While mass merchandisers moan about the lack of money to be made in the barbecue grill business, they are fired up about the more expensive and gadget-intensive models they are adding to their 1985 lineups. They hope uniqueness will relieve some of the competitive heat. Margins in the category are noriously "horrible," retailers agree, starting in the 30-point range and winding down to 20% and under after fierce summer promoting. However, chains like K mart, T.G. & Y., Sears and Danner's are approaching the gas grill market this year with more sophisticated models.
In fact, the gas grill market has reached only a 14% saturation level, according to Larry maxwell, vice president sales for Briston, Wis.-based Charmglow. He underscores this is the same point microwave ovens had reached when "they went crazy" several years ago. For 1985, Charmglow introduces a complete new 10-sku line of cart model grills featuring more carts with posts and "a lot of redwood." Prices will range from a $169.99 suggested retail to $699. Also evolving with the times is Weber, the leading charcoal grill maker, with some 20 charcoal kettle grill sku's on its roster and nine not-too-successful gas grills. Western regional sales manager Bill Ebyl reports the Palatine, Ill.-based manufacturer will probably introduce a full line of more viable gas grills in 1986.
Retailers, meantime, are working with vendors to tap the strong gas grill trend, adding more luxury and convenience features. While they are generally trying not to tamper with price while upgrading their grills, many have added new top-of the-line models this year. K mart, for instance, upped its 1984 ceiling price of $229 to $250, and Danner's went from last year's $189 top price to $239. Sears added a $299.99 kettle style gas grill to its 1985 catalog, but the top point remains at 1984's $399. At T.G. & Y. the gas grill line's highest priced point for both years has been $179. In fact, merchandise manager John Minici reports he has revamped his entire gas grill line for 1985 without disturbing any price tags. "We were positioned incorrectly un 1984. We had too many pedestal models and not enough features," he recalls. "For 1985 we have been able to work with suppliers to offer the consumer the added features while maintaining 1984 price points."
The "guts of the business" is at the opening $99 price point. However, Minici projects more volume from the next two price points--$139 and $159--for the upcoming season. K mart senior buyer Donald Bratt also has been working with vendors to develop new gas grill models with unique accessories without increasing price. He points to the price competitive Swinger II from Metals Engineering, Greenville, Tenn., which K mart "has done a few new things with" for 1985. "We are offering new features, like more redwood, and a general upgrading of the grill to remove it from the promotional rat race," explains Bratt. "We have to try to preserve margins somehow or this business will eventually go offshore." Accessories is one aspect of the grill business with stronger margin muscle, hovering between 40% and 50%. However, many mass merchants report they simply do not have the floor space needed to cash in on it.
K mart, nevertheless, is going almost chainwide in 1985 with a replacement parts program it tested last year in Florida, reports Bratt. In coordination with Columbus, Ga.-based manufacturer Bradley, the chain will offer replacement burners and fire and cooking grids designed to fit 80% of the grills on the market. He is devoting 30 in. of the stores' average 70-linear-foot grill departments to the program and anticipates "much healthier" margins than from the grills. While mass merchants try to devise new ways to make the grill business more profitable, it is still the category consumers most frequently buy on promotion, according to a 1984 CSA/Leo J. Shapiro and Associates consumer attitude study. It reveals that 7 out of 10 shoppers polled bought their grill on sale.Therefore, while retailers may be projecting as much as 20% sales gains for 1985, winning profit dollars may continue to be much more elusive. "As a whole this category is not the answer to a buyer's prayers," concludes Bratt.
The motivation appears to be two-fold:
- First: By offering more unique models, each varying in the selection of features--such as temperature and fuel gauges, control panels, various cooking surfaces and sizes, redwood shelves and more--merchants can build markets share while rebuilding some margin security.
- Secondly: The 10-year-old gas grill business is simply where the growth potential is. The Barbecue Industry Association not only targets gas grills as the growth segment of this business, it is also where the dollar volume is strongest. For instance, while gas grills comprised only 20.1% of the category's total unit sales in 1984 (including charcoal, gas and electric), compared to charcoal's 79.1%, they rung in some 66.7% of total sales. Charcoal sales accounted for 32.2%, and electric 1.1%. For 1984, that totaled $271 million for gas grills (manufacturer dollar value), $131 million for charcoal and $4.3 million for electric grills.
In fact, the gas grill market has reached only a 14% saturation level, according to Larry maxwell, vice president sales for Briston, Wis.-based Charmglow. He underscores this is the same point microwave ovens had reached when "they went crazy" several years ago. For 1985, Charmglow introduces a complete new 10-sku line of cart model grills featuring more carts with posts and "a lot of redwood." Prices will range from a $169.99 suggested retail to $699. Also evolving with the times is Weber, the leading charcoal grill maker, with some 20 charcoal kettle grill sku's on its roster and nine not-too-successful gas grills. Western regional sales manager Bill Ebyl reports the Palatine, Ill.-based manufacturer will probably introduce a full line of more viable gas grills in 1986.
Retailers, meantime, are working with vendors to tap the strong gas grill trend, adding more luxury and convenience features. While they are generally trying not to tamper with price while upgrading their grills, many have added new top-of the-line models this year. K mart, for instance, upped its 1984 ceiling price of $229 to $250, and Danner's went from last year's $189 top price to $239. Sears added a $299.99 kettle style gas grill to its 1985 catalog, but the top point remains at 1984's $399. At T.G. & Y. the gas grill line's highest priced point for both years has been $179. In fact, merchandise manager John Minici reports he has revamped his entire gas grill line for 1985 without disturbing any price tags. "We were positioned incorrectly un 1984. We had too many pedestal models and not enough features," he recalls. "For 1985 we have been able to work with suppliers to offer the consumer the added features while maintaining 1984 price points."
The "guts of the business" is at the opening $99 price point. However, Minici projects more volume from the next two price points--$139 and $159--for the upcoming season. K mart senior buyer Donald Bratt also has been working with vendors to develop new gas grill models with unique accessories without increasing price. He points to the price competitive Swinger II from Metals Engineering, Greenville, Tenn., which K mart "has done a few new things with" for 1985. "We are offering new features, like more redwood, and a general upgrading of the grill to remove it from the promotional rat race," explains Bratt. "We have to try to preserve margins somehow or this business will eventually go offshore." Accessories is one aspect of the grill business with stronger margin muscle, hovering between 40% and 50%. However, many mass merchants report they simply do not have the floor space needed to cash in on it.
K mart, nevertheless, is going almost chainwide in 1985 with a replacement parts program it tested last year in Florida, reports Bratt. In coordination with Columbus, Ga.-based manufacturer Bradley, the chain will offer replacement burners and fire and cooking grids designed to fit 80% of the grills on the market. He is devoting 30 in. of the stores' average 70-linear-foot grill departments to the program and anticipates "much healthier" margins than from the grills. While mass merchants try to devise new ways to make the grill business more profitable, it is still the category consumers most frequently buy on promotion, according to a 1984 CSA/Leo J. Shapiro and Associates consumer attitude study. It reveals that 7 out of 10 shoppers polled bought their grill on sale.Therefore, while retailers may be projecting as much as 20% sales gains for 1985, winning profit dollars may continue to be much more elusive. "As a whole this category is not the answer to a buyer's prayers," concludes Bratt.