Spreading the stimulus

The economic stimulus package signed by President Obama in February expanded tax credits on more than a dozen types of energy-efficient products—everything from solar water heaters, to geothermal heat pumps, to wind energy systems.

Home improvement retailers have been using this as an opportunity to highlight these products through ads, in-store signage and, in some cases, special events. Everyone from Home Depot and Lowe’s to Main St. USA hardware stores are showing their customers how to save money, while increasing store traffic and boosting their own sales in the process.

“There are a number of vehicles we are using to promote the tax stimulus,” Home Depot spokeswoman Jean Niemi said. “We have a Web site, homedepot.com/taxcredit, that explains the tax credit and lists qualifying products. In addition, we have store signage, and we also provide DIY home energy audit brochures that give customers a checklist and shopping list.”

The home page of Lowes.com features a link to “Build Your Savings,” a page that has information about tax credits and reducing energy bills, and includes how-to videos designed to help homeowners “save more than $3,000” by doing the work themselves. There are “Tax Credit Eligible” signs posted throughout Lowe’s stores, and customers who use a Lowe’s credit card will receive a year-end summary of “Tax Credit Eligible” purchases.

Anecdotal evidence suggests the tax credits are working to boost sales. Windows and doors in a Plymouth, Minn., big box are $200,000 above projections, according to a local TV report that credited the tax credits. And Ace Hardware of Anacortes, Wash., which is heavily promoting the tax credits, has reported a 20% increase in sales of energy-efficient products this year.

Randy Burgess, VP of the Anacortes-based store, has been proactive in providing customers with tax credit incentives, posting information next to products like water heaters and weather stripping and providing rebate forms where they apply. His store is also planning an end-of-the-summer event with a bulb exchange that will feature vendors promoting everything from wind turbines to composting toilets.

“Obviously, we’re trying to drive sales and have had success on items like light bulbs and water heaters,” said Burgess, who is also a group leader for several Ace dealers in the Puget Sound area. “It definitely resonates with the customer. We’ve been doing this since before the election but have stepped up efforts even more since.”

Burgess said that some of his customers are already familiar with the tax credits from news reports and the Internet, while others don’t know about them until they read the information posted around his store.

“If the faucet has leaked for the last two years and they’ve ignored it, they’re fixing it now. If the water heater needs to be replaced and they’ve been putting it off, they’re doing it now,” he said. “People see a chance to get something back and to do something good at the same time. It’s all positive.”

Gina Schaefer, who owns six Ace Hardware stores in the Washington, D.C./Baltimore area, is in the process of setting up an 8-ft. “green for tax credit” section in one of her downtown Washington locations. The section, which should be in place by the end of July, will consist of the product, a description of the concept, the code or statute that relates to it and tax credit information. The information will be presented on laminated documents that give it a polished look.

“Our focus is on getting cash back for the customer,” Schaefer said. “Initially, I think the section will appeal to homeowners, but then more to contractors, since our demographic is one that finds people to do the work for them.”

This is not the first time Schaefer has promoted energy-saving products in her stores. She has invited Solgenics, a solar panel company, to set up a table in one of the stores to educate customers about the benefits of these products. And Honeywell, which recently partnered with Ace to promote its wind turbine product, will be doing a training session with the staff once the product is in stores.

Schaefer is promoting the “green for tax credit” section in a newsletter she sends to customers, as well as on the store’s Facebook page and through Twitter. While Schaefer believes some customers will take advantage of these credits, she said the price tags may be too steep for others.

“I think some people don’t know enough about it yet, and others think it’s too expensive because they don’t make the connection to savings over time,” she said. “Like the wind turbine is $4,500, and they can get a tax credit of $3,500. But they see the $4,500, and it turns them off.”

Craig Cowart, senior VP merchandising and marketing for Marvin’s Building Materials and Home Centers, said his company has been notified by several suppliers about tax credit offers for consumers and has posted “take home” point of purchase information supplied by those vendors. But he said Marvin’s is just starting to push the envelope on this and has not yet seen a surge in sales in these categories.

“To date, customer response and feedback has been very limited,” said Cowart, whose company has 26 locations across Florida, Mississippi, Georgia and Alabama. “We are seeing more movement on categories like insulation when we offer our own discount, such as via mail-in rebate, versus simply communicating the incentive for tax credits alone.”

Cowart said suppliers like M-D Building Products, which makes weatherization materials, have been focusing on energy savings for a long time, while others, like Guardian Building Products, have increased their focus with the expansion of the stimulus tax credits. Regarding customer interest in these products, he said it increases when his stores make it easy for them to quantify savings.

“When we show them what they can save by using a programmable thermostat versus a manual unit, we see a slight surge in these products,” Cowart said. “And we find a bigger gain on energy-saving goods when we promote it at the right price, not just leaning on the fact the product saves a customer money on energy consumption.”

In terms of marketing, Marvin’s includes information about energy-saving products in its ads, posts signage in its stores and does “how to” segments on the Birmingham, Ala., FOX television station morning program—some of which have included energy-saving tips like changing furnace filters on a regular schedule, using programmable thermostats and proper home insulation.

Home Hardware Center, a chain of 15 stores in Mississippi and Louisiana, is starting to promote items like Larson storm doors and CertainTeed insulation, providing brochures to customers and posting vendor advertisements about tax credits.

“We’re taking the message that it’s a good time to replace windows and doors and reinforcing it,” owner Jim Smith said. “It may not make a big difference in terms of money in their pocket, but every little bit helps in today’s economy.”

Specialty retailers are also having success with energy-efficient products, including Solar Reflections in New Britain Township, Pa., which sells solar daylighting systems and attic fans. CEO Jacob Vargo said he advertises his products and the tax incentives associated with them in magazines, newspapers and on the Internet, pointing out to consumers that they can save money both short and long term.

“It’s a great cost-effective way to go, and people are saving money and getting a 30% tax credit, too,” said Vargo, who has showrooms in Chalfont and Sellersville, Pa. “The May-through-August time period has always been busy, but with this year’s added kickback from the government, I’ve seen a marked increase.”