Ron Parrs, owner of Par Pool and Spas, reveals where the pool and spa industry is headed

So Where Are We Going?

That's the question that everyone in the Pool & Spa industry needs to be pondering at this moment in time. And the answer needs to be well thought-out.

Aqua Magazine's article on the dwindling profit of chemicals merely scratches the surface of what I believe are chronic and systemic problems of an industry that possibly has never truly matured; at least in the classic business sense of the word.

As I put forth my thoughts and ideas, I will do my best to explain what I have seen and what I have experienced over the last 4 decades. I apologize in advance for painting the various segments of the industry with very broad brush strokes.

Let me first say that I grew up in the Pool & Spa industry - a brief history. In the late 1950's, my father began selling and installing vinyl liner inground pools after being in the awning and storm window business for a number of years. His office was in our finished basement and our own backyard pool served as his showroom and working model.

In the later 1960's he opened and developed a retail pool chemical and supply store along with selling aboveground pools. To the industry as a whole, the 1970's brought an expansion of the business in all sectors (construction, service and retail) until the days of the "oil crisis" and recession.

Most of the 1980's were solid years; construction remained steady, new chemical treatment technologies emerged, swimming pool after-market retail became more "refined" almost in a boutique sense. Spas and hot tubs came into vogue.

Competition was relatively limited to local fellow "traditional" pool builders/retailers, along with a couple of modest sized discount "chain" stores and the occasional hardware store (what I believe to be the initial cracks in the pool industry armor) who chose to have a shelf or two of chlorine tabs, shock, algaecide and pH adjusters on hand. But we were still considered (even by suppliers) to be "mom & pop" stores.

There was a mom & pop mentality throughout most of the industry. For a variety of reasons, we chose to NOT consider ourselves as professionals or specialists. In the 1990's we all experienced a rather strange growth and change to the industry. Suddenly there were all of these catalog-shopping portals. And then later on the Internet blossomed.

All the while, more and more pool and spa related products (even pools and spas themselves) began showing up in "non-traditional" outlets such as big-box stores, membership style stores, and so on into today's current society and marketplace. Heck, you can even buy pool & spa chemicals on Amazon.com.

What have we allowed to be done to ourselves? Are all these changes "bad"? Maybe not, but I believe the real question should be: at what point did we as a so-called professional industry of "specialists" lose our way?

At all levels of the industry (retail - also includes builders and service companies, distribution and manufacturing), we seem to have not only lost our way, but we also neglected the need to be professional business people marketing, selling and supporting high quality products that should have a high value for the consumer and a good profit for the retailer, distributor and manufacturer.

Instead we have all become, in one way or another, relatively foolish mom & poppers (at all levels) wanting to take the last morsel and give it away just to make a buck. At the same time, overall professionalism within the industry has become abysmal, products have lost their value and have instead become commodities and most salespeople have become mere order-takers who are generally unwilling to think outside of the box.

When mentioned that there are "professionals" in the pool and spa industry, and you will more than likely hear snickers, if not guffaws from the general public (check out any of the online forums where the blind lead the blind). Oh, and did I mention that very few of us are even attempting to "support" the industry as a whole? What does "supporting" the industry even mean? Please allow me to explain these thoughts.

There was a time, as mentioned above, that if you had a pool and you needed supplies, you went to the local pool store. At this location, the consumer could find the products they needed with helpful and knowledgeable store owners and salespeople to help them with not only their purchase, but with their technical questions.

Is there a change in the way people purchase items today compared to 10 or 15 years ago? Without doubt, yes. How many times does a consumer come into a store ask their questions or have their water tested (and spend the valuable resources of the establishment) only to leave and purchase the "same thing" either on-line or at the local big box store?

No wonder retailers are frustrated - and sometimes down right rude and the industry receives a black eye. Or how about when you, Mr. Retailer, go down to pick up a few supplies at the local distributor and find one of your own customers standing in line buying products or that same guy puts a sign on his car, prints up business cards and "gets into the business"? You feel like your years of loyalty and hard work have just been backwashed away!

Then there's the manufacturer that comes out with MAP (minimum advertised pricing) for the so-called mass merchants and big internet and catalog guys but the rest of us retailers look at that price list and discover the pricing is still 5% less than what he can buy it for through distribution.

Never mind the big-box store who can return his pool and spa merchandise to the manufacturer at the end of the season with no return freight or stocking fees and only pay for what he sold - there's a dirty rotten industry secret that most retailers don't know about.

Who's to blame? I like to think that everybody is to blame, including myself. What have we done, not only to our individual companies' bottom line, but the pool and spa industry's bottom line as well? And that may be the more serious issue.

Are we afraid of making a profit? Or worse, are we afraid of offending someone who thinks that our "price is too high?" Our industry and its products and our individual expertise have value. The bottom line is financial as well as overall perception. So, what are we collectively doing to our industry, our livelihood, and our very future?

Allow me to make a few more illustrations and observations at all levels of the industry. This time we'll start with the manufacturers.

By and large, the manufacturers of the pool & spa industry have carried the brunt of the marketing, the advertising, the innovation of new products and services. Up until recently, they have had a relatively simple task supplying all of us with great products at reasonable costs with relatively minimal governmental oversight or interference.

That may be changing, and changing dramatically, as we've seen with the VGB Safety Act and potential environmental issues. It costs time, effort and money to fight these issues or to at least reach reasonable compromises (skewed to our thinking not government's) with the authorities. Unfortunately, maybe they didn't stand up enough - as a united industry.

Everyone, including manufacturers, is under pressure to make sales and increase market share, but to what end? How are they responsible for building and maintaining marketplace professionalism? What about real and perceived value? Do they open up a new dealer without having that dealer or its principles at least prove that they understand the complexities and idiosyncrasies of the pool industry? Is the new dealer responsible to expect and receive proper training so that they are a "certified" or "trained" dealer?

That may be difficult since so many products are only available through distribution. But we will look at that aspect shortly. What about proper, realistic pricing strategies that dealers should be encouraged to follow or maintain in order to be a bona fide dealer? Back in April of this year, I would suspect that almost all dealers received the MAP (minimum advertised pricing) memo from Pentair.

When you read the first sentence, you felt good. You thought, hey, someone is finally standing up for the hundreds of smaller dealers wanting to compete. But then as you read through the rest of memo, you quickly realized that the MAP was close to or sometimes at dealer cost (because you weren't large enough to buy direct and therefore had to go through distribution). Again, the small dealer is left feeling neglected or unimportant, and rightfully so.

On the other hand, kudos should go to Raypak for their corporate stance on heater sales via the Internet. Yes, heaters are specialty products that need special handling, servicing, expertise, etc. Heaven only knows what Joe consumer is going to do in attempting to install a heater then have warranty issues that are not covered due to consumer negligence or poor or improper installation.

And by the way, Joe consumer has been told through the variety of Internet forums that he doesn't need a professional pool service company because he can treat his pool with a bottle of Clorox and a box of Arm & Hammer! No wonder all of the copper that was a part of the heater is in his pool.

The last part of the supply end that we should look at or at least uncover for our uneducated pool & spa brethren is the "support" of big boxers.

This is a difficult area. We understand that in order to keep the price "reasonable" manufacturers need to produce a higher volume of products. Because dealers choose not to belly up to the bar and become dealers or end user suppliers, the volume has to go somewhere.

Turning to the mass merchants in and of itself is not necessarily a bad thing, but the rules under which they supply these outlets is.

I alluded to the "dirty rotten secret" earlier. What dealers don't understand is that "big boxers" dictate to the manufacturers what kind of product they will carry, what it will cost them and even when and how they will pay for it.

A case in point: several years ago at an Authorized Dealer event, we were privileged to be taken on a plant tour. It was truly interesting and very eye-opening - although not the kind of eye-opening that the manufacturer probably wanted to display.

As we came to the end of the tour, we visited the distribution warehouse where orders are assembled and readied for shipment. Right smack in the middle of the floor were pallets and pallets of obviously returned merchandise (this took place in October). It was an embarrassing moment to say the least, and management fumbled to explain why the big boxers could return merchandise at the end of the season, but we as "authorized dealers" had to keep - let alone fully pay - for ours.

Why can't the small dealer, the backbone & the public face of the industry have similar terms? The big boxers don't test water or have staff that can explain how to vacuum a pool, but they can sure as heck sell and undercut our pricing and products.

The Aqua Magazine article on profitability of pool & spa chemicals is well noted. Saline generation, at one time a potential boon and blessing for the industry, is now a potential boondoggle. From poor and cheap products to builders and service people and retailers who don't understand the depth and idiosyncrasies of the product.

Salt is NOT the only thing you need. The lowly pool owner doesn't understand proper water balance let alone proper care of that saline/chlorine generator. Poor product placement gives consumers relatively good success in year one (because the pool freshly filled), but in year two and onward, water care is often vastly different.

Not to mention improper plumbing, stray electrical currents, electrolysis, corroded pools and equipment, and so on. When are the manufacturers going to come down and either take back merchandise or even a dealership when that dealer (or his staff members) knowingly lies or distorts what a product can and can not do. Another case in point is Ultra Violet products.

UV does NOT kill anything, yet dealers are plastering the Internet with misinformation saying otherwise. The consumer is confused, led astray, and has lowered his perception of the industry who is supposed to be providing him with fun and relaxation.

Who is telling the truth about the product? When a manufacturer claims that they are "driving business" to the professional retailers, then make sure there isn't anything even remotely similar in the non-pool and spa industry mass merchant (please take note of that distinction).

Or how about not selling to the mass merchant at all. Now THAT would be driving business our way! The rhetorical questions to the manufacturers: How do you as manufacturers establish and preserve a broad, solid network of dealers, service people, builders who KNOW and understand the product inside and out?

How do you police your dealers (and even e-tailers) by making sure they are up to date with the most current information and technologies and techniques to make the manufacturers' products the best that they can be? And both add and give value to the consumer.

Distributors are always in a predicament. It's tough being the middle man. In the current economic climate, you can't live without distribution. They all serve this fabulous function of having just what we as dealers need (99% of the time) when we need it with the capability to not have to warehouse too much inventory.

All of that at a reasonable cost. So-called problems at the distribution level are minimal. They have the goods. Dealers don't have to inventory. Distributors make their margins. Dealers pay a "convenience" cost for not having to inventory all of that stuff. Everybody is pretty happy. Is there a rub? Sort of.

One of the problems with our industry is that virtually almost any Tom, Dick or Harry can get into the business. Almost no experience needed. You need a vehicle (don't even need a pick up anymore), and maybe a business card or two. If you have seen any of these "folks", you can't miss them. They ask how to plumb a filter or chlorine generator. They know next to nothing of basic water chemistry, never mind how to properly treat a chlorine demand or white water mold problem.

And yet they are sold these specialty products to place and install in the hands and yards of consumers who know just a little bit less. Where is the proof that they know the business? Where is the proof of their technical expertise? Ask most distributors and they have the patent answer, "well, if I don't sell to them, someone else will." How about NO ONE sell to them?

Force that sale back to the dealer where it belongs. It is NOT up to the distributor to teach and hand-hold their customers on everyday issues. There is a cost. Or how about the electrician who comes in to buy his pool lights or junction boxes but while he's there, he'll pick up a little chlorine and algaecide for his pool at the same time.

In fact, you know, maybe he'll pick up these items for that pool customer and take the profit himself. What happened to just "selling to the trade?" How many distributors are almost "coerced" to sell to the local fire and police departments rather than having the gumption to send that police officer or firefighter (who are really well paid in most cities and towns in America by the way) to any one of several local pool stores or dealerships where they can actually get the help they need?

Finally, how are local distributors (both national chains and single outlets), along with the manufacturers they represent, helping their local dealers, service people and builders become and stay the most professional pool and spa people possible? And are they holding these dealers, service companies and builders accountable for what the sell, service and/or install?

Now I get to talk about my heart. Retail pool and spa. As a retailer (and former builder and service provider), we deal with "end users" of the products. We're on the front lines. We directly see the problems and the failings of the products as well as the successes. We are the ones who ought to and should have the MOST expertise due to the variety of products that we market and sell (as well as install and service).

Instead, we have largely become a legion of order takers. Instead of watching a customer come into our establishments and find out his or her particular needs, we allow them to purchase what THEY think they need - we don't sell them anything.

Usually without any questions asked. After all, Joe customer has done all of the research he needs online. He checked out Wikipedia and two other forums and according to Velma in (choose the state across the country from you), all you need to fix whatever problem you need fixed is this gizmo.

As so-called professional dealers we are slipping in our ability to rightly diagnose problems with particulars and peculiarities of the individual pool or spa owner. Perhaps, we as owners have done a poor job in properly training and educating our staff so they are almost "clones" possessing most of our knowledge.

Experience is another thing. A couple of years ago I was having lunch with my local insurance agent before he retired. I will never forget it, he looked at me said, "you know Ron, we're both in the same business. (long pensive pause) We're in the solutions business. We are PROBLEM SOLVERS."

How right and on the money he was. And is. What we sell has obvious value. What we KNOW has even more value! Now how do we translate that into our business and into profits and margins we should expect?

We are all viewing and experiencing dramatic changes within retail in general and our industry in particular. Buying habits are changing. Traffic patterns are changing. Where and how buyers get their information is changing. Rapidly. But are we changing along with society? Do we have MORE knowledge and information than the blogs or forums?

Honestly, it was flabbergasting to sit in a Region I Atlantic City Show seminar several months ago dealing with algae and witness the incredulous faces as if they (many, but not all of the attendees) had never dealt with a bad algae problem. All I could do was shake my head in utter disbelief - I thought these were professionals.

The most severe problem I see with us as retailers (read that as pool stores, service businesses and builders) is that, by and large, we are caving to the so-called economic pressures and foolishly believing that the only way to win or keep customers is to continually lower pricing.

We believe that we are in direct competition with the big-box stores or the various e-tailers & websites. We aren't necessarily. We have a customer standing within literal inches of us and we are unable to make a decent sales presentation and sale. Let's face facts: we have a captured audience.

If the weather is bad and the local economy has hit the skids (2009) that is what we have to deal with; if they aren't going to buy, they are not going to buy; no matter what the retail price is. Then next season, how do you justify a dramatic price INCREASE? Many small(er) retailers believe they can "buy" their way into a market with "rock bottom" prices and then "make it up in volume."

That's utter foolishness. The mass merchants can make it up in volume because they have the volume to begin with! The specialty retailer must learn to position himself as just that: the specialist who is the problem-solver. He's not the mass merchandiser and he can readily justify a higher, professional, yet competitive price.

In fact, consider telling that Wal-Mart customer to take his water sample to the local Wal-Mart and give him the name of store manager or the assistant manager. As an e-tailer, it is a shame to see the amount of money that is being left on the table by other e-tailers who are trying to get into the marketplace. The same general rules apply here.

Plus there is also the consideration of additional costs: handling (versus a brick & mortar store where the customer takes it with them), packing tape, boxes, packing peanuts, labels, processing, etc. Free shipping is not free. It either has to be paid for by the consumer or the e-tailer takes it off of his bottom line. Quality products have a value. What is the point of selling a particular item for 25% or more less than the competition to try to increase market share when instead you can provide better information (support) and justify a higher price and therefore better profit margin.

I am NOT calling for "fixed" pricing, but competitive pricing (where everyone who is perceptive, is within a relatively narrow margin). Why have we bought into the thinking that we need to be the "lowest price available?" Many e-tailers (not all) have chosen to commoditize the industry whether it is in chemicals, automatic pool cleaners, pumps, or any other product - again, we have a captive audience who needs us and wants our products.

We have allowed our competitors (big-boxers, catalogs, other e-tailers, and even certain manufacturers) to dictate what we sell and how much we sell it for. Getting back to being an e-tailer, it gives me great joy to sell a good product at a good margin when I have provided good information and support for that product at our website. Especially when my pricing is possibly significantly higher than someone else. It proves that price is not everything. Providing value is - whether in knowledge or presentation or hopefully both.

It should be noted that there are many knowledgeable, well-run retailers in the industry. Many have been highlighted in the pages of the various trade press articles or as "spokespeople" for various vendors. These people are committed to the pool and spa industry as a whole. They not only enjoy being in business for themselves, but they love being in the pool and spa business in particular.

So, where do we go from here? What can we, as an industry do as a whole? Do we want an industry that is based upon good, quality products that provide good to excellent value or do we want to have the "cheapest (fill in the blank)" available? Even Hyundai automobiles recognized that. They were once thought of as a lowly, Korean import at a cheap price, but over the past couple of years Hyundai has transformed itself by showcasing and producing quality models that are good looking AND have a good price value (just cover the Genesis's front badge and have other people guess the make and price of the car).

People aren't ashamed of owning a Hyundai anymore because of its growing history of quality and value. Have we done the same for the pool and spa industry? What does "supporting" the industry mean? To me, supporting the industry means that I put my best face forward. It means that my vendors, distributors and peers hold me accountable for what information I may put forth. It means that when I see "foul play," that I should expect the mutual vendor and/or distributor to actually do something about it and not just give the situation lip service.

The accountability must travel both ways through the system. These ideas and expectations may sound naïve or Pollyanna, but I believe for our industry to not only survive but thrive, we must do something. And it must be done quickly but intelligently. A wide ranging dialogue between all segments of the industry must begin very soon. To do nothing will only harm the pool and spa industry as a whole.

Thoughts on this letter? Please email [email protected]

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