A recent article in the Japanese publication“JARN” tells of how two factors — sales by mass retailers and e-commerce — currently are having a negative effect on the HVACR distribution system in China.
In fact, the article goes on to say, “This has affected the distributor system to the point where it is now on the verge of breaking down.” So the question is, are we seeing, or will we see such a trend in North America? The answer is yes and no.
I believe it was sometime back in the late 1980s or early 1990s that our industry was abuzz with articles and discussions about how Home Depot was getting into the refrigerant parts business. And though Home Depot is, for a fact, selling many parts, pieces and air filters today, it is primarily to do-it-yourselfers and not to general HVACR contractors.
So despite all the early alarm that has basically been tried here and failed, I doubt we will see any major retailers making a run at that portion of our market any time in the future.
I was in Japan back in the late 1980s and noticed residential heat pumps were on display and being sold in department and furniture stores. And though I don’t know if these were being installed by contractors of homeowners at the time, I do know such systems are getting very easy to install. So I definitely see the potential for a large portion of this type of business slipping away from our traditional distribution method of distributor to contractor to consumer. Both large retail chains and e-commerce may well become our industry’s future competitors.
The good news is our market, unlike the rest of the world, currently is dominated by ducted and large central refrigeration systems, so I don’t think this trend they’re experiencing in China will change things here very much. Therefore, the future sales of standard split systems and all their related parts and pieces through traditional networks looks pretty stable in the U.S. and Canada. Also, local codes and the wide diversity of the climates across our continent ensure HVACR suppliers and contractors likely will continue to do business in the same ways for many decades to come.
There is no question the ways smaller split and packaged systems may be sold in the future will change our market. Despite building codes, we probably will lose (and are probably already losing) sales of these types of systems. And the question for those in the current distribution network is whether they will get ahead of it and control it or lose it to direct sales from manufacturers and/or from large retail outlets.
Is this possible? Yes. Online sales can’t be easily regulated and small ducted and packaged systems can be manufactured to pass any safety requirements for use and installation by consumers, as has occurred with window and console air conditioners. Therefore, we could soon see retail stores selling them.
What am I suggesting? I’m not going to tell you how to run your business. I’m just telling you change is coming.
Therefore, be aware of this and decide what, if anything, you will do to take advantage of a definite global trend.
This article was originally titled “A lost art form?” in the June 2016 print edition of Supply House Times.