The Burgeoning Market In an article appearing in the June 29, 1938 issue, Mac Smith, a Detroit merchandising counselor, wrote on the growing opportunities for contractors to install air conditioning equipment in small retail stores and restaurants.

A survey of 1,366 recent air conditioning installations done in a variety of cities including Brooklyn, NY; Syracuse, NY; Indianapolis, IN; Chicago, IL; Miami, FL; Houston, TX; and San Francisco, CA, revealed that small businesses were big buyers of air conditioning systems. “Stores and shops — predominantly one-room establishments like dress shops, shoe stores, haberdasheries, men’s wear shops, and drug and confectionery stores — represented only 10% of the tonnage in these communities prior to 1935. Two years ago, they jumped to 25%. Last year, they accounted for a third of all air conditioning business.

“Restaurants were believed by many to be a saturated market when they reached 12% of the air conditioning tonnage in 1935. But they were up to 14% last year.”

Smith pointed out that theater installations, which had been 40% of the market a few years prior to 1938, were well below 7% by 1938. In addition, Smith called attention to the fact that there were only so many movie houses, and most of them already had air conditioning, while only a small percentage of stores and shops were air conditioned.

Also, large buildings and industrial plants were dropping in relative importance because the market for the smaller systems was expanding much quicker.

As the small-tonnage market grew, Smith asserted, it was becoming more profitable for the smaller dealer to get into the air conditioning business. And this not only was good for the dealer but others involved as well.

“More outlets for air conditioning mean more sales. More sales mean bigger production schedules in air conditioning factories, almost invariably resulting in lower prices for equipment. And reduced prices mean easier business for everybody!”

According to some small-tonnage dealers, the reasons that this was “the most desirable kind of business [in the industry] to handle” included ease of calculations, low overhead, and ease of selling. Whoever was the first to approach a prospect was likely to get the job, unlike with a big job where there was more competition and more shopping around occurring. Also, there wasn’t a lot of red tape involved, as, “The man who runs the business is the man who is going to do the buying.”

Another point made was that the hardest part was over. By 1938, everybody knew what air conditioning was and they knew its benefits. “But the sales work on the air conditioning prospect has scarcely been started,” Smith said. “A cross-section of the ‘Main Street’ market across America… revealed the amazing fact that 79% of those people who are seriously considering the purchase of air conditioning during 1938 have never had a sales contact from any representative of a manufacturer or dealer in air conditioning!”

Publication date: 06/25/2001