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Room Air Conditioning: A Tale Of Two Vendors

7/16/2007 02:00:00 AM Eastern

Manufacturers and dealers were hopeful that last week's first nationwide heat wave of the summer would kick-start sales of room air conditioners after weeks of relatively cool climes.

But consumers who sought relief from the heat by purchasing first-time or replacement models were faced with a perennial decision: visit a mass merchant to grab an inexpensive import and go, or make a longer-term investment in a premium appliance that's sold on an assisted sales floor.

TWICE spoke with top proponents of each approach — privately held Friedrich on the specialty store side and Haier America for the mass channel — to get their take on their respective markets and the current summer selling season.

TWICE: How's business?

Jane Deming, marketing services manager, Friedrich: The category is so weather related, but sales are moving at a good clip. We're ahead of last year and beating our target.

Kurt Kaufhold, VP, home comfort general manager, Haier America: Sales have been really good and we're ahead of last year so far. We met our plan and shipped our orders. Retailers had been a little anxious because the heat has only now come across the country. We hope it gets their sell-through going.

TWICE: Describe your operating model.

Deming: We only distribute to retail partners that can take the time to sell and explain our products. We don't try to compete with lower-priced imports, although offshore pricing pressure is driving prices down. Sometimes their quality is reasonably good, sometimes it's not. But we haven't changed our manufacturing model substantially since the company was founded in 1883. The vast majority of production is still done in San Antonio, Texas, and our goal remains to build durable, commercial grade, workhorse products. To underscore the point, we just won two Consumers Digest "Best Buy" awards in the premium room air category, and recently received a letter from a consumer with a 40-year-old working Friedrich air conditioner. We also learned of another unit that survived Hurricane Katrina after being submerged for three weeks.

Kaufhold: Our accounts include national discounters like Wal-Mart, Target, Menards and BJs, and regional chains like P.C. Richard. All of our units are manufactured in China, and are distributed from two warehouses located on either coast, which allows us to turn a truck around in 24 hours on re-orders. We have two lines — Energy Star-qualified and non-Energy Star qualified — and the bulk of our business is in replacement sales of smaller bedroom units, with retails starting at $89 to $99 for the smallest 5,000 btu models.

TWICE: What are the big trends in AC?

Deming: Ductless split systems [with outdoor compressors and indoor units] are catching on in the U.S. They don't obstruct windows, you can control multiple units independently, and it's a good alternative to central systems. There's been a push on the residential side over the past three years and I think you will begin seeing more of them at retail.

Kaufhold: Due to the rising cost of utilities, the Energy Star designation is becoming more important to customers who want to conserve energy, but who also want to do so in comfort.

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