Profile of spa and hot tub dealers surviving in a tough economy

Scott Webb Headshot

No need to dwell on the latest economic news. What matters is what a dealership does today to stay active in the market and sell merchandise.

AQUA talked to several dealers that are taking in truckloads of spas and selling them to customers at a time when that takes a little more than it used to.

Case #1: Orley's | Medford, Ore.
Heat is still in style

There are several factors behind the steady progress at Orley's despite the countervailing economic winds. As owner Larry Milligan, Sr., points out, the dealership has survived many a downturn, due in part to a well-diversified stock-in-trade. The dealership has a clever mix of products designed to see it through a variety of economic climates, including this one.

The company is known for its spas, aboveground pools and wood-burning stoves. One of these three is currently doing quite well.

Yes, not surprisingly, consumers are still willing to pay to heat their homes, and the demand for a money-saving option has grown. Strong sales of penny-pinching stoves has allowed Orley's to shave margins on spas without killing overall revenues. And that, Milligan says, has kept them moving.

"Right now, there are still people who have money that are looking for a good price on a spa. They are willing to buy, but only if the deal is good enough for them. And we target these people.

"From my side, we've got to do enough volume to be able to give them that deal they're looking for. I have spas sitting on the floor right now that are 40 percent off retail pricing. And that's what draws people in to us."

Orley's can accept a lesser margin on these spas because the dealership has other products that can make up the difference. As part of this strategy, Milligan is always on the lookout for a good deal on a truckload of spas, which he can pass on to consumers, which keeps the front doors swinging open. And an important part of that effort is his relationship with his spa manufacturer.

"When times have gotten difficult, Catalina has offered us good deals because they know what the market is like out there. They're very conscious of that. They're always checking to see what's going on. They come up each year and work the fair with me, so they know firsthand what's going on and what the consumer is wanting."

Case #2: Georgia Spa Company | Buford, Ga.
Getting noticed

At Georgia Spa Company, they're making a more determined effort than ever to get spas in front of consumers. They're not the first dealership to try to get out in the parking lot and draw a crowd in order to move some spas, but often enough, it works.

"Basically we went to the front of our shopping center here, and we put up a 40-by-40 tent with about 15 hot tubs in it," says Josh Kemerling, general manager. "I think we spent about $3,000 on Atlanta radio to promote it. They did a big blitz and from 2 to 4 that afternoon they had a live remote at the tent sale. They brought out about 30 pizzas, and we put up a jumpy balloon Moonwalk so the kids had something to do.

"My total budget for everything, including the tent and security, was $9,000. It was surprising to us; we had a lot of people in at the beginning of the week, but on Saturday and Sunday, it really happened. We sold seven spas on Saturday and eight on Sunday. Fifteen spas in two days was pretty shocking."

The main thing for Georgia Spa is to stay aggressive in the market, Kemerling says, and not to wait for customers to show up asking for spas.

"I talked to about five dealers recently, and I know three of us have stayed really aggressive. It's what we have to do. I told the owner we will not fail as long as we can keep advertising and keep being aggressive. We have not passed up a home show yet, and we've built our packages better."

A great help to Kemerling has been the dealer groups organized by his manufacturer. These are made up of non-competitive businesses that can share ideas on how to keep sales up.

"I serve on a roundtable where we meet other dealers," he says. "If a month is really hurting, you may call another dealer and ask what they've tried. If somebody tells me something worked for them, I will try it if I can. It may work or it may flop, but you have to stay aggressive. If you sit back, I think you'll fail."

Case #3 Bullfrog Spas of Ogden | Ogden, Utah
Goin' mobile

Like its amphibian namesake, Bullfrog Spas of Ogden has found that the key to survival lies in mobility. Not the lily- pad-to-lily-pad kind, but the ability to move spas and even the showroom itself, quickly and easily to remote locations. This acquired skill has enabled the dealership to thrive in tough times.

The company is able to set up an inviting retail venue - a "mobile showroom," in the words of Shawn Maynard, co-owner - at all sorts of festivals and events, where spas are either sold directly or advertised indirectly to the community at large.

"We own several wedding reception tents and we use them to set up a mobile showroom, complete with carpet and 10 spas and inflatable balloons and things like that. It's typically a two- or three-week event somewhere away from the store. And at that type of an event, we'll sell a bunch of spas. When we are at the tent event we offer what our customer thinks is the best offer ever.

"The short-term nature of the event lends to the validity of the deal and the urgency to buy now. It's an effective tool. It's designed to sell spas and it does. The only downside is it's a fair-weather thing."

Bringing spas from the dealership to a place where potential customers are gathered is a central part of the company's strategy. Even when the spas don't sell, they provide great advertising. It may be a simple matter of a spa set up at a grocery store across town with a sign that says, "Enter to win a Bullfrog spa."

"That business [where we set up the spa] gets to pretend that they're giving a spa away, and the benefit for me is that it's a big advertisement that lives there for a month," Maynard says. "So I will often have several of those around town."

The dealership has also invested in a spa toter, which enables one person to put five spas on display at a remote location with minimum effort. Maynard usually dispatches the toter to one-day events.

It may not even produce a sale, Maynard says, "but mostly it's a big giant billboard at this event and in front of all these people, and the person manning it gets to give an in-person commercial. We try to sell at these events, but that's not really our primary purpose. It's like a billboard except way more effective, because it's a lot more personal."

It takes a lot of extra work to keep spas out in front of consumers, but there's really no choice, Maynard says. "When it gets tight like this, this is the kind of thing you have to do."

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

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