Purchasing pool and spa products properly will help increase store profits

By happy coincidence, the essential elements of product retail - purchasing, presenting and promoting - all start with the letter P. It's a convenient memory device for those considering how to boost the bottom line in a tepid economy. This article will explore the first of these three P's and offer you some useful advice to make the most of your retail opportunities. Think of your inventory buying mission as a treasure hunt to find the best, most reliable and coolest stuff to stock your store.

First of all, you need to utilize different sources. Let's look at what you can find at trade shows, which may be the best place to find the newest and most innovative products being introduced to the market. It's a crucial place to both purchase products and get ideas for future purchases. You can see, compare, bargain and try out in person products and programs before committing your firm's valuable resources. There are some tricks, however, to effectively working a show and using your limited time and resources to best advantage.

1. Start in the boondocks. Obviously, the big players have the huge, flashy booths and best positions at a trade show, but it's a good idea to bypass the biggies and start looking in the far corners of the show. Check out the smaller booths, the newer products and the out-of-the-way offerings first. This way you will discover unusual stuff just coming out and have a better shot at being the first in your area with the new and different. This keeps your store a little edgy and exciting for your customers. They like coming in and seeing unique items they can't find anywhere else. Yes, it will show up in Wal-Mart eventually, but you will have a year or two to be the "cool store" before it does. I have found many unique products this way. Discover the new product at the show, effectively display and promote it, and you will be surprised at how much that one small product can add to your bottom line.

2. Sniff out the deals. As you cruise around the show floor, keep your eyes open for the show specials, the early buy deals, the volume deals, the free samples, and the programs offered by distributors and manufacturers for the coming year. Pick up literature for all these things. Don't feel shy about asking if the "show special" will be honored after the show - this gives you time to look it over or share with your staff back home before you decide. Very few specials are good only at the show. Most companies will gladly give you extra time to make up your mind.

3. Try before you buy - a lot. Avoid overloading your store with huge quantities of an item until you have had a chance to try it out for quality, sales value and service from the supplier, especially warranty issues. Make sure the company you are buying from is going to back up the product before you commit to purchasing a large quantity. Buy small amounts, and then commit to larger quantities as you evaluate the product and it proves successful.

4. Be cautious in quantity. Avoid the temptation to get carried away and overstocked just because something looks like a good deal if you buy in quantity. The whole key to being profitable in a retail store is turnover. The longer it sits, the more it is a liability no matter how good the deal.

And check to see if the product will be available through your local distributor so you can restock in small quantities at will. If you really like an item, though, you may need to "lean" on the manager at your local distributor to keep it in stock for you. Be aware you may need to aggressively request the items you want, as the managers are under pressure to keep inventory low, especially in these tough times.

5. Know what works in your market. Different markets need a different product mix. Even with pool chemicals, this will vary. Climate, pool type predominance, debris sources (leaves, blown dirt, etc.), whether you have a lively DIY market or full service customers, resort areas vs. urban or rural areas, residential or commercial trade, etc., all these factors are going to play into how you purchase for your stores. I have two stores, each with very different requirements, and we purchase accordingly.

You also need to evaluate your competitive situation in setting prices for your store products. A good rule of thumb is to go with loss leaders on products that are compared often by your customers and strive to be just slightly below your competition on just those products.

Then, on your other products, you can take a full margin. In general, a pool retail store tries to make an overall 40 percent margin for all the products. You can afford to be cheap on some things if you can maintain this margin overall.

6. Keep an eye on the pizzazz factor. Purchase some products that are visually exciting just to keep your store looking fresh, interesting and different. Keep your eyes open for a few different and new things each year at the trade shows to jazz up the store. You want the customer to come in and say, "You always have the coolest things!" It helps them to keep coming back just to see what you will come up with next.

7. Network for info. Develop a network of industry acquaintances over the years and talk to other people at shows and industry events in non-competing markets to share ideas on what has and has not worked in their stores. Visit other stores any chance you get and share ideas. Don't be shy at shows. Speak up and visit with your peers on the shuttle buses, in the hotels, on the convention floors and at social events. Some of your most valuable information can be gained from your colleagues.

Of course, the major source of supplies throughout the nation is distribution. There are large distributors in most of the big cities all over the country and if you live in one of them, this may be your best source for most of your products. It's a good idea to establish relationships with all the major distributors in your area, and to reevaluate their programs each year, compare what each has to offer, and bargain for the best deals you can cut.

However, having one distributor as your major source gives you an edge in obtaining your best deal if you can buy enough to establish yourself as a major client. Be aware as well that in this industry the one thing you can count on is change. Be loyal to suppliers that back you up, but when conditions shift it may be to your advantage to switch suppliers accordingly.

Communication is key. Make an effort to communicate well with your distribution employees and establish a good working relationship with the managers and assistant managers of the branches you deal with, as well as their sales reps. Why? In part, so you can tell the branch manager what you want him to stock.

I learned the importance of this from the rep side of the equation: Distribution branches are constantly barraged with salespeople wanting them to stock new products. But branch management is held accountable for what they can actually sell, and, accordingly, they want to be sure a market is there before they bring in that wonderful pool care book or whatever you saw that you want to start using. It's important to communicate with your manager, maybe over and over until he gets the message and brings it in, what you want in there. They are busy and may need to be reminded multiple times. But do so in order to have things available when you need them.

Directly Speaking

In some instances you may find it to your advantage to buy directly from manufacturers. Usually this option is only available to very large organizations, but there may also be smaller products not in distribution you wish to purchase this way.

Some of you may be members of buying groups or prefer this method of purchasing for your store. You will have to evaluate whether it offers more advantages for your particular situation. Questions you should ask yourself in evaluating if this is right for you are:

  1. Will joining a buying group actually save me money on products, especially considering any fees and minimum purchases that might be involved?
  2. Will I be able to plan ahead carefully enough to bring in supplies in a timely manner in order to take advantage of the savings, and do I have the space to warehouse everything?
  3. Do I have sufficient controls over the inventory so there is no attrition - through theft, for example?
  4. Will turnover be rapid enough to justify the upfront investment of bucks?
  5. Can I do better stocking fewer products from local distributors, turning over quicker and having what I need available more quickly?
  6. Does the particular buying group I am considering have requirements to pick up the slack financially for any of their other business members who get into financial difficulty?
  7. What are their requirements for all members and how does this work for my individual company?

There may be other special sources you discover for individual products that work in your store. For example, we once had a mini-warehouse facility nearby that ended up with a large quantity of repossessed canvas beach chairs. We bought these at a huge bargain and they were great in our stores and very profitable. The specialty distributors who cater to selling a wide variety of smaller products are an especially good source for unique items.

Taking all these sources and methods into account - maximizing different sources, working the trade shows, knowing your market, using caution and good sense in your quantities, and developing your contacts with distributors and buyers groups - will help you arrive at an efficient and profitable buying strategy.

Although purchasing is tricky, following these suggestions can help you avoid some costly mistakes and make the most of your purchasing decisions.

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

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