It pays to embrace unique products
Should a specialty retailer avoid stocking commodity products in favour of unique, new products? It can be a big risk, for a number of reasons. First, the retailer may lose consumers who visit the store to pick up the basics along with more specialized accessories or treatment products. Second, consumers looking for commodity products may look to the retailer and its staff to educate them on how those products compare with higher quality, premium products. Finally, by eliminating a product category, the message received by consumers is the retailer does not care about the customers who need them.
Even though commodity products are necessary, it is obvious specialty retailers will make better margins and more effectively differentiate themselves in the marketplace by focusing on new and unique products that are not available at mass retail outlets.
For example, with the incredible growth of saltwater pools, salt has become a commodity in the pool industry. A few varieties of pool salt can be found at mass retailers and more varieties can be found at specialty retail outlets. If a specialty retailer sells a 20-kg (40-lbs) bag of commodity salt at $11.99, the 40 per cent profit margin is approximately $4.84. That same 20-kg bag of salt may also be available at mass retail outlets for half the price. Mass retailers can live with lower margins because they hope customers will purchase higher-margin products during their visit. And, given their vast purchasing power and sophisticated logistical networks, their margins may be acceptable, even at their greatly reduced retail prices.
On the other hand, if a specialty retailer sells a 20-kg bag of premium, high-quality pool salt with stain, scale, corrosion inhibitors and other additives blended in, plus a significant performance guarantee from the manufacturer, the retailer can price it at $42.98. In this case, using the same 40 per cent profit margin, the retailer would make $17.16. If premium salt is not available at a mass retail outlet, and customers understand the value they receive from the premium brand, the specialty retailer has done its job and successfully differentiated itself in the marketplace by providing value to customers that could not be found elsewhere.
Ensuring success in specialty retail
How can specialty retailers be successful in light of the growth of mass retailers? First, it is important to understand why customers visit the store to ensure it meets their expectations. Pool owners shop at specialty retail stores to find unique, quality products and to learn about the best ways to care for their pools—not because they are less expensive. They also know specialty pool stores are the best places to find the newest products available to solve specific pool problems and to limit the amount of effort needed to maintain their pool during the season.
Attending trade shows, reading trade publications and working with vendors to get the necessary product and sales training are great ways to stay abreast of the new product curve in order to anticipate and meet customer expectations.
The next step is to build customer satisfaction and loyalty. By meeting or exceeding customers’ expectations, they become satisfied and loyal. It is very difficult to lose loyal customers who often provide valuable word-of-mouth referrals, so the more loyal customers a specialty retailer has, the better.
Compared to mass retailers, there are a number of reasons why specialty retailers have an easier time building the satisfaction and loyalty of pool owners:
Year-round service
Specialty retailers have a longer window of time to serve their pool customers. Mass retailers usually offer pool-related products during late spring and the first half of summer. After early July, they typically liquidate their remaining stock via clearance pricing to make room for fall and winter products.
Specialty retailers, on the other hand, start their season at the beginning of the year and often hold ‘Pool Schools,’ other promotional events and early-bird sales. They are also available to serve pool owners throughout the entire swimming season and into the fall, long after mass retailers have reduced their pool product offerings.
Personalized atmosphere
Specialty retailers recognize that swimming pools are a major investment. Sales staff can ask intelligent questions to understand needs, wants and objections and proactively sell a range of products to meet those requirements. They also have the time and capacity to record this information about each customer, so they can ‘wow’ them at their next visit with personalized service. With loyal customers, retailers can also anticipate their needs and wants by selecting product offerings with specific customers in mind.
Vendor training
When selling new, unique and premium pool products, specialty retailers can take advantage of training programs from vendors to help them successfully recommend and sell these products. Pool customers expect a high level of expertise from specialty retailers and these training programs are very helpful in building this.
