the market. On the negative side, inventory 

ties up money that could be used to support cash flow, make store improvements, hire more staff or 

buy more of the better selling models. 

The HPBA survey confirmed that there are retailers who are keeping substantial inventories and 

there are retailers who only buy product when they need it. Despite that variance, many retailers have 

unsold inventory at the end of the season. And all dealers have showroom models and burn displays 

that they need to purchase and use to demonstrate features and benefits of the products they sell. Any 

mandate that would limit the time a retailer would have to sell previously certified or otherwise 

approved and previously unregulated inventory would have negative financial impacts. For retailers 

carrying larger inventories, the consequences would be extreme. For others who maintain smaller 

inventories the impact would be less, but even for these retailers there would be negative impacts when 

you factor in the need to sell showroom display stoves. In sum, it is clear that there is high risk to the 

retailer, and potential for great financial loses if these stoves had to be sold in a short period of time – 

such as in 6 months after the final rule becomes effective (or by the time the rule becomes effective if 

the appliance is regulated under proposed new Subpart QQQQ). 

V. There Are A Variety of Other Factors That Influence Distributor And Retailer Buying Decisions 

Due to the forecast and inventory difficulties faced by manufacturers, distributors and retailers, 

HPBA believes that EPA should adopt an unlimited sell-through period for previously approved 

appliances under the proposed rule and a minimum of a 2-year sell-through period for previously 

unregulated appliances to alleviate undue harm to retailers. That benefit comes with a correspondingly 

low cost to the environment for either type of appliance because retailers will not be able to stockpile 

previously approved (or previously unregulated) appliances in light of restrictive credit limits, invoice 

due dates, space constraints, seasonal considerations, the limited effect of discounts, and the fact that 

retailers must ensure that they are able to service the appliances they sell. 

A. Retailers Must Balance Stove Purchases With Credit Limits

Credit limits are one of the important reasons that retailers and distributors are less likely to 

stock up in any great quantity in advance of the compliance deadline dates on models that do not meet 
Page 18 of 26

the new NSPS requirements. Although distributors and retailers take advantage of volume purchases, 

early buy discounts, lead time discounts and other incentive programs offered by manufacturers 

because they need inventory to sell in the off-season when cash flow is low, they need the extra margin 

dollars they get from making quantity purchases so that they can have a 40% or more average gross 

margin, and, by purchasing in volume, they are showing their commitment to the manufacturer so the 

manufacturer will not appoint another retailer in their area. The pressures to buy inventory, however, 

need to be balanced with the retailer or distributor’s credit limits, which limit how much a retailer and 

distributor can increase their inventory. While normal in-season credit limits are often ignored for early 

buy programs because manufacturers need to fill up their distribution pipelines and are willing to take 

greater risks to do this, there are always limits placed on the amount of product that can be purchased. 

Distributors have similar credit limit restraints. One distributor indicated that his bank would 

only finance 50% of the new inventory purchased. For another distributor the bank limited purchases to 

50% of the saleable inventory on his books. 

In addition to credit limits placed on retailers by manufacturers and distributors, the retailer also 

has limits on the line of credit they have with their local banks. Those limits restrict the amount of 

inventory of previously certified or otherwise approved and previously unregulated models that retailers 

could stockpile in advance of effective dates in the final rule. 

B. Invoice Due Dates Also Limit Retailer Purchases

All early buy programs have specific dates when the money is due to the manufacturer. 

Sometimes it may be a specific date just prior to the start of the prime selling season and in other cases 

it might be payments spread out over a 3 or 4 month period during prime season. No retailer will buy 

stoves that they don’t think the will be unable to pay for when the payment is due. This is a very 

important limiting factor that often prevents retailers from making larger purchases in order to gain 

greater margins. If payments are late, the retailer’s credit limit will go down. If late payments are not 

made in a reasonable period of time, the retailer is put on credit hold and they will be unable to get

stoves or parts and accessories that they need to continue selling stoves and remain viable as a 

business. 

C. Retailers Face Space Limitations

Most distributors and retailers have a limited amount of storage space and as a result are 

careful how much inventory they buy at any one time. Space is needed for not just the appliances but is 

also necessary for the decorative and installation accessories that are required for these appliances. 

Typical accessories include decorative grills, heat shields, hearth pads, fire starters, fireplace gloves and 

paint, among many others. In addition, there is a need for storing the venting products that are 

required for both cash and carry customers and installation crews and these include Class A 

prefabricated chimneys, and chimney connectors and chimney caps. 

D. Seasonality And Buying Patterns 

The seasonality of the hearth business governs many of the retailers’ buying decisions. 

Offseason buying is limited to showroom models (usually at discounted prices or special terms) and 

early buy purchases where the money is due starting in early fall. In theory, the number of stoves 

purchased in a traditional early program should be about equal to the number of stoves needed to carry
Page 19 of 26

the retailer through the weak months of April, May, June and July to the start of the season which is 

usually in August, but this is not always the case. Warm late summer and early fall weather can delay

the start of the selling season. Retailers will begin to take in more inventory as the season starts and 

they try to keep their inventories balanced so that they have more of their best-selling models in stock 

in anticipation of sales in October, November and December. 

The seasonal nature of the business is significant. If stove models become non-compliant as the 

market is waning in the spring, then there will be at least four months – April, May, Jun and July – 

before the prime selling season begins in August. There are also timing differences which have been 

observed from region to region. Generally the selling season in the Northeast season starts first, while 

California it starts last. The seasonality of the business enhances the risk to retailers should the NSPS 

mandate only a certain number of months to sell off non-compliant inventory. The offseason months of 

April, May, June and July are usually are slow selling months and sales events used to stimulate sales

during these offseason periods often don’t work. Retailers need multiple peak selling seasons (August

through March) to be certain that all of their potentially stranded inventory will be sold. 

E. Retailers Have A Limited Ability To Use Discounts To Move Products

Retailers also will not be likely to stockpile previously approved appliances prior to the effective 

dates of the final rule because they have only a limited ability to use discounts to move products. 

Manufacturers discourage heavy discounting because the discounting retailer will draw sales from the 

surrounding retailers. One company has stated in writing that a retailer can discount up to 10% but 

cannot combine this discount with other offers. This is another reason why it makes no sense for a 

retailer to buy quantities of stoves in excess of typical amounts; they may not be able to sell them 

cheaply enough to entice buyers, they lose money when they sell them at too deep a discount and they 

may get stuck with stoves that don’t sell at the special sales. 

In addition, discounts don’t always work to reduce inventory. For example, after the pellet 

stove boom in 2008, sales died so quickly that distributors and retailers had a lot of excess inventory. 

Some retailers were offering two free tons of pellets (a $500 value) with each stove purchase and even

with this incentive, customers were not buying. 

F. Retailers Must Be Able To Service The Appliances That They Sell 

Finally, the service area size that retailers must cover limits retailer’s market area and the size of

retailer’s inventory. Retailers are required to service what they sell. Service can be in the form of free 

site visits within a certain period after the sale to help customers with operational questions and 

performance issues such as smoking problems caused by improper chimney draft and low heat issues 

due to the size and moisture content of the fuel. Service work may also be warranty related; a stove 

part may break, or some part may be missing. Manufacturers rarely reimburse retailers enough to cover

the cost of the repair. In addition, drive time and mileage expenses are rarely covered under the 

manufacturer’s warranty reimbursement. A third type of service work is work that is performed outside

of the warranty period. Here retailers can charge more, but not so much that their customers go 

elsewhere to get the work done at a lower cost. The reason why these 3 types of service have the effect 

of limiting market areas for retailers is that it is too expensive to service customers outside a given 

distance or drive time from their stores. This is another reason why it makes no sense for retailers to 

buy a large number of soon-to-be non-compliant stoves in hopes of flooding the market – the market is 

only so large for a retailer because they cannot make money servicing the outlying areas. 
Page 20 of 26

Credit limits, invoice due dates, space constraints, seasonality, the limited utility of discounts, 

and the fact that retailers may only sell what they can service all are limiting factors for distributors and 

retailers when it comes to inventory purchases. These financial constraints will be a factor in 

distributors and retailers decisions to buy non-compliant stoves in advance of looming deadlines for sellthrough. As a result, while appropriate sell-through relief period would greatly benefit retailers to

ensure that they are not left with stranded inventory after the effective dates in the final rule, providing 

unlimited time to sell previously certified inventory or a 2-year period for previously unregulated 

appliances will not cause retailers to stockpile an unusually high number of appliances. 

 

VI. Distributors and Retailers Need Adequate Time To Avoid Standing Inventory. 

 

A. How Much Time Is Needed To Sell Existing Inventories? 

In the HPBA Hearth Retailers Survey, retailers were questioned as to how much time they 

needed to sell best-selling, moderate selling and slow moving appliances. The majority of retailers felt 

that they needed 12 to 24 months to sell moderate and slow selling inventory. It has to be assumed 

that for dealers specifying 12 months for a moderately or slow selling model that they mean 1 complete

selling season plus time at the beginning or end of the season depending on when the stove could no 

longer be sold. A retailer specifying 24 months means they need 2 complete selling seasons. Four of the 

retailers felt that they needed much more time than 24 months 

 

Page 22 of 26

 Retailers’ reluctance to buy models that are not given an unlimited sell-through period will have 

profound financial impacts on appliance manufacturers. Many retailers will stop buying appliances they 

are not absolutely sure that they can sell, and the manufacturers will lose the revenue from the sales of 

these stoves; revenue that is needed to fund the design, testing and the launch costs for new NSPS 

compliant models. It has been reported that this is already happening in the warm air furnace market 

and will be exacerbated unless EPA grants adequate sell-through relief. 

B. Dealers Will Be Hesitant To Purchase Models That May Become Stranded Inventory 

Under An Inadequate Sell-Through Period 

The uncertainty surrounding the proposed changes to the NSPS will affect retailer buying 

behavior unless EPA grants retailers a sufficient sell-through provision to allow them to clear inventory. 

Retailers are plainly concerned with being stuck with stranded inventory. In the survey, retailers were 

asked if they knew the date that a given appliance could no longer be manufactured, how would this 

affect their purchase of the appliance? As Table 7 demonstrates, 15 of the 26 retailers surveyed (over 

57%) indicated that they would not buy, would not keep inventory on hand, would close out inventory 

or would hesitate in buying depending on how long they could sell the appliance. 

 
Page 23 of 26

Table 7: Buying Attitudes Related to Existing Models 

VII. Conclusion And Recommendation 

 As the retailer survey demonstrates, the revised NSPS should offer distributors and retailers 

certainty, not confusion, so that that distributors and retailers can best manage their buying choices and 

disposition of held-over inventory. Retailers already face substantial uncertainty in determining which 

and how many models to stock, and the proposed NSPS revisions only increase that uncertainty. The 6-
Page 24 of 26

month sell-through provision for current EPA certified models (with no sell-through for appliances that 

EPA proposes to regulate under new Subpart QQQQ) will have a chilling impact across the entire 

industry. Retailers will stop buying products so they don’t get stuck with unsellable inventory at a time 

when the manufacturers need the revenue to support the substantial product development effort 

needed to bring their product lines into compliance with the much more stringent standards EPA has 

proposed. 

For these reasons, HPBA urges EPA to adopt an unlimited sell-through provision for all 

previously approved appliances. Dealers and distributors need adequate time to clear discontinued 

models without imposing extreme financial consequences to their businesses and manufacturers need 

the regulatory scheme to provide adequate assurances in this regard to retailers and distributors, who

will not even purchase models involving significant risk that inventory will become stranded by 

regulatory restrictions on sell dates. For previously approved models, avoiding any stranded inventory 

will have de minimus environmental effects. The minor trade-off of the impact to the environment 

from products already meeting emission limits far outweigh the dire financial risks to manufacturers, 

small-business distributors and retailers and significant profit loss if these products reach a point where 

they can no longer be sold and so should be a simple policy choice for EPA. 

Manufacturers, distributors and retailers will suffer these same economic consequences for 

discontinued products which were not previously approved. EPA recognized this in establishing a 2 year 

sell-through relief provision when the current NSPS was promulgated, 40 C.F.R. § 60.530(a), and needs 

to follow this precedent and establish similar sell-through provisions in the final NSPS under Subpart

QQQQ. Failing to do so would cause unnecessary harm to these small businesses that could easily be 

alleviated with adequate sell-through provisions. 

 
Page 25 of 26

Curriculum Vitae – Charles Page, Homewarmth, Inc. d/b/a Jumpstart Marketing 

Total Years in the Hearth Industry: 37 years 

Companies and Dates of Affiliation: 

• 1977 Jøtul Stoves: Technical Advisor 

• 1978 Southport Stoves: Customer Service Manager 

• 1979 - 1986 Vermont Castings: Technical Product Manager, R & D Coordinator, New Product 

Manager & Fireplace Product Manager 

• 1987 - 1992 Thermal Energy Storage Systems (TESS Fireplaces): Director of Product 

Development and President 

• 1992 Protech Systems (Ventinox): Vice President of Marketing 

• 1993 JumpStart Marketing (Business Marketing Consulting): Owner & President 

• 1995 - 2010 Harman Stove Company: Northeastern Manufacturers Representative 

• 2011- present HomeWarmth Inc.: Northeastern Manufacturers Representative for Industrial 

Chimney Company 

Positions Held and Description of Responsibilities:

• Kristia Associates –Jøtul: Wrote and produced the first comprehensive training and repair 

manual for Jøtul product line of wood burning stoves. 

• Southport Stoves - As technical director and customer service manager was responsible for 

development of technical support materials and product training for three brands of European 

coal and wood stoves – Surdiac, Morsø and Efel. 

• Vermont Castings – Held various positions in Research & Development, responsible for 

obtaining laboratory and code group listings, assisted in the development of many Vermont 

Castings appliances and related accessories. Provided technical support and product training to 

dealer network in North America and Europe including writing installation, operations and 

repair manuals. Marketing functions included forecasting and sales analysis, product planning, 

new product specs and feasibility analysis, and product launch coordination. 

• Thermal Energy Storage Systems -Developed new models and a viable product line of modular 

masonry fireplaces, developed national advertising and marketing programs, established dealer 

network and consumer direct sales promotions for TESS Inc. 

• Protech Systems - Developed and implemented new company wide strategic plan. Coordinated 

all aspects of marketing and sales, including development of dealer and distributor programs, 

marketing materials, advertising and inquiry tracking systems. 

• Jumpstart Marketing - Provided wide range of marketing and advertising service to 

manufacturers and service companies. Services included market surveys, public relations and 

advertising, brochures, promotional materials and sales training. 

• Harman Stove Company - As Northeastern Factory Representative developed strategy to build 

dealer network throughout New England and New York and took sales from $30,000 to over 19 

million per year. Wrote marketing materials used nationally. Worked closely with owner and 

R&D to develop new products for the retail market. Built training facility to educate dealers on 

installation, troubleshooting and repair of Harman stoves. Provided technical support and 

marketing assistance to network of 100 dealers. 

• HomeWarmth Inc. - Northeast sales representative for ICC Chimney – Excel chimney, RSF and 

Renaissance Fireplaces. Responsible for recruiting dealers in New England, New York and 
Page 26 of 26

Eastern PA. As liaison between dealers and R&D, responsible for developing many new 

innovative venting components. 

Significant Accomplishments: 

• Developed first of its kind high school curriculum on wood heating and alternative energy that 

received national recognition. 

At Vermont Castings: 

• Designed and patented system for installing stoves into fireplaces. 

• Wrote test standard for domestic hot water heaters in solid fuel burning appliances adopted by 

ULC. 

• Specified and assisted in design of two fireplace inserts with a European manufacturer for the 

European market. 

At TESS: 

• Redesigned and patented a system for renovating heat circulating fireplaces. 

• Supervised the design and building of state of the art testing laboratory for masonry fireplaces. 

Used lab to obtain independent lab listings for TESS fireplace models. 

• Launched two new fireplace models. 

At Harman: 

• National Sales Rep for 15 consecutive years. 

• Instrumental in making Harman the number one pellet stove line in the US market. 

• Assisted in design of several VESTA award winning products.

Trade and Professional Group Affiliations and Positions Held 

• Board of Directors – Wood Heating Alliance, 1987 and 1988 

• WHA Government Relations Committee, 1987 and 1988 

• Member – Fireplace Manufacturer’s Caucus (WHA) 

• Board of Directors and Treasurer – Hearth Education Foundation – Served on Board for 

approximately 8 years. 

• Secretary for Task Group writing standards for the construction of masonry heaters – American 

Society for Testing and Materials (ASTM E1602) 

• Member of NEHPBA for past 17 years