Above-Ground Bear Market

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Weather has always been a big factor — the biggest even — in the aboveground pool market. Year after year, retailers credit good weather for strong sales and curse cool, cloudy weather when sales dip. An early thaw. This is going to be a record season! Snow into April? Well, maybe next year… Sales of above-ground pools have been declining in recent years, but dealers and manufacturers say it's not fair to pin all the blame on Mother Nature. Consumer preferences and competition from inside and outside the industry are also working against the market, and depending on whom you believe, those factors may not prove as fickle as the weather and may be here to stay for a while.

One of the chief culprits in the decline of above-ground pools is, well, a newer type of above-ground.

"There are new pools giving competition, and soft-sided pools have definitely had an impact on the traditional above-ground business," says Bill Mackenzie, vice president of sales for Delair Group LLC, Delair N.J., a company strongly identified with traditional steel-walled above-grounds. "The industry is not as dynamic as it used to be. The decline has been gradual and it does not seem to be abating."

At Aqualand Pool, Spa & Patio in Bowling Green, Ky., sales manager Chris Irvine says he also notices that above-grounds aren't selling the way they once did. While he agrees that soft-sided models are taking business away from traditional-style above-grounds, he points out a couple of other reasons the market isn't thriving lately.

"The main thing is, on the low end, that two things are happening," he says. "A lot of companies are putting inferior product out there and it's really giving the industry as a whole a bad reputation as offering a product that won't last.

"Another thing, as far as water care goes, I think when the product is sold with an inferior care package, then it makes the industry look bad. These people are going to work or talking to their relatives and friends and saying, 'Well, I bought this above-ground pool and it's so hard to take care of. Don't get one.' And that's not only taking business away from me, but also from everybody else that sells these things."

Irvine says that large chain retailers, including Wal-Mart, often sell these inferior pools and try to pass them off as being just as good as what's sold in specialty stores. Rather than solely blaming the big retailers, though, he points a finger at the manufacturers, too.

"I think as an industry a lot of manufacturers are shooting themselves in the foot because they're striking deals with larger companies — these chain stores — and they're making privatelabel products for them," he explains. "That's fine. It's capitalism. The biggest problem I have is these larger chain stores are then representing the product as the same quality as the smaller stores have, only at a cheaper price. And that is not true."

Will Buyers Be Back?

Delair's Mackenzie is one industry insider who's fearful — but not certain — that the recent downward trend is a sign of things to come for the slumping segment.

"Going back to the '60s and '70s and even into the '80s, those were tremendously successful years. And the market really hasn't grown since 2000," he says. Mackenzie adds that while pressure from soft-sided pools and even regulations prohibiting above-grounds in certain housing developments are certainly impacting the market, it's difficult to tell to what degree and whether those forces will continue to stymie steel-walled pool sales.

"It is tough to put a number on the decline because some years it goes down because of the weather," he explains, underscoring the fact that there's a possibility that weather and temporary economic forces may be largely to blame. That's the hope, at least.

"We don't want to be pessimistic! Last year was a good year for our business, which sort of bucks the trend," he says. "The possibility is that 2006 starts a better trend for the industry."

Eddie Secard, vice president at Secard Pools in Rancho Cucamonga, Calif., says he's certain the market will bounce back, despite the gloom that's descended over the industry recently.

"Oh, for sure. Without a doubt," he says. "People are still going to want to swim and they're still going to want to have that instant gratification of getting the product now. And that's where this segment of the market will always be a winner."

A Reason For Optimism?

Secard's belief that the above-ground market will rebound is based on the economics of soaring home values, which has made access to equity for pools relatively easy.

"Nationwide we've seen a tremendous increase in property and home values," he says. "I'll give you an example: If your home went up $100,000, most people feel like that's money they've got to burn. The thing is they didn't earn that money.

"If you have to come in on Saturdays and work overtime, you're going to be a lot more cautious about how you spend that hard-earned money."

It's this feeling of having "found money" that's been pushing many homeowners into spending more on pools than they otherwise would have, he adds.

"What's happened is people don't want to spend $3,000 on an aboveground pool because they can afford to spend $30,000 on an in-ground pool," Secard says. "So a lot of the above-ground pool market has been hurt because there's been a lot of extra money generated by home equities that's been spent on higher-end products.

"But things will level off. I think business is cyclical. It's like the tides of the ocean. It can't stay high tide forever. That's the ebb and flow of business."

In addition, Mackenzie says that the pressure from soft-sided pools, most specifically the lower-end models found at the large retailers, comes with a silver lining.

"Our dealers are telling us that oftentimes people will enter the aboveground pool market with a soft-sided pool and then graduate to a moresignificant traditional above-ground pool in the future," he says. "So it's not all negative, but it is a very competitive market and there are a lot of companies out there."

Soft-sided pools buck the downward trend 

Sales of soft pools are solid.

Eddie Secard, vice president of Secard Pools in Rancho Cucamonga, Calif., is in a unique position to assess the impact soft-sided pools have made on the traditional steelwalled above-ground pool market.

"We've been selling above-ground pools for nearly 50 years, and roughly 40 of those 50 years we were solely a steel-walled pool dealer," he says. "About 10 years ago we brought in the soft-sided aboveground pool. Now, I'm talking about a framed soft-sided pool. Let's not confuse that with the Intex-type blowup ring-style ones.

"Here's our experience: The pendulum has continued to swing in favor of the soft-sided pool. The No. 1 reason is that our entire society is based on convenience. That's why there are lots of Starbucks drivethroughs. It's the convenience of not having to get out of the car.

"In the soft-sided pool market, that's the reason people love the product. It's cash and carry."

In other words, the convenience and speed of installation that's helped the steel-walled aboveground segment grow may be turning into something of a liability, he says, now that there's an aboveground pool that can be installed even more quickly.

"Most of the time [steel-wall customers] are going to have a professional installer come out, which in the summertime can be weeks," he explains. "And none of us wants to wait. In our case, the only thing that's kept us growing has been the soft-sided pool. If we were steelwalled only, we certainly wouldn't have had the type of growth we've had in the last eight or 10 years."

—B.K. 

What can be done? 

Steel-wall manufacturers, dealers, try to stay relevant

With sales of its steel-walled above-ground pools slumping, manufacturers and dealers are altering their strategies in an effort to maintain market share. Delair Group LLC is among the manufacturers wading into a new market for its products.

"We've had great success with trying to merge the in-ground with the above-ground by really promoting a line of semi-in-ground pools, which are cost-effective and give you the appearance of an in-ground pool," says Bill Mackenzie, vice president of sales for the Delair, N.J., manufacturer. "They'll build decks around them, so it's really a nice option.

"I think we're all trying to find ways to separate ourselves and to maximize any opportunities that are out there. You have to be a little more creative to compete in the industry these days."

Partial in-grounds are usually planted about 2 feet into the ground and surrounded by decking that hides the exposed parts of the pool wall. Of course, they require excavation equipment and usually building permits, but for the right homeowner they strike a nice balance between above-ground and gunite pools, Mackenzie says.

"The materials cost the same, but they'll spend a little more on the preparation and the deck and surroundings," he adds. "You can get one for between $10,000 and $20,000, depending on the size and the surroundings."

At Aqualand Pool, Spa & Patio in Bowling Green, Ky., sales manager Chris Irvine says his company is trying to carve a niche for itself by offering higher-end pool packages instead of competing head to head on price.

"If other stores are going to try to sell the $2,200 above-ground pool, then we're going to try to sell the $5,500 above-ground pool and go for more of a premium package," Irvine says.

This tactic isn't for everyone and comes with risks, according to Mackenzie, because added cost scares away many buyers.

"Above-ground pools are a price-sensitive market, and when you start adding products, you're adding price, which creates an obstacle," he says. "We're focusing on aesthetics and more-contemporary looks to try to appeal to the eye of the consumer. Again, taking what we have and trying to modify it."

—B.K.

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