Industry Retailers Take the Plunge, But Cautiously

2. Industry Retailers Take the Plunge, But Cautiously • AQUA magazine’s 2018 State of the Industry report for pool retailers found that despite the stronger economy, fewer (52% compared to 64% for 2017) pool retailers said they were “very comfortable” about the future of their business. • Even so, 63% of retailers think their business is strengthening, 10% said it was weaker and 27% said it remained the same. A quarter (24%) of retailers are worried about online competition and big box stores and hiring/training new staff (30%). • More than a quarter (26%) have annual revenues of more than $5 million; 15%, $2.5–$5.0 million; 25%, $1.0–$2.5 million; 14%, $750,000–$1 million; 5%, $500,000–$750,000; 8%, $250,000–$500,000; and 7%, $100,000–$250,000.

3. The Temperature Increases on Hot Tub and Spa Sales • Sales of spas have increased YOY for every month from March 2017 through March 2018, including +25% for February 2018; +24%, September 2017; +15%, July 2017; +13%, June 2017; and +10% for both March 2017 and October 2017. • Approximately one-fifth of hot tubs are resold (100,000–200,000 units). Since the recession, retailers have added used hot tubs. Customers are able to trade in used spas, which are then reconditioned and sold at a discount, usually 25%–40% off retail. • A common complaint about hot tubs is that they are unattractive. Some manufacturers are now creating innovative hot tub designs, such as the cauldron style. Other innovations include automated water treatment, inflatable hot tubs and increased energy efficiency.

4. Pool Service Companies Have Cornered the Market on Clean • Pool service providers were upbeat about their 2017 revenues, with 31% experiencing a very strong increase; 41%, rather good; 19%, just OK; 8%, a struggle; and only 1% experienced a bad year. • Finding good workers was the top concern, at 33%; followed by being undercut by online retailers, 14%; unprofessional companies souring the market, 11%; finding any workers, 8%; rising costs, 7%; and personal ability to maintain their business, 7%. • Since labor supply is an issue, service professionals were asked the best way to attract young people to the profession and 31% said better marketing of the industry; 25%, offer better opportunities for growth; 20%, better pay; and 8%, better company culture.

5. Pool Builders Happy to Be in a Hole • IBISWorld estimates the new pool building industry generates $9 billion in annual revenues, with an annual increase of 3.8% from 2013 to 2018. There are approximately 13,450 businesses in the industry. • The increase in single-family homes construction (+26.11% forecast for 2018) has created more demand for new pool construction. Since the housing market has been tight during 2017-2018, some homeowners have installed pools to increase property value. • Metrostudy’s New Pool Index (NPI) increased 9.5% YOY for Q4 2017, and the company forecasts a 10.6% annual increase for 2018, with growth slowing during 2019. Construction trends include pre-fab package pools and integration with home automation.

6. Making Future Waves • The median size of the American home’s backyard has decreased more than 26% since the late 1970’s, putting space constraints on pool size and necessitating long, narrow equipment pads and equipment that does double duty. • Some pool retailers are launching online stores to make buying last-minute items more convenient for customers. • Experts urge pool and spa retailers to include outdoor living products, such as fire pits, patio furniture, waterfalls and barbeques to supplement pool-related sales, space permitting.

7. Advertising Strategies • When marketing new pool construction to homeowners, emphasize home values are increasing, and a pool could add value to their home in many locations. • It’s not unusual for pool services companies to market special cleaning offers during the summer, but suggest they enhance their offer with a drawing for all those who make inquiries (leads) for a family vacation to a major water park. • Lure current pool owners with an assortment of interesting and attractive outdoor living items with a limited discount offer when making a qualifying purchase.

8. New Media Strategies • Service companies should send a thank-you, follow-up email each time their technicians services a customer’s pool, hot tub and/or spa and should recommend any repairs or additional treatment they’ve discovered that require attention. • Offer online purchasing of chemicals and other products to your customers, with in-store pick up, so you can upsell them. Include content on your Website highlighting new products that will enhance their enjoyment of their pool, hot tub and/or spa. • Builders can advertise on local real estate agent sites to attract new homeowners who want to upgrade by adding a pool or spa.