Nobody’s happy about the recent power crunch and the looming energy crisis — except perhaps companies that sell energy-conservation products.
Sales have already surged this year for some catalogers that sell such items, and the dim outlook for the power supplies in some states could translate to even greater demand for energy-conservation merchandise. According to a study by Sears Roebuck and Co. and Roper Starch Worldwide released in June, 70% of Americans have purchased energy-efficient appliances, and 88% say it’s likely that they’ll purchase an energy-efficient appliance the next time they’re in the market for one.
Real good sales
For Real Goods, a Broomfield, CO-based energy-conservation products catalog/retailer, “sales have picked up with a fury this year,” says president John Schaeffer (who is also the author of The Solar Living Sourcebook).
During 1999, sales of solar- and renewable-energy products were brisk, he says, in response to concerns about potential Y2K-related problems. But in 2000, demand dried up. This year, though, Real Goods’ sales of such products tripled between February and May.
The increase in sales has led Schaeffer to plan a circulation increase for next year. “Our books have been more profitable than ever, and our dollar-per-book is way up,” he says, although he won’t provide specifics.
“We’ve finally reached the point, after 23 years in business, where solar energy is cheaper for many people than utility power,” Schaeffer notes. “The U.S. Congress Office of Technology Assessment says that the current world oil supply will not take us beyond 2037. It’s time for people to make a change in the way they use energy.”
In addition to higher energy prices, Schaeffer credits the rise in conservation awareness to rebate programs. Most states, he says, reimburse residents who reduce their power usage.
While the majority of Real Goods’ sales of energy-conservation products are to customers in California, the cataloger is seeing increased demand from buyers throughout the country. Real Goods’ most popular products include energy-efficient fluorescent lightbulbs, solar hot-water heaters, water-heater jackets, draft plugs, rechargeable batteries and battery chargers, and energy-saving shower heads that “don’t require as much heat for hot water as regular shower heads,” according to Schaeffer.
SmartLiving, a cataloger of energy-conservation products such as lightbulbs, lamps, and shower accessories, has also seen a rise in demand for its products. “Demand is definitely up, and energy conservation is more top-of-mind today than before,” says Phil Vece, team leader of marketing services for Berlin, CT-based power company Northeast Utilities, which mails SmartLiving to customers in Connecticut, western Massachusetts, and New Hampshire. The catalog sells Energy Star (conservation-labeled products) merchandise at a discount.
“We’ve had many requests for energy-efficient table lamps and bulbs, hand-held shower heads that conserve water, and air-circulation products,” Vece says. Although he won’t disclose circulation or sales figures, Vece says the company sold 314,000 compact fluorescent bulbs and fixtures in 2000 — a number that he expects to rise. “Customers are interested in saving money and energy, but they don’t want to compromise their lifestyle,” he says.
It’s not just consumers who are concerned about power shortages and higher energy costs. Businesses are also buying more energy-saving products, says Patti Chesney, merchandise manager for Hubert Catalog, which supplies equipment to the food-service industry. “Between energy being more expensive and a very cold winter nationwide, we’ve seen sales on some of our [conservation] products increase substantially,” Chesney notes.
Last year, sales of the Harrison, OH-based Hubert’s strip doors (“doors” made of strips of cloth or other material that hang down like a curtain, helping to seal in energy while allowing people to move freely in and out of the doorway) increased 27% from the previous year, and sales of refrigerator cases and case covers were up 7%. So far this year, Chesney says, sales of strip doors have soared 36%, while sales of cases and case covers have climbed 20%.
Tapping into the market
Considering that energy costs aren’t likely to fall significantly anytime soon, some general gifts and home goods catalogers may want to consider adding energy-friendly products to their mix, says Jacksonville, FL-based catalog merchandise consultant Leila Griffith, whose clients have included environmental products manufacturer Seventh Generation.
But selling items for energy conservation has its drawbacks. Many such products — and most electronics products in general — have low margins, Griffith says. Whereas the standard merchandise margin is 50%, margins for electronics can be as low as 20%. Fortunately, nonelectronic energy-conserving items such as bedding, sleepwear, and insulation generally bring in heftier margins.
Catalogers that want to add energy-conservation products to their merchandise mix might start with higher-ticket items, such as air-filtration systems that sell for $400. And when starting out, make the energy-conscious category only about 5%-7% of your product mix, Griffith says. “That way, the overall margin is not as affected.”
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