Those in the above-ground pool segment of the industry know it has been a rough year. While many agree the general demand for above-ground pools has gradually declined, the past year's sales remained consistent. However, record-breaking weather conditions and rising home foreclosures forced retailers and manufacturers alike to get creative in order to keep the sales coming. "We think the middle class across the United States is shrinking, so ultimately, it's going to have an effect on our available marketplace," says Jim Newman, vice president of Splash SuperPools, an above-ground manufacturer in North Little Rock, Ark. "So that doesn't bode well for us. I would think that our segment of the market has been under attack from a couple of different fronts."
The above-ground market is aimed toward middle-class America, so when an uncertain economy threatens a recession, people get more protective of their money.
"We've had to look at different ways to go after different segments in the above-ground market," says Newman. "For instance, we still sell a large amount of the residential pools, but we also have kind of diversified into selling very large, commercial-type pools that not a lot of people can do."
Splash's new customer base now includes outfitting church and summer camps that aren't lake- or wateraccessible. "We're trying to diversify our product offering to use the same technology or the same engineering that we do with our traditional residential pools and make pools available for other venues," says Newman. He adds that Splash has supplied pools to traveling scuba diving educators, ESPN's Great Outdoor Games and the marine industry, just to mention a few.
Another of Newman's concerns is the public's desire to buy things with money that would otherwise be put toward a pool purchase. "Let's face it, there are a lot more things out there now that people want that are in the same price range," says Newman. Think flat-screen TVs, high-end grills and backyard/patio additions. "So we're up against a lot of competition for that discretionary dollar."
Big Box, Big Opportunity
Industry insiders agree big box stores are offering an above-ground product that is appealing to the general public. Is it of better quality? No chance. Is it less expensive? You got it. And it's gaining popularity and giving the above-ground segment more than a little competition.
"I'm literally part of the same building complex as Target," says Tom Verduzco, owner of Backyard Spa and Leisure in Fresno, Calif. "And I see, because half my showroom is all glass, I see people all day long wheeling these out in their carts."
These "toy swimming pools," as Verduzco likes to call them, cost a few hundred dollars or less compared to the few thousand it takes to buy what he refers to as a "real pool." Troy Derheim, president of Tubs of Fun in Fargo, N.D., notes the interest in the less-expensive pool at the discount stores has bloomed throughout the last 10 years.
"It went from none to hundreds of thousands; almost every other backyard has got little, little pools," Derheim says. "I think at first myself and many other retailers across the country were frustrated with that because it looked like we were losing sales instead of customers committing to a $2,000 to $4,000 pool. We can't compete with it."
Like Derheim, Paul Schaplin, coowner of The Pool and Spa Warehouse of the Carolinas in Wilmington, N.C., deals with customers purchasing starter pools. "I'm getting a lot of customers who have the Wal-Mart stuff, the real cheap entry-level above-ground pools," says Schaplin. "They maybe get them for a season and find that, yes, they enjoy having a pool, but they don't enjoy the major upkeep and maybe not the quality."
There will always be an interest in the "toy pools," as it is an appealing and affordable answer to those who don't have the few thousand dollars it takes to invest in a good-quality above-ground pool. But to those who do have the ability to make the monetary commitment, the hassle of the lower-quality pool is not worth the savings.
"I know a lot of people will make the decision to go in and buy a lessexpensive pool from Wal-Mart, but I would tell you the majority of them end up going back to the dealer for help because they are having issues with the equipment," says Newman. "We believe that when people buy those less-expensive pools - at least we hope this is the case anyway - they realize they really do want a pool, but they don't necessarily want a cheap one like this again."
Newman acknowledges that unless consumers have the money to invest in an above-ground pool they may have to settle for a toy pool. It's a matter of finances. "They know it's a better pool," says Newman. "They know they'd enjoy it more, they know its going to last longer. Heck, there's even a resale value to our pools. But, do they have the money to spend on it?"
Like it or not, the economy is affecting the above-ground clientele. But much like the way parents are likely to give their children a "starter" dance class or karate lesson before they fully invest in an activity that turns out to be a dud, the "starter" pools can turn out to be an underground marketing strategy that benefits the aboveground market. Many potential pool buyers who have kids want to know before they make a large investment that their children are going to use and enjoy it.
Marketing 101
"I would say 30 percent of my customers last year, when we sat down and had a conversation about aboveground pools, it started out with that exact situation," says Derheim. "They didn't know how much they were going to use it, weren't sure if it was the right pool or not, little bit worried about it, bought the little pool, and then the kids were in it every single day. They saw the value of it and said, 'OK, now we're willing to commit to the higher amount.'"
Not everyone has the ability to buy a starter pool and then upgrade as time goes on. For some, purchasing a pool is a one-time investment, and reaching the buyers who are looking to invest in the better-quality product from the beginning requires juggling advertising strategies until finding something that sticks.
"We were spending up to $10,000 a month on advertising," says Schaplin. "For a little business, that's a lot. We have invested in a giant LED sign out on the side of our building, which can actually show photographs." Schaplin programs his 8-foot-by-8-foot multi-color sign to run a slideshow featuring custom projects, pools and related products. Verduzco tweaked his advertising strategy and now invests in four-color, high-end newspaper inserts, a step up from his usual black-and-white ad in the front section of the paper.
"I've switched to what looks like an oversized postcard, and it's colored front and back," he says. "So when you open your paper, here are six or seven different colored ads right there. So it's almost like you have to go through them before you get to your newspaper."
Verduzco finds his new newspaper advertising has prompted potential customers to come in and say, "I want that pool in the picture. Where's this pool at?" Verduzco admits that he doesn't remember people coming in and asking about the pools advertised in his black-and-white ads. Backyard Spa and Leisure also promotes products by hosting special events like home shows and parking lot sales.
Whatever he's doing, his strategies are paying off. "I personally feel sales have maintained for me, and I think it was partly because I advertised a lot more than I have in the past," Verduzco adds.
Some advertising tactics don't require glossy ads or electronic signs. Tubs of Fun focuses on providing customers with what the big box stores lack: knowledge about the industry, especially about safety.
"As a professional pool retailer and installer, my No. 1 goal is safety," says Derheim. "The last thing you want is to put your products in the backyard and have someone get hurt from it. It doesn't help business, and we don't want to see that happen to families. That is a big part of our marketing."
Derheim has also incorporated updates about swimming pool safety into Tubs of Fun's Web site. With an area dedicated to safety tips and links to Web sites about safety, Derheim hopes to educate customers about the seriousness of having a pool in the backyard and show them the company is dedicated to making it a pleasant and enjoyable experience, something a discount store won't do.
"I would say that of the people who come in looking for small pools, I probably get 95 percent of the sales," says Derheim. "Because once they come in and do see the difference [between us and what the big box offers], they are willing to spend more on education, on placement and setup."
This year appears promising for sales already, despite more recordbreaking weather conditions affecting the United States. For manufacturers and retailers of above-ground pools, burgeoning sales early in the year buoys what's to come.
"I'm a little encouraged because we had a surprisingly increased amount of interest in January now for next summer for above-ground pools," says Derheim. "We've been fairly busy talking to people already."
