Despite recent concerns over the state of the economy amid the pandemic, pool and spa companies are reporting very brisk sales this spring. This includes not just pool maintenance products and services, but renovation and new building.
While some business practices have been altered due to social distancing measures, which has made transactions slightly more difficult, sales have been remarkably strong in the four businesses we spoke to for this story. This seems to be due to a couple of factors:
1) Existing backyard pools have become more valuable to homeowners due to a lack of alternative entertainment venues, and therefore these pools warrant more diligent upkeep and even renovation. 2) New backyard pools are more desirable for the same reason, which is stoking demand for new construction.
The best leading economic indicator for new pool sales is pool construction loan applications, and high demand this spring has sent those applications through the roof. That’s where this story begins.
Flash Flood In Loan Applications
Sarah Bess is the marketing director at Lyon Financial, a company specializing in outdoor home improvement loans with a focus on pools, which has seen a rise in business practically overnight. She lets the numbers speak for themselves.
“We anticipated, and were initially on track for, about 20% growth this year,” says Bess. “We were meeting those goals as the year began, then the March shutdown hit and we had absolutely no idea what was going to happen. Applications stalled for a bit, but then the first of April came around and suddenly my contractors started calling and saying, 'Hey, I'm seeing the most leads we’ve ever had.’ And it just took off from there.”
Between the months of April and July, Bess says that she typically receives an average of 3,500 loan applications each month, with a record-setting total of 3,800 in June of last year. Through April 2020, the total number of applications for this year had increased by nearly 100%, or just under 7,000. And from May 1 through May 13 [the date of this interview], they’d already received more applications than Bess’ previous one-month record, in less than half the time.
“We definitely were not expecting this,” Bess says, “but it just continues to go up and up. We haven't seen application volume drop off since it started. At Lyon, we've been looking to hire 10 or 15 more people just to deal with the volume, because even if we peak out in June or July, I don't think we're ever going to be back to the numbers we had before.”
As part of a team that recognizes how an exceptional backyard can make a major difference in a lifestyle, Bess believes that this growth is about more than just people wanting a pool. Since Lyon also handles loans for other outdoor improvements, they’ve seen growth in loan applications for covered porches, outdoor kitchens, gazebos and so forth. This, Bess assures, is beginning to shape out as a new desire for people to invest in the outside of their homes in a way that most people would usually reserve for interior investments such as kitchen or bathroom renovations.
“From the small pool builders we work with to the larger 50-million-a-year guys to the manufacturers, everyone is seeing unprecedented growth,” says Bess. “It's kind of like an explosion right now with demands from the consumer. And we just have to continue to build on this as we move forward, as summer comes, and likely for years to come, to build that backyard oasis for the consumer where they can feel safe.”
Financially, The Best Month in Company History
Reports of a surge in demand have been coming in from different sections of the country. A prime example comes from Richard’s Total Backyard Solutions in Houston, Texas, where the company set a new all time record for sales in April.
The pattern has become familiar: Consumer shock as the COVID-19 news hit, followed by brief lull, followed by a spike in demand.
“In meetings with our sales team in early March amid COVID, we were afraid that no one was going to come in and no one was going to be signing contracts. I remember telling them, ‘This is going to be rough,’” says Cristina Nikolov, social media marketing manager.
“Easter weekend came and we were suddenly completely slammed. Booked up, booked up, booked up, booked up. I was telling my designers, ‘Look, you’re going to find people who are going to get mad because we can’t meet with them right away.’”
Julie Richard, vice president, believes it’s more than just a temporary change in consumer thinking: “The real shift that COVID-19 has created for us is people deciding that, ‘Hey, what if something else like this comes up? We want a backyard retreat, a staycation, that we can have from here to evermore. Because I don't want to have to cancel a European trip or a cruise or anything.’
“And that caused a flurry of business. Literally, the ladies that handle our leads are snowed under just trying to get to them as fast as they can and get appointments with our designers. Our designers tell me, ‘Listen, I had 12 virtual consultations today, and I have eight designs to do tonight.’ They’re working extra hours to keep up.
“And so, financially, April was the biggest month we've ever had in the history of our company. And I don't mean just the biggest, I mean by leaps and bounds the biggest.”
The flurry of business has not been confined to pools by any means. Hot tubs have been flying out the door since the shutdown started, Richard says. “For hot tubs, I literally ran my delivery crews seven days a week to get people hot tubs when the first stay-at-home work order came out. I put a video out and said, ‘Hey, you want to get out of the house? Are you all sitting around looking at each other? Do something about it. I will personally get you a hot tub tomorrow.’
“We worked hard, even on Sundays, to get those hot tubs out. My guys were exhausted, and so was I. But we got a lot of hot tubs out the door because people realized that that’s something they could get right now, without having to wait.”
Regulations, Retail and Water Care
The new shutdown regulations and social distancing imperatives have been a factor in retail and service, but stores have adjusted quickly to minimize the effect on sales. Contactless options such as delivery and curbside pickup have helped companies such as AquaTech in Winnipeg, Manitoba, shrug off the adverse influence of the new social order.
“We now have a contactless water testing option that we're never going to get rid of,” says Kathi Belcourt, retail manager. “First, it helps keep overhead at a minimum and helps us use our time efficiently. But it's also more convenient for the customer. They're never going to want to have to wait again if they don't have to.”
Belcourt says that AquaTech has begun offering other service-related options as well, such as chemical-only pool maintenance and water-sample pickup service for those unable to drive to the storefront. Being able to provide products and services to people on the other side of the city has given the company a new level of service and efficiency that customers have found appealing. What was first thought to be a concern over continuing sales has become an attempt to keep up with them.
Around this time of year, AquaTech might typically receive two or three calls a day across any department. But this spring Belcourt has asked summer staff members if they could start early to better manage the five to 10 calls they now receive hourly.
The recent impetus for investment in the backyard is a change Belcourt expects to continue long after state shutdowns are lifted.
“It's forced us to look at things in a different way, and it's going to grow our industry in a way that we haven't seen since the 80s,” she adds. “There's going to be a huge upswing in people who are focusing on their families, and we just have to be there to help them do that the best that we can.”
Construction and Installation
Many companies this spring have noted the good fortune of being deemed “essential” by various state governments, thus allowing them to stay up and running and in position to take advantage of the uptick in backyard business due to cloistered customers.
Michael Berggren, owner of Berggren’s Backyard Oasis Pool Construction in Wenatchee, Wash., found this to be the case for both his construction company as well as his service and maintenance business.
“Thankfully, the governor of Washington state considered it essential to open pools because we saw an early uptrend in maintenance and pool openings. We also saw an increase in people wanting repairs done to their pool, so we did a lot of equipment swap outs and new automatic pool covers because when people are home staring at their pool every day, they want it in the best condition. Business has actually been booming for us. We did almost four times what we normally do every year in equipment sets and cover replacements.”
Though Berggren is glad business has increased, he says it has been a transition each step of the way. From coming up with and maintaining a new health/safety plan to making calls to the Washington state patrol and county sheriff’s office for permission to work on certain sites, Berggren anticipates the day that things can return to a normal work routine. Still, he assures the effort has been beyond worth it.
“At the end of the day we're excited that we can continue to pay people's salaries and hourly wages so they can continue to feed and provide for their families,” says Berggren. “To me, that's a huge deal.”