More than 90 percent of these stores employ 10 or fewer during the busy season, and 78 percent have five or fewer employees. Many of these people said goodbye to co-workers last year, as 38 percent of respondents told us they'd reduced staffing levels in 2009. That wasn't much of a surprise. What was surprising was that only 3 percent of respondents planned to cut employees in 2010. Is that a function of optimism?
"Well, I think that's more because people have done all the cutting they can," said Alice Cunningham, co-owner of Olympic Hot Tub in Seattle. "How can we cut any more? We're already at rock bottom."
Norm Coburn, who owns New England Spas in Natick, Mass., sees it differently. "I think if people are not continuing to fire that's a sign that things are stabilizing," he said in one of three questions-and-answer sessions we conducted with retailers. "Otherwise they'd be cutting some more. If things seem stable you don't mess around."
These differences of opinion were common among those we surveyed. For example, while a large majority saw gross revenues fall in 2009 (57 percent), they differed in their plans for 2010. Many told us they planned to hunker down and try to avoid the fate of their local competitors who'd closed their doors in 2009. Others planned to spend their way to prosperity, whether that's by adding clerks or salespeople (23 percent), or by increasing spending on advertising and marketing, employee education or new equipment.
"We're opening a new store," said one respondent, echoing what several others said. This is encouraging news indeed. Other bits of optimism can be gleaned from respondents who told us they planned to increase their presence on the Web, remodel their showrooms and add new products or services.
"Solar heating and solar-powered products, along with reconditioned hot tubs did real well for us last year," one retailer said. "They gave us an additional boost, and something to do when sales were flat."
Among the other ancillary products retailers told us they planned to add in order to offset some of the losses in spa sales recently were grills, saunas and high-end casual furniture. Many planned to take on new products carefully, fearing excess inventory. Small steps were the recipe for these companies: "Scents and such. Not much," said one respondent (rather poetically, we might add).
What, Me Worry?
Concerns about the lack of credit, whether for flooring or for customers, was widespread. Retailers also singled out lack of consumer confidence, a soft real estate market and the general state of the economy.
"Our commercial funding was pulled this year," one respondent said. "We are having to spend our cash for product in the showroom, where in the past we relied on our flooring programs."
"Pretty much all of the above," said another, unable to name his single biggest concern. "First, there's consumer confidence. If it doesn't go up, people aren't going to spend. The second would be all taxes and insurance costs. My gosh! There is no more floor planning for dealers, everything has to come out of our own pocket. It ties up a lot of money for small businesses that are already struggling."
Retailers may be wary after five years during which hot tub sales have dropped, according to manufacturers who spoke candidly and privately, by more than 50 percent nationwide, but they're far from fearful. In fact, about half of respondents told us they expected sales revenues to increase this year by 1 to 15 percent, and another 16 percent expect even bigger gains.
"Inquiries about inground pools are greater than last year," wrote one survey participant. "And we've seen some interest again in hot tubs. Also, we're hoping the summer won't be as cold as last year."
Another chalked his sunny outlook up to intuition: "Just a hunch," he said.
For Coburn, the return to where the portable spas market was just a few years ago can't come quickly enough, and the fact that it's taking so darn long is simply baffling, especially in light of how few homes currently have them.
"I think it's pitiful how few hot tubs we all sell compared to the potential," he says. "Do I think the market will get back to where it was? I do. I've been the eternal optimist about our category of products being more 'household appliance'-like.
"I use my hot tub every day and I absolutely love the benefits of it. I have seen tens of thousands of customers come to appreciate the benefits of hot tubs and saunas, and I want them to spread the word. It's something that's affordable, and I don't understand why more people don't have them. I'm going to keep fighting the fight until we get back to those levels [of 2005]. That may take a while. I hope I live long enough to see it."
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