Madison, Wis.-Based Hot Tub Dealer Tries Hand at Mall Location

Bachmann Mall 0111Life takes some unexpected turns. Fred Bachmann hadn't planned to expand his successful dealership to the other side of town, but when Ron Skoronski, the owner of Bachmann's cross-town competition, developed a terminal illness, the two men sat down to discuss a sale.

They'd discussed the idea of a possible merger for years, but with Skoronski's health problems now a concern, the men agreed that Bachmann's Pools, Spas & Patio would acquire Benson's, Skoronski's store, continuing Benson's high-quality patio furniture and portable spa lines. "He was always a good competitor with good products and our philosophies were a lot the same," says Bachmann. "So it was a good fit."

With the merger, Bachmann's acquired not only the patio furniture and portable spa lines, but also a second showroom and another 6,000 customers. Initially, Bachmann's stayed at Benson's well-established location on the far west side of Madison, Wis. However, Bachmann soon had to move out of the west side location because Skoronski, knowing he was going to get out of the business for health reasons, had sold the building before the merger.

"I did try to negotiate a lease, but the new owner's goal is to tear down the building, and get a big development going for that corner," says Bachmann. "In the interim, I thought I might be able to stay there, but the lease rate they had was astronomical, so I could never come to terms with them."

That left Bachmann without a west-side anchor, so the company rolled the dice and leased a very visible space in a large and popular west-side mall in the spring and summer of 2010. Creating exposure for the hot tub category was part of Bachmann's motivation. "We do a lot of trade shows, but our industry is always challenged," says Bachmann. "We're competing for the expendable income that people have for other luxury items like boats, snowmobiles, motorcycles, and ATVs, but the thing about hot tubs is, by nature, they're hidden in backyards for privacy. However, the things we're competing against, like boats or motorcycles, you see them on a daily basis and think, 'Wow, that's cool, I'd like to have one of those.' Hot tubs are hidden in the backyard, so you've got to create exposure."

The Mall Experiment

Choosing a spot in the mall was a little tricky. An interior mall location may have generated more traffic, but Bachmann knew he needed to have chemicals go out the door to make the bottom line work. "So that's why I thought I needed the curbside entrance, because if you're buried in the middle of the mall, you're not going to sell 20-pound buckets of chlorine," says Bachmann. "It's just not going to happen, unless you have somebody to cart it out for them."

Another factor to consider was the need for a significant amount of square footage so the dealer could display patio furniture. "Anybody interested in patio furniture wants to look at 10 pieces before they feel comfortable with one, so it takes a lot of square footage, and interior mall space is so expensive even compared to the curbside space I had, that I didn't think I could sell enough to justify it."

Ultimately, Bachmann got a good deal on a six-month lease for a curbside spot, meaning its entrance opened to the parking lot, but not the main avenue in the mall. Initially, Bachmann was optimistic about what he calls "the mall experiment" because the company had its best May ever in terms of revenue. "That made me really optimistic, so I spent a bunch of money on advertising this summer to get the word out about the new location, and then June, July and August were some of the worst summer months we've had in a decade."

The dramatic drop-off in sales convinced Bachmann that the mall wasn't the right fit for a hot tub store. "The parking was prohibitive -- spaces were just packed during business hours. We just didn't get the numbers we were hoping for there, and while we may have a store again next spring on the west side, it won't be in a mall."

"I think we really need to be in a strip center," adds Bachmann. "And you need to be on a good street, so you're convenient for the customer to pull right up in front of your door, and walk in with their water sample or walk in to get their bottle of chlorine or 50-pound jug of chlorine. You've got to be that accessible. As far as the hot tubs go, it's not an impulse purchase as much as people think it is. The products we sell in our industry are destination-type products. People think about and plan for a hot tub for about six months. That's what we're finding from our warranty cards that we turn into Watkins Manufacturing: People look at hot tubs anywhere from six months to a year before the make their final purchase."

Beyond the poor parking situation, another reason the West Towne mall location may not have taken off for Bachmann is timing. Patio furniture was still a new category for Bachmann, so he didn't realize that opening his doors in April is late for selling patio furniture. "What I learned is that March is the best month for selling special-order patio furniture. February is pretty good for that, too, so I missed my season. This makes sense because high-end, special-order patio furniture takes six to eight weeks to get, and if somebody wants it by Memorial Day, they have to order it in March, and we didn't open until April 3, so I missed my market a bit."

Another factor in Bachmann's decision was staffing costs. He wanted a west-side location in order to offer water testing and chemical sales, realizing that customers would not want to drive across town to the east side location for that service. "Yet, to do that west-side location right, I've got to have trained people there, knowing what they're doing," he says. "You can't just put high school kids for six or seven dollars an hour plus a bit of commission in there. You can't do that in this industry. You've got to have people who know what they're talking about, and that costs more, so the staffing expense for a whole other store in this economy may be a little too much for a town the size of Madison. I'm just not sure if it justifies two locations."

Shortly after Bachmann realized the mall experiment was not working out as well as he had hoped it would, he checked in with a friend of his in Arizona, another dealer who had opened a location in a mall about three years earlier. "I know three years ago it was a boon for him. It was doing great. When this mall thing at West Towne didn't work out so well for me, I called Jeff, and I said, 'How's that mall thing working out for you?' He says, "Oh, I had to close it. It worked really well for the first year or so, but with the economy, it just doesn't pay anymore, with the staffing costs as they are.' I wish I had called him earlier, since he faced pretty much the same issues I had."

Forward Focus

In reflecting upon the spring and summer of 2010, Bachmann saw that most of his sales in May, the best May the company had ever had, came primarily from sales of consumables: chemicals, filters, solar covers and replacement covers. "Those sales are what really made those numbers go up. It wasn't so much the high-ticket retail items like hot tubs or in-ground pools. Those sales were about normal," says Bachmann.

So before launching another brick-and-mortar second location, he'd like to see the economy turn around. In the meantime, Bachmann has his digital second location, "On our Web site, you can order anything from chemicals to replacement covers to filters, and shipping is free." The other way Bachmann's currently reaches out to its west-side customers is offering weekly service. "We're trying to combat not having a west side store for now at least until the economy turns around."

Bachmann says the dealership has always had an emphasis on providing excellent pool and spa service, which has helped Bachmann's become one of the most respected service providers in the area. "Going forward," he adds, "we're putting our efforts even more so into service, on both the residential and commercial side. The service industry is strong, and we plan to keep building on that because it's something you can count on every day."

Comments or thoughts on this article? Please e-mail [email protected].

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