Sales of cooling equipment increased this summer, according to the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), whose combined June and July 2017 reports showed that U.S. shipments of central air conditioners and air-source heat pumps were up about 5.7 percent compared to units shipped during the same time frame in 2016. Specifically, shipments of air conditioners in June and July increased about 5.4 percent, and shipments of air-source heat pumps increased about 6.4 percent compared to units shipped in June and July 2016.
That trend seemed to last through the summer as many contractors reported sales of cooling equipment increased this year — sometimes dramatically — as an improving economy and low unemployment helped convince homeowners to replace their existing units rather than repair them.
STRONG SALES
The reason why consumers made the decision to replace rather than repair is that they are starting to feel safe, said Mike Agugliaro, founder of CEO Warrior and previous owner of Gold Medal Service, East Brunswick, New Jersey.
“There’s a great emotional trend of safety that’s happening in people’s minds right now,” he said. “And when homeowners feel safe, they invest in their homes, which includes buying new HVAC equipment, which is what they did this summer.”
And, boy, did they buy a lot of cooling equipment from Gold Medal Service. In fact, the company broke its own sales records just about every month this summer, with June sales topping $3.5 million, which is approximately $600,000 more than it sold in June 2016.
“July was an amazing month as well,” said Agugliaro. “I think sales for home service companies in New Jersey will stay strong through the fall, because I think we’re going to get another hot spell.”
Indeed, the weather in New Jersey was wonderfully hot and humid this summer, driving many homeowners to replace their aging cooling equipment, noted Agugliaro.
“It also helps that banks are lending again and financing companies are not so strict, which allows homeowners to obtain financing. But, I’ve been in this business for 23 years, and the biggest reason people are buying new equipment is that they’re comfortable spending money again. They’re feeling safe.”
Cooling equipment sales were also strong at Reno, Nevada-based Sierra Air, thanks to a robust marketing program and an influx of new residents.
“We’ve been in business for more than 30 years, and this might be one of our best summers ever for residential sales,” said Ron Ford, owner and president, Sierra Air. “We’re about 40 percent higher in sales than last year, which I think is due to the fact that we doubled our marketing budget. We’ve changed to more TV and radio ads, and TV, in particular, seemed to be the biggest driving force for us. We use CallSource to track every lead that comes in, and we’ve seen a huge spike in calls from TV ads.”
It also helps that Reno is experiencing a tech boom with several companies, such as Tesla Motors, Apple, Rackspace, and Amazon, recently moving into the area. In fact, according to the Economic Development Authority of Western Nevada, 27 new companies moved or expanded into the Reno area in 2016 bringing close to 3,000 jobs with them. And all these workers are, of course, potential customers for Sierra Air.
“Our population is probably up 25 percent over the last two years,” said Ford. “That’s been very good for business.”
Stronger marketing is also the reason why Jeremy Anderson, general manager, Aire Serv of Las Vegas, Henderson, Nevada, believes sales were so strong this summer.
“We increased our online marketing efforts, focusing on online reputation through different digital marketing efforts, such as Yelp, Angie’s List, SEO [search engine optimization], PPC [pay-per-click advertising], etc. We have been focused on delivering a service we could be proud of. I’m not saying we are perfect, but we’re doing a better job of focusing on client satisfaction and retention.”
Still, Anderson is hesitant to say that summer sales were great this year.
“Great might be overstated,” he said. “We have seen steady growth — growth that is consistent with previous trends. So, we have had a good summer. Demand for cooling equipment usually starts tapering off around Labor Day, but it happened sooner this year, due to lower-than-normal temperatures. I expect that we will see one more heat wave this year, and our fingers are crossed that we can ride it through the fall.”
A stronger economy and low unemployment helped boost sales of cooling equipment at McCarthy’s One Hour Heating and Air Conditioning in Omaha, Nebraska.
“Summer cooling sales have been strong, and we have seen more people than usual write checks for their systems,” said John McCarthy, president, McCarthy’s One Hour Heating and Air Conditioning. “We have also increased the average ticket sale.”
While this was a good summer for McCarthy, he is not necessarily content with the outcome.
“We set new sales records this summer, so I have to be happy, but I am always looking to improve,” he said. “We have a long way to go to make up for last year’s warm winter.”
Weather definitely played a role at Atchley Air in Fort Smith, Arkansas, as cool temperatures resulted in flat equipment sales this summer.
“The biggest factor that kept us from growth has been the mild summer weather,” said Mike Atchley, president, Atchley Air. “Temperatures were significantly lower than average. We’ve done a pretty good job with the opportunities we’ve had, and we’ve had more success in getting financing for customers this year compared to last. The improved closing rates and having multiple financing options have allowed us to keep pace with the 2016 summer, even though the weather hasn’t been cooperative.”
SUMMER HITS
For those customers who chose to replace their equipment rather than repair it this summer, many opted for high-end systems, particularly inverter-driven units.
“We have installed more inverter-driven technology this year than any other year, and the 18-plus SEER equipment is particularly popular,” said Anderson. “We have also had more requests for Nest, ecobee, and other connected thermostats. I think the convenience and efficiency benefits of these products, along with their affordability, will continue to drive sales.”
Ford also sold a record number of high-end units this summer, particularly Carrier Infinity units with Greenspeed technology.
“These systems cost more than double what mid-level Carrier equipment costs, and I thought we’d sell two or three of them, but we’ve sold 30 systems. Getting my guys to even offer them has been a real challenge, because it takes guts to offer a $15,000 air conditioning system. It’s hard for them. We’ve also sold a lot of Wi-Fi thermostats, and on about 90 percent of our jobs, they’re just included now.”
Wi-Fi thermostats are also very popular with Atchley’s customers, who love being able to control their thermostats from their smartphones. Homeowners also showed an increased interest in variable-speed equipment this summer.
“That’s been a big change for us over the last year,” Atchley said. “We have a lot of customers who like the efficiencies and comfort that come with a variable-speed outdoor unit. We are also seeing more interest in our Aeroseal duct sealing process. It really goes along nicely with the efficiencies and comfort discussion we have with homeowners about variable-speed air conditioners.”
McCarthy’s customers have also shown an interest in Aeroseal, particularly when paired with a high-end cooling system that includes filtration, humidification, and a connected thermostat.
“Many of our clients want us to Aeroseal their ducts, which gives them 100 percent of the air going to the design register of the home. We have also made a commitment to install Honeywell RedLINK thermostats on all our new installations. During this summer’s heat wave, we received many dirty filter notices, so we were able to prevent our clients from possibly having no cooling.”
Agugliaro also noticed that customers bought more high-end cooling systems this summer, which he, once again, attributed to their overall feeling of safety.
“Buying patterns tell us the emotion of the market,” he said. “Compared to what people bought last year, it’s obvious that there is a trend of safety. That’s a great trend to see, because HVAC equipment makes people feel comfortable and safe, and it can save homeowners money; it makes them feel secure. That’s our job as contractors — to make people feel as safe as possible, as comfortable as possible, and as secure as possible. If we all do this all the time, we can change the world.”
Publication date: 10/9/2017