Gazebos and spa enclosures can add a second profit base for retailers

5 C 809 AqEvery backyard retailer is familiar with the up-sale, the add-on. A couple wants a hot tub, maybe they'll buy a cover lifter or a set of stairs. The more the better. But why play small ball when you've got powerful bats on the bench?

Selling spa enclosures or gazebos gives dealers a chance to not only sweeten the deal, but to nearly double the sales ticket on a spa transaction.

"From what my dealers tell me, customers are fewer and further between, but when there's one in the store who'll spend the money, don't let them go. Capture every possible dollar," says John Olson, president of A & B Accessories in West Fork, Ark. "That's where gazebos come in."

Olson says prime candidates for gazebo sales are homeowners who are attracted to the premium end of a spa manufacturer's line. "When those customers are in play," he says, "there's a great opportunity for the dealer to capture a significant sale."

The Pitch

Olson says A & B, which is perhaps still best known as a spa steps and surrounds manufacturer, has seen its biggest growth over the past several years in the gazebo category. The company started out with cedar gazebos, but in response to customers' requests for a lower-maintenance product, turned to composite materials and ceased making cedar ones.

"We're heavily into alternative materials," he says. "Our newest addition is one that we have been using the last year and a half in our step program. We call it Envirotech. It's a 100 percent post-consumer recycled product. It's very exciting stuff. It's also fairly expensive, but the performance of it is just outstanding. We're in the process of incorporating it into the gazebo line."

Dealer cost for the company's current line of gazebos, made mostly of cellular PVC, ranges from $2,500 to $7,500, with retail prices roughly double that. That's a nifty profit to be sure, but Olson cautions against aiming too high.

"I'll give you one nugget that we've found," he says. "The gazebo can't cost more than the spa. When you effectively double the price (or more), it turns them off; it negatively impacts the whole sale.

"But if the gazebo is at or a little below where the spa price is, you're OK."

Fred Hobbs, president of Sequoia Works in Rio Linda, Calif., says his customers also typically try to avoid doubling the price of the package, because even under ideal conditions, it can be difficult to get a customer to agree to add between $5,000 or twice that to the sale price of a hot tub. His company's gazebo offerings include freestanding redwood models and low-maintenance spa-mounted models using a polymer that's similar to that found on spa skirts. He advises dealers to consider each option before pitching one or the other to a consumer, with the price of the spa they're eyeing serving as a guide.

"It just depends on the situation," he explains. "It depends on the customer and how important it is for the spa to be enclosed.

"It looks nice, it feels nice in the winter. But it doesn't have a lot of value for some people. So if you want decent volume you have got to have that less-expensive product. It just depends on how the customer values the gazebo product - whether they're looking to pay that upper-end price. It depends on who walks in the door."

The Lineup

Getting to that point with a customer, even a hot prospect with money to spend, really hinges on creating the desire for a gazebo, even though few hot tub shoppers set out with a gazebo in mind when they start shopping. This is especially true of first-time spa shoppers, according to Andrea Heys, account manager for Visscher Specialty Products, a Canadian manufacturer with roots in the logging and retail lumber industries.

"First time retail clients looking for a spa may want to be guided through the process," she says. "Dealers that have set up the whole package of gazebo and hot tub create an image, giving the customer a visual aid of what can enhance their backyard.

"The couple who are looking to buy, and we all know most final decisions are made by the woman, want the whole ambience the dealer has created in the showroom. They want the aromas, the music, the lights, and most importantly, quality for their money."

Heys' vision of this scene includes a gazebo, naturally, and the hope is that the vision is planted in the customers' minds, too. And once the idea of adding an enclosure takes root, it can be difficult to dislodge.

Customers are going to shop elsewhere, comparing prices and features on the different hot tub models, but if a cross-town competitor doesn't include at least one model on the floor attractively framed by a gazebo, they may find themselves digging for your business card even if your spa is a little more expensive.

"The homeowner cannot compare apples to oranges," Heys says. "If they go into another store that only has a spa, they look at the spa, and it's less expensive, but for a few thousand dollars more they're getting the whole ambience the dealer has created with the package."

Hobbs agrees with Heys that creating an enticing scene, a tricked out vignette, is a key element in up-selling, but admits many of his customers don't arrange their showrooms that way. Some lack the space, others may not have completely bought into the idea of becoming backyard retailers instead of hot tub dealers who happen to offer complementary products. Those kinds of dealers are appreciated, to be sure, but Hobbs says they've got a tough row to hoe.

"We have a lot of product on display across the country," he explains, "but we also have many dealers who don't display the product. It's just extremely difficult to sell a $10,000 product out of a brochure. It's almost like selling a product on the Internet.

"The customer has to experience a leap of faith to be able to buy something like that, and they have to be motivated. It's always been tough for dealers who don't display. It's just a very simple premise: In order to get the job done, you've got to have the commitment."

Going Yard

Though a large percentage of gazebos sold by hot tub dealers are bought to surround a spa, that's not always the case, according to Olson, who points out that some people will buy them simply to add living space to a home.

"They may not want a spa, but they'd like to have an outdoor eating area or an outdoor room, and the gazebo is an excellent option that way," he says. "It can be a 'man cave,' if you will, where you've got some tables and chairs, a place to read the paper and have a coffee.

"People are spending more time at home, whether it's at a gazebo or a pergola or by a pond, water feature or barbecue island. It's not a robust market, but it is still an active market."

Olson's observation can be fairly extended to all gazebo sales, which track pretty closely with hot tub sales. And no one needs reminding about what's happened to that market lately. He and the other manufacturers are concerned, but optimistic, and are doing all they can to help their dealers sell more units. Sometimes, that means working to lower the price points, other times it means simply listening to their stories and offering advice on increasing prospects and leads.

"The economic times are being felt by everyone," Heys says. "We are all trying to ride the storm out together. It must be very difficult at the moment for dealers, who are trying to create more traffic through their doors.

"The homeowners that are coming out to the store are being cautious about spending money. Together, we have to create the ultimate experience to encourage them to enhance and invest in their own backyards. We have to go back to basics and learn again to listen."

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