Tell us about the business.
It's a family business that my parents started back in 1962, so we're celebrating 50 years in business in 2012. We started building inground pools, then in the 1970s we opened a retail location in Waukesha. In 1982 we moved to our present location, and about 20 years ago we opened our Franklin location.
We do abovegrounds, retail, service, and stopped building pools about 25 years ago. We introduced hot tubs in 1981.
Let's talk about aboveground pools first. I'd imagine sales are down.
Yes, and you've got a couple of forces that are in play no matter what you do. First, you've got the weather, and in the last several years there've been ups and downs, but mostly downs with low temperatures and high moisture. So, when the backyards are underwater, it's a little tough. Then you've got the economy. But I'd have to say weather is a bigger factor for aboveground pools. There's also competition from those little Intex pools, which sometimes satisfy people's needs for swimming.
This year the weather's been very nice around here.
That's given us a nice jump-start. We're seeing some early interest, more toward the middle and even the high end. And the customers that are looking are going for more of the complete packages, including the deck.
What about the economy? Things have gotten a bit better there, too. Is that contributing to an increase in business?
There's going to be some residual to what's been going on the last few years. There's a little negativity, but overall things are a little more upbeat, and again, we're dealing with better weather, so both of those are helpful. Also, I think you have to take a look at the unrest in Madison last year. We cater to a lot of teachers, firemen and police officers, and they were a little riled up last year.
What brands of spas do you sell?
We carry Hot Springs and Sundance, so it's on the higher end of things. We've been selling hot tubs for 32 years, so we've got a lot of repeat customers buying their second and third hot tubs, so that's really helped us out during the downturn. There's been a nice demand from our existing customers. We've got a big list of old customers with aging hot tubs.
Are people looking for lower-priced tubs these days?
We're still on the high end. I think some of the middle market is gone, but I think you'll see people still liking the features and benefits of the higher end, and I think there'll be some good business on the lower end.
We also see a little downsizing. People would come in that used to get the four- or six-person hot tub and they'll say, "Well, there are just two of us now." They still want all the bells and whistles, but maybe just for two people now.
As a Watkins dealer that concentrates on the high end of the market, do you plan to start selling rotationally molded spas to reach that lower price point?
We'll look at it and figure out where it will fit in for us. There are some good possibilities there. But I don't think Watkins has even decided how they're going to market that product, so they haven't rolled out the program yet.
Looking at your website, a couple of things stand out. You've got an e-commerce site there, and you're selling private-label chemicals.
The e-commerce thing is really a convenience for our customer base. Do I want to compete on a national level, or out of my region? No. It's just a convenient way for our customers to order from us. We do some spring sales where we have a big uptick in sales and we get busy at the store, and so instead of going to the store to order the products, they can pre-order them then just pick them up. We find that people like that ability to order from home over the Internet. They're still able to patronize us, but they also have the convenience. It's a different avenue, but we don't intend to change the pricing. There are those places that will sort of have two operations — the brick store and the online store — and they'll separate them. We'd rather just run it as an extension of our stores.
What about the private-label chemicals?
That's something that's been going for a long time. We find that people gravitate to our name, and even if we have a lower-priced product, they'll still reach for our brand. It's got a loyal following. There's a value, and people realize that the quality is there. They've had good success with it, so it becomes a repeat-business scenario. It's manufactured by Jonas, and we do liquid chlorine and shock products with Champion Packaging out of Illinois.
You sound fairly optimistic about the weather and the economy this year. Do you think the market is on its way to full recovery?
If it's ever going to get there, it's going to take a while. They're kind of forecasting a little bit of improvement, but it looks like mostly a flat year. That seems to be the consensus.
Were your customers typically getting money out of their houses or financing purchases before?
Believe it or not, that was never really our customer. Most people seem to have the resources to make the purchase. I'm sure there are a lot of customers who are on the fence about buying who wish they could just write a check, but . . . There was a lot more going on when people could do the 90-days-same-as-cash kind of thing, but that's really dried up.
You're selling online yourself, but are you feeling pressure from other online retailers who are selling your core products?
We used to do a tremendous amount of business with parts, and we always made sure we had inventory in parts on hand so we could get them to our customers right away. We're seeing some of that business gravitating to the convenience factor of buying online. And I can't blame those people.
Are the manufacturers doing enough to keep a level playing field?
I think they care about the retailers, but they're also at odds on how to properly help us. But there are a lot of them who are doing more than just providing lip service; I think they're trying to do what they can. A couple of years ago manufacturers were doing anything for cash flow, trying to get their books in order. But we're past that stage and everybody is realizing what we need to do to grow the industry and move it forward.
