In preparing last year’s edition of AQUA’s State of the Industry issue, the phrase “cautiously optimistic” was so common among builders it sounded like an industry-wide mantra. The reasons behind those qualified assessments were not obscure. In short, the prevailing feeling was that although the industry was experiencing slow but steady growth since the dismal years of the recession, the recent memory of those down times coupled with economic uncertainty ahead gave pause to those forecasting better days.
This year that plodding pace has continued into the first quarter of 2014, and if the increase in sales isn’t exactly inspiring, the industry is clearly expanding. Builders evince a firm resolve to maintain the momentum with sound business practices and increasingly aggressive marketing efforts.
This year’s SOI Builders Survey suggested builders are enjoying an improved business climate. Of those responding to the survey, 69.12 percent indicated that 2013 was better than the year before, with 18.38 percent saying it was the same, followed by a scant 12.5 saying it was worse.
THE BROADER LANDSCAPE
As has been the case in the past, both in good times and bad, assessments of industry performance neatly shadow the real estate market. According to the U.S. Department of Commerce, new housing starts climbed to 1.09 million, up 22.7 percent over 2012. That’s the highest they’ve been since peaking at 1.4 million in 2007, right before the bubble burst.
Likewise, the National Association of Realtors reported 5.39 million in existing home sales, the best performance in seven years.
When considering those housing statistics as well as similar upswings in the stock market, consumer confidence and manufacturing statistics, improvements in swimming pool sales are no surprise. However, weather and climate are also part of the picture, starting with the brutally cold winter just past. The winter of 2013-14 was among the coldest on record the Upper Midwest and Northeast. Even the Southeast, which is typically less impacted by cold, saw numbingly frigid temps.
By contrast, much of Western U.S., where the weather is typically mild, moderate to extreme drought conditions have resulted in water shortages that have threatened pool sales. In addition, rising energy costs have put pressure on the pool market as consumers weigh potentially increased operating costs in pool purchasing decisions.
This year’s survey respondents also cited a bevy of more routinely problematic issues including safety concerns, unqualified competition, black market contracting practices, hostile government regulations and concerns over the environmental impact of pools and spas.
Despite those potentially limiting factors, it’s clear that more homeowners are feeling comfortable with their finances and it seems safe to say the darkest seasons of recent years are behind us.
A NOTE ON VOICES
As is customary in the AQUA SOI issue, we’re presenting Q&A pieces with insightful industry leaders. On the builder front, this year we have two fascinating discussions, one with Paul Porter of Premier Pools, the purported largest builder in the world, and another with Debra Smith of Pulliam Pools, widely believed to be the oldest pool construction firm in the U.S. and possibly the world.
In both cases, you’ll find some truly enriching perspectives on what it means to achieve success and how to sustain it, regardless of the weather or current economic climate.
Comments or thoughts on this article? Please e-mail [email protected].
Eds. Note: This year’s survey differs greatly from the 2013 edition with the questions more closely targeting the business side of the pool building industry. Last year we learned that builders are a diverse group with a broad spectrum of design and construction practices. With this year’s focus we similarly find that in terms of business practice, builders are split on a number of key issues with widely varying opinions.
Getting Better
In spite of bad weather, water shortages and other potentially challenging issues, builders are looking forward to a strong 2014. Of our respondents, 69.12 percent say 2014 will be better than last year, 18.38 report no change and only 12.5 say business is headed downward.
Impactful Issues
When it comes to the big issues that are driving market conditions, nearly 60 percent of builders cite the economy, with weather and local competitors tied for a distant second.
Revenue Range
In stark contrast to the nearly unified answers to our first two questions, when asked about their annual revenues, builders revealed a wide range, with an impressive 40 percent checking in with revenues in excess of a cool million.
Going Social
We asked for comments about the perceived benefits of social media marketing. Responses included “a means of free advertising,” “a great way to reach large numbers of people quickly,” “a place to showcase your work,” “validates reputation and consumer satisfaction” and “generates referrals.”
“Many customers feel like they know you better on a more personal level. In some cases, Facebook has allowed us to build friendships with clients and potential clients, when we otherwise probably would not have had that opportunity.”
“It broadens exposure of a product that is very visual, and allows feedback, be it positive or negative, to become part of the equation.”
“Social media creates another outlet where potential customers can get comfortable with your business or product.”
Picture Priority
Given that pools are becoming ever more visually striking and that marketing and awards are largely based on imagery, we asked builders if they hire professional photographers to capture their best work.
Yes – 30% No – 70%
Popular Products and Features
automatic pool covers, fire pits, shallow non-diving pools, swim spas, sun shelves, saltwater chlorination systems, solar heating, wellness hydrotherapy, water slides, UV sanitation, waterfalls and swim-in grottos, complete landscape design, robotic cleaners, LED Lights, Japanese tile, custom attached spas and fountains.
“We are starting to see customers “compete” with one another once again. We’ve had more people say, ‘Well, my friend/neighbor got a new pool and got some cool things and was wondering if I could add that to my existing pool.’”
Education Needs
Year in, year out, education remains a primary concern for builders. We asked respondents if they feel that the industry’s organizations are meeting their educational needs. Despite oft-cited criticism of the state of education, builders gave a surprisingly positive response.
Yes – 73% | No – 27%
“Continuing education and other education should be available to take online at our convenience.”
“Training is too far away and expensive. We send employees despite cost and distance but that could be vastly improved upon.”
Price Point
Builders often complain that price is the primary factor driving sales; an issue that they believe erodes quality and industry reputation. So we asked: Is price the primary factor driving sales in their markets? Regardless of the response, the comments reveal that price remains an emotional issue for many.
Yes – 52% No – 48%
Comments:
“We have had more than a few people tell us that they liked our company the best, but for financial reasons they had to use another company. We’re fairly sure that not all of our competitors have proper insurance coverage, bonding, etc.”
“Price unfortunately still drives most customers but does not drive our determination to deliver quality.”
“We strive to prove that our products and services are different and better. We don’t have the closing rate that cut-rate builders have, but we are profitable enough to sustain our company and employees for the long term.”
“Since 2008 the consumer is far more cautious in spending, and till 2013, the lowest price won most deals. This of course does not apply to those with plenty of disposable income, a desire for high quality products or services.”
Succession Plans
The challenge of bringing fresh faces to the industry has become a hot topic. We asked builders if they currently have a succession game plan and what they think the industry needs to do in order to attract young talent.
Yes – 45% | No – 55%
“We need to convince people that swimming pool construction/service is an actual industry that they can make a career out of.”
