Dear HVAC community,
As COVID-19 continues its impact, it’s understandable to shift through various emotional states. But, by understanding our consumer landscape, we are managing to remain optimistic about the future of the mini split market.
Communities, industries, and businesses are certainly feeling the weight of coronavirus’ economic effects. Here in Florida, we’ve been hunkered down for a while already with schools and colleges closed, mandated work-from-home arrangements and everything from sports and entertainment events to planned trips and church services canceled.
When the news is all doom and gloom—as it has been since the beginning of the outbreak— it can be hard to stay positive and feel in control when the future seems so uncertain. Staying informed at this time is crucial.
So, we would like to help keep you clued into what’s happening across the consumer landscape: which factors are influencing, how people are reacting, how consumers’ behaviors are shifting, where they are turning, and what this all means for our business.
Here are a few things keeping us confident here at Comfortside/Cooper&Hunter:
1) Increased amount of time spent at home.
Based on recent research, 95% of consumers say they’re spending more time at home. As people become used to the routine of staying indoors – either unable to continue working or working from home – there is likely to be a greater need for certain items, improving their home comfort. Air Conditioning is becoming more essential, especially during the upcoming summer season. Due to economic uncertainty, homeowners are looking for energy efficient options that won’t break the bank.
2) Home additions are becoming a new trend.
The coronavirus outbreak has forced sports and entertainment facilities, such as fitness and dance studios, gyms, movie theaters, stadiums, night clubs and entertainment parks, to temporarily close their doors. People who are used to spending their time actively are quickly tiring of limited in-home activities. For example, some are converting their garages or planning home additions to be used as fitness and gym areas. The same is true for outdoor sports, with parks and stadiums being closed. Sportsmen are converting their homes to training facilities with in-home training aids. Fanatic movie goers are adapting their habits by creating a similar experience at home, with soundproof home theater rooms. All these newly created living spaces require air conditioning. Mini splits can be a perfect solution: energy saving, economical and easy to install. Portable AC units can also be an option as a temporary add-on to the existing HVAC system.
3) It’s a perfect time for renovating business premises.
Many restaurants, cafes and small businesses providing services were previously unable to find an opportunity to renovate their premises, with fear of losing customers and business income. During this forced break period, the opportunity to upgrade presents itself, and this includes air conditioning systems. While the reopen time is uncertain, the moderate investment to a mini split system could be a wise decision.
4) Family budget non-essential expenses shift.
Due to shelter in place orders, some non-essential family expenses were immediately cut, including:
- Eating out (restaurants, bars, coffee shops);
- Entertainment (concerts, sports event tickets, night clubs, entertainment parks);
- Non-essential shopping (clothes, Easter related);
- Beauty & Wellness (hair, nail and spa salons, barber shops);
- Travel (air tickets, cruises, tours, museums);
- Extracurriculars for kids (paid sports, art activities);
- Gym memberships;
- Cars (gas and maintenance).
So, those families who were dedicating a big chunk of their budget to out-of-home activities might now consider prioritizing home improvement investments instead.
5) Unexpected financial aid.
In recent days, the US government announced radical packages, including unemployment benefits, small business loans and stimulus checks to many Americans. The direct stimulus checks are expected to be deposited by the end of April, right before summer hits the US. For some, it will help alleviate the financial pressures to cover essential expenses while, for others, it will serve as extra, unexpected income to spend. While big purchases, such as real estate and motor vehicles, are postponed, home improvement can make headway.
6) Late tax refund and consumers’ plans to spend it.
The Treasury Department and the Internal Revenue Service are providing special tax filing and payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns has been extended from April 15 to July 15, 2020.
This year’s annual tax return survey, conducted by NRF and Prosper Insights & Analytics, found that nearly two-thirds (65%) of consumers expect a refund. While this research was conducted before the COVID-19 outbreak, 10% of the consumers were planning to use their refunds for home improvement. It is worth mentioning that other plans may be changed due to the current circumstances e.g. it is less likely that somebody will go on vacation (13% planned) or opt for “splurge” purchase (9%). Many consumers will also delay major purchases, such as those involving real estate or motor vehicles (10%). Even though the majority of the population had planned to prioritize payment of debts, increase savings, or fill essential needs, there is likely to be an increased percentage of people deciding on home improvement as the circumstances force them to spend more time there. The extension of the tax filing deadline will result in the tax refunds shifting into the summer period, increasing the chance that the funds will be spent on air conditioning as a part of home improvement.
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Taking all of these factors into consideration, we are optimistic and well-prepared for the upcoming season:
- We strongly believe that consumers’ behavior change due to COVID-19 will result in mini splits category growth vs central air conditioning systems.
- We haven’t stopped working. With a current full stock of products and parts, we’re keeping our office and warehouse fully operational and ready to ship new orders, service existing installations, and provide necessary support.
- Not a single person has been laid off at this uncertain time. In fact, we hired an additional multi-lingual technical support staff member to enhance our customer service.
- Minding social distancing and canceling on-site classes, we’ve invested in additional technical equipment to provide online training, including video broadcasting of tear-down procedures and troubleshooting of our mini split systems.