Home Depot, Trane chase homeowners

April 28, 2000
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ATLANTA, GA — Home Depot and The Trane Company have established a pilot program that puts the major home improvement retailer in the residential installed hvac market for the first time.

“At $19 billion annually, this is the largest segment of the home improvement business in which we’re not presently involved,” said Chuck Berk, Home Depot national product manager. “We feel the time is right for us to explore this potential opportunity.”

Home Depot will use its recently acquired subsidiary, Apex Supply Co. of Atlanta, to provide the link to Trane. Apex is a Trane wholesale-distributor.

For the pilot program, the retailer will showcase Trane systems in its stores in the eastern Tennessee cities of Knoxville, Chattanooga, and Kingsport, as well as Dalton, GA. Seven stores will be involved.

Dave Pannier, executive vice president for the equipment manufacturer, said the program will use Home Depot’s strong customer relationships to generate additional sales for Trane dealers.

“Our dealers are excited about the partnership,” he stated. “With 20,000 people a week visiting the average Home Depot, it’s easy to see how that kind of additional exposure to our products should drive more business to them.”

More leads for contractors?

Pannier said that Home Depot will basically be a sales lead generator and that all sales would be made by a Trane Comfort Specialist Dealer. The store will have a display showcasing the manufacturer’s residential products, and the full range of residential heating and cooling products will be offered.

Leads will be forwarded to a call center at Apex Supply, where they will be passed along to the dealer serving that territory. The dealer will then make the sale and handle installation. The customer will pay Home Depot, which will keep a lead generation fee.

Approximately 30 dealers will participate in the pilot program. Trane and Apex discussed the program with area dealers in advance, and gave them the choice of whether or not to take part.

“All agreed this was an attractive opportunity,” said Pannier, and all are participating. “They may obtain leads not gained through normal channels.”

At the end of the pilot

Pannier said that Trane will look at the program for the upcoming cooling season and the heating season. By the end of the year, the company expects to be able “to validate whether this was a successful pilot or not.”

Apex Supply vice president Buddy Wallace remarked that the new program is an extension of Home Depot’s growing commitment to professional customers.

“Partnering with professional contractors in the marketplace is a new arrangement for Home Depot,” said Wallace. “This program utilizes Apex’s expertise in hvac to provide the link between Home Depot and Trane.”

Home Depot currently operates more than 960 stores in 45 states, five Canadian provinces, Puerto Rico, and Chile.

Sidebar: Contractors speak out

Contractors contacted by The News had mixed opinions regarding the union between Home Depot and The Trane Company. Apparently, what side of the fence a contractor sits on, so to speak, is what a contractor thinks about the pilot program.

Kevin Whalen, of Q-Dot, Inc., Pittsburgh, PA, didn’t want to call “it a black day in hvac history, but let’s just call it a nasty day.”

He characterized the new union as a “food chain” in which someone is bound to lose.

“If you have people lined up five deep, everybody needs a certain size chunk to stay in business. Either the homeowner has to pay more or part of the food chain, e.g. the installer, gets eaten up. I’m not sure people signing up for the program understand the cost.”

Meanwhile, Frank Karoly, of Unique Indoor Comfort, a Trane dealer in St. Louis, MO, believed that “If it’s done right and backed up by good service, it will help us. Home Depot has the ability to help build the Trane name and brand image.”

On the other side of the fence, Mike Cannon sells Carrier products at Crosby & Company in Bossier City, LA. He took the Trane-Home Depot link as a challenge.

“We are already fierce competitors with Trane,” said Cannon. “We welcome the competition. I’d be more concerned if I were a Trane dealer.”

And then there is Rich Kusleika, of Standard Heating and Air Conditioning, Inc., Omaha, NE, who believed the venture will not be around for long.

“It may have an up-front affect, but in the long run, it won’t work,” he said. “Any decent contractor will not just do installation work. They can’t make enough money. Home Depot may have to work with some non-sophisticated contractors.

“It never worked for Sears and all it does is add another layer of mark-up to the customer,” concluded Kusleika.

Dan Honeycutt, of GMS Air Conditioning, Inc./ Comfort Systems USA, Stone Mountain, GA, is a commercial-industrial contractor, so the latest news doesn’t affect him. But, yes, he certainly has an opinion.

“I’m not sure it’s a good arrangement because manufacturers may lose their close contact with residential contractors,” he said. “You’ll see more manufacturers getting back into the contracting business and the dilution of what I consider a fairly successful supply chain.”

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