For the retail portion of our State of the Industry issue, we spoke we three industry leaders to serve as our "retail voices." In these profiles, they share how their businesses fared last year, their strategies for success and their vision for the future. For 2013, we spoke with Brian Quint, Merry Wise and Steve Ruscigno.
After a career in the automotive industry, Oregon Hot Tub General Manager Steve Ruscigno has been in the hot tub industry for 12 years. While he’s glad to see hot tub sales are growing stronger, he’s concerned about manufacturer relationships and the public’s perception of the hot tub — or lack thereof.
How was your 2012 overall?
We were up over 2011 by probably about 10 percent. And 2011 was a very good year for us.
Some of our survey respondents were surprised by stronger sales in higher-end hot tub models. Was that the same for you?
Yeah, definitely higher sales in high-end hot tub models. I’d say our average ticket was up by about $800.
One of the goals of the hot tub industry has been to convince customers to view the hot tub as a health and wellness product and not as a party product. Are you seeing signs that the tide is turning?
No. Not at all. I think the hot tub industry is failing miserably in that regard.
Tell us more about that.
Well, we carry saunas and swim spas as well. And I know the hot tub industry for 30-plus years has been trying to sell the hot tub as a health and wellness product, but because of places like Costco, when customers come into a hot tub store, they come with a preconceived notion that the hot tub is $3,000 to $5,000 for a good one. It becomes a price war game — it’s becoming more like a mattress than a health and wellness product.
With saunas and swim spas, you don’t even have to introduce them as health and wellness products. People automatically think that when they see them. And I know that just from working shows and watching people react to the hot tub. When you’re talking to the consumer about the hot tub, it’s usually all about price. But when you’re talking to a customer about a sauna, it’s all about the health benefits. And that’s coming from the consumer.
What are you as a business trying to do to change that?
As a business, every product we offer is a “life improvement product,” so we go to market that way. We’re not big enough to do it like the manufacturers can do it, but at the same time, when we’re standing in front of that customer, we’re everything to them in that moment. While I don’t think the advertising and the marketing from a manufacturer level is hitting the mark, I think on the sales floor, we really try to hit the mark by promoting all of our offerings to be life improvement products.
When you do have an audience with a hot tub customer, what do you tell them about the health and wellness benefits?
You just start talking to them about what’s going on in their lives. What’s their pain? Everybody’s got pain, everybody’s suffering from something, whether it’s mental, emotional, physical, spiritual. And once you get people talking about themselves, you start finding out they’ve got these aches and pains. They were in a car accident, they’ve got a hard job, whatever it is, and you just go down that road. Because it’s really all about them and how they’re going to use our product.
We’re a 34-year old company. And yeah, we sell a lot of hot tubs, but we do it because we care about the customer’s experience with the hot tub, not just about getting it out the door and moving onto the next hot tub sale. So it’s really important during the sales process that we talk about how they’re going to use it and how it’s going to benefit their life. And yeah, it gets off track sometimes because they really just want to know the price or they’ve been shopping, so they’ve got these questions about ozone and stuff. But you just try to keep it more on their lifestyle rather than the product.
So the problem is that you can’t really spread the health and wellness message unless these people are already in your store.
Right. And another thing: The industry is not creating new hot tub buyers. So since the recession hit in ’08 and ’09, our trade-ins have gone up tremendously, which means that it’s a second-time buyer. They already had one from us, and now they’re coming to buy their second one from us. Or they had another brand, and that manufacturer is now out of business, so they come to us. I think about 60 percent of our sales over the last three years have involved trade-ins.
The manufacturers aren’t doing a good enough job of creating a new hot tub customer because they don’t unite at all. They fight against each other. Everything’s so secret in this industry. And I came from the automotive industry about 12 years ago — it’s a much bigger industry. Coming to this industry was a little of a culture shock in that none of the manufacturers actually talk to each other.
What should they be communicating?
For example, most of the manufacturers I believe get their sales information from the sheet manufacturers, so it’s only a guess as to how many hot tubs are really sold or made in the industry. So you talk to one manufacturer and the industry was down, you talk to another manufacturer and you hear the industry was up. Each manufacturer talks about how they were up, but the industry was down. So for me being a dealer, I don’t know who to believe or what to believe. I just know my numbers, so I concentrate on what we can do. I don’t really worry about what the manufacturers can do. You’re asking, “What can they do?” and they need to unite, in my opinion. They need more national marketing as an industry, not as a single manufacturer. If you look at milk or beef, you see billboards that promote eating beef or drinking milk. There’s a bunch of people who make milk, and they all came together as one group, kind of what like what the International Hot Tub Association, I would imagine, is trying to do.
So the reason people don’t see hot tubs as a wellness product is because no one is telling them to think that.
Right. And I know 10 years ago, there was a survey that said, “If you won the lottery, what 10 things would you buy?” Hot tubs weren’t even on the list. But if someone said, “If you won the lottery,” and they suggested things, including hot tubs, hot tubs were No. 1. It just shows there’s no awareness. If someone said, “You could have a hot tub,” they’d put it on the top of their list. But for them to think that on their own, it doesn’t happen.
What’s the biggest challenge of the hot tub industry?
It’s actually something I thought when I first got into this industry: There’s a bunch of aging owners with no exit strategy. The hot tub industry is about 34 or 35 years old. A lot of these successful hot tub companies were pioneers in the industry, they’re now to the point where they need to get out of it and their businesses aren’t worth anything. And they can’t give it to their kids because that’s not the right choice, and they have no exit strategy. So it’s going to be interesting to see what happens because the people who built this industry are now 35 years into it, so say they started at 30 or 40, and now they’re in their 70s or 80s. From what I’ve seen just in the Hot Spring dealer network, which I believe is the largest, there’s no plan. And coming from automotive 12 years ago, I’m kind of a big picture guy — and I don’t see the big picture for this industry. It’s kind of scary, actually.
Changing gears a little, tell me how social media has played into your business strategy.
That’s a good question. We’re all over it and in everything you’ve got to be in: Twitter, Facebook, we do blogs, we’ve got everything going on. I can’t really say it’s helped, I can’t attribute a number of sales to it. Steve Hammock at Watkins always says, “The Internet will never be as small as it is right now.” So with the Internet just growing and growing and growing, it’s just another way to get your company out there. It’s another way to connect all the little Google spiders to make you relevant to search engine optimization and all that kind of stuff. And we use Twitter, for example. We can put out an offer: “10 percent off for all military veterans today.” So we’ll put little sales tweets, but we use it more often to say things like “Congratulations to the Jones on their new spa.” We use it to get ourselves out there on the Internet because it’s never going to be smaller.
Where do you see Oregon Hot Tub going in 2013?
We’re thinking it’s going to be a breakout year for us — lately due to the fact that we’ve got our staff excited about our offering of life improvement products. I know that sounds cliché, but we really just hammer it into our folks that this isn’t just a widget, it’s a life improvement product.
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