‘Luxury items’ dealers work to keep heads above water

TRAVERSE CITY – Consumer spending on such items as hot tubs, swimming pools, billiard tables and similar amenities has plunged across the country as discretionary income continues to dwindle. Traverse area retailers have been similarly hit by current economic challenges and are responding with shifts in product lines, staffing and service.

According to the Association of Pool and Spa Professionals, sales of new swimming pools (both in-ground and above-ground) fell approximately 12 percent in between 2007 and 2008. The trend isn't expected to improve much in 2009.

Larry's Pool and Spa, which sells swimming pool, hot tubs, outdoor furniture, grills and related items, began feeling the downturn close to a year ago. According to co-owner Don Stephenson, summer business is up for repairs and maintenance as homeowners opt to keep older models in good operating order rather than replace with a newer model.

"People are trying to keep things going longer, so we're doing more repairs," he said. "Instead of replacing liners, we're patching liners…there's definitely more fixing going on."

"Purchases are specific. People buy what they need to and that's it," Stephenson added. "There are far fewer spur-of-the-moment buys, like knickknacks or pool toys."

In response, Larry's was conservative when purchasing new inventory last fall, especially in patio furniture and related accessories. Longstanding relationships with suppliers allow them to quickly obtain products. "That's paying off for us right now," he said.

Stephenson also cited the credit crunch in the sales slowdown, noting that home equity loans and other financing that was often used to fund new pools is no longer available to many consumers. He remains optimistic, however, that the economic tide will shift again soon and noted the economy has taken many swings since his parents founded the business in 1968.

At Traverse City's Home and Hearth, general manager John Richardson has seen the economy impact product lines differently. Pool tables have taken the greatest hit in sales, while pellet stoves have proven to be very popular, offering energy benefits as well as aesthetics.

"The pellet stoves have been very big," Richardson said. "We anticipate that continuing and are stocked up for the fall."

Renovation projects are exceeding new builds, but have heated up fireplace sales, he said, noting the impact construction trends have on their product sales.

Chill factor

Weather is another impacting factor, especially sales of swimming pools. Northern Michigan's long winter and cool summer start haven't helped sales, but as the temps have moved closer to normal seasonal levels, interest has risen.

Chad Miller, Home and Hearth's managing partner, notes that more people are opting away from large vacations and are choosing to focus on activities closer to home. The shift is benefiting pool sales, as well as several of the business' other products.

"Travel can be expensive," he said. "A pool is an investment up front but provides something a family can enjoy together for many years."

Rick Phillips, owner of Phillips Lifestyle which sells spas, pools, saunas, fireplaces, pool tables and related products, said that there are bright spots in the current economic climate.

"We've been in business for 30 years," he said. "This has given us the opportunity to look at who we are and what we do … and analyze every aspect of our business and the cost of operations."

This review led Phillips to add new inventory lines and streamline various operational costs. Some products were added due to consumer interest, such as a new line of self-cleaning spas and more fireplace products. Others, like a new line of pool tables, brought a significant change while offering consumers more affordable price points. The changes have been good and necessary, he said.

"We like to say we're the newer, better Phillips Lifestyle," he said.

Like the others, Phillips noted that industry sales had been declining for the past two years and that current sales, while lower, were not down dramatically. He credits hard work, attention to customer service and the new operational strategies.

"In order to stay in business today, everyone must address the cost of operations and cut expenses to make a profit," he said. BN