By Bob Harper
It is no secret the pool industry has been beset by declining sales and profits. The reasons seem obvious: new pool construction is down, consumer spending has slumped, the overall economy is struggling and mass merchants are carrying more and more after-market pool products. Pool owners are also turning to the Internet to purchase pool supplies, which further decreases profits.
The economy and competition, however, are not the only causes of the pool industry’s problems. Another force affecting profitability is the sweeping trend toward saltwater pools, which has decreased demand somewhat for traditional pool chemicals—one of the leading aftermarket profit centres for retail pool stores.
While retailers cannot do anything about the economy, they can take on the competition and win back the profits they have lost during the saltwater boom by recommending the right products to their customers, offering expert advice on saltwater pools and building strong customer relationships.
The problem
Industry research and surveys show the saltwater pool market is growing steadily, both in total numbers and as a percentage of the overall pool population. As these numbers increase, sales of chlorine and shock treatment products are declining in some regions.
Replacing lost sales of traditional pool chemicals with sales of pool salt is not the answer. Why? If both chlorine and salt are priced to yield equal margin percentages, margin income on commodity salt will be much lower than on chlorine, as traditionally sanitized pool owners will spend more on chlorine throughout the season than saltwater pool owners will spend on commodity salt.
In addition, salt has become a commodity in the pool industry. Mass retailers such as Wal-Mart and Canadian Tire are selling basic pool salt at rock-bottom prices to get pool owners, who are highly desirable consumers, into their stores. This sets a lower expected price point with consumers, ultimately lowering prices and profits.
For example, a specialty pool retailer will typically sell $100 worth of chlorine and $128 worth of shock products during a 16-week season for a traditionally sanitized, 80,000-L (21,134-gal.) inground pool. At 45 per cent margin, that equals $103 in profit. If that same pool is converted to salt, a pool dealer may sell five bags of commodity pool salt at $15 each, on the high end. Using the same 45 per cent margin, profit drops to $34.
Further, that same 20-kg (40-lb) bag of commodity pool salt is also available at mass retailers at a cost between $8 and $10. To stay competitive with pool salt, dealers cut prices and margin, or risk losing sales to the products sold at nearby mass retailers.
Pool stores cannot replace lost chemical sales by selling commodity pool salt, particularly since they are competing with mass retailers that are selling similar products for much less. Saltwater pools are here to stay and dealers should not ignore these customers. If they choose not to cater to them, their competition will.
