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The conditions that created the COVID surge are changing, and the effects are being noticed by pool and spa dealers across the country.
One year ago, a pandemic pall remained over much of the country. Major news stories included the Delta variant and travel restrictions, and initial vaccinations were being rolled out. In that environment, with consumers generally not traveling and still focused on their own backyards, the pool and spa market continued its scorching pace, and builders and retailers worked to keep up with demand as best they could.
As 2022 rolls into mid-summer, however, circumstances have changed. In terms of activities, the country is normalizing in many ways. Air travel is nearing its pre-pandemic levels, and live entertainment is back. On the economic front, polls now list inflation as a top priority with consumers, and interest rates on home mortgage and home-equity loans have risen considerably.
In this environment, dealers are reporting a slight cooling in the previously torrid pool and spa market.“I think that there's definitely a shift going on,” says Don Riling, president at Olympic Hot Tub in Washington. And he’s not the only one sensing it: “I'm on a weekly call with a number of other hot tub dealers from around the country. We started this call to just make sure that we were still feeling connected during the pandemic, but also so that we could share what was going on in our stores and look at our business trends together…and all of them are seeing a little bit of a softening of their business, too.”
For Riling and others, this market cool-down is evidenced in part by shrinking backlogs. Waitlists that once felt impossibly long are finally starting to catch up with themselves.
“[My lead times] have gone down a bit,” says Riling. “A year ago, customers would be waiting eight months to get a spa, and that’s gotten better. There's a little bit more flexibility and availability of product now. Not on our most popular models, the most sought after ones — people are still waiting six to eight months to get those — but I've got product that will be here in the next three months that is available to purchase right now.”
At DesRochers Backyard Pools and Spas in Wilmington, Ill., Retail Operations Manager Mallory Bjekich-Wachowski can relate. In the peak of COVID, her lead times stretched as far as 18 months out. Now, they average about 12 months. “[The market] has cooled off. I mean, it's hard to completely describe it,” she says.
The shift has been particularly noticeable in middle-market customers, says Renee Huston, of Madison, Wis.-based Patio Pleasures. “It’s that sweet spot in the middle that I personally feel we’re starting to see slow down. The white collar worker, the median household income, that’s where I’m hearing them say, ‘Maybe we should wait,’” she says. “I feel that the consumers from the higher income brackets will continue to spend.”
For others, the proof is directly in the numbers: David Isaacs, owner of Isaacs Pools & Spas in Tennessee, has seen a decline in nearly all of his retail categories, while service is up.
“On chemicals, we're down 7% year-to-date. As of this week, spa parts are down about 19%,” he says. “New pool cleaners are down 38% and pool equipment, that’s down about 24%. Our maintenance items are down about 46%...and then, pool parts are down 31%.”
That’s not to say his overall business won’t have an “up” year, he says, as the service side of things has increased by approximately 20%. “Being down in retail says more about what’s happening with our buyer than it says about us.”
Retailers point to a variety of economic factors and nuances in consumer behavior that have influenced the dip in direct sales. Isaacs notes his customers are now stocked up, thanks to preparations in response to the chlorine and supply shortages. “We're finding that people already have a lot of the stuff they need, or their pools were in great shape when we opened them,” he says.
Bjekich-Wachowski believes a cold and rainy start to peak pool season might also factor in, at least in the Midwest. “Our weather has been so bad, I don't know if that has to do with it,” she says. “If the weather isn't great, the middle market customers tend to not buy as much, because they might not have a heater so they might open later, that sort of thing.”
At Olympic Hot Tub, Riling has noticed an uptick in cancellations. “I'm noticing some people that have already purchased are having second thoughts and are getting a little concerned, and they're canceling their orders,” he explains. “It hasn’t been everyone, but we're certainly seeing a little bit more of it than I have noted in the last 24 months…Some of the cancellations that we've had are from people who wanted the ‘right now tub’ instead of the ‘right tub.’”
“Some of the folks that came into the market to purchase a hot tub during the beginning of the pandemic and even in the middle of it were more of the midrange customers,” Riling continues. “But it was because they weren't dedicating any of their income to other things, like travel or going to dinner. I think they were actually willing to spend more on the hot tub that they purchased back then. Now, things have gotten so much tighter in terms of day-to-day expenses for those customers…it hits them harder.”
Amid the market cool-down, communication with customers and marketing strategies are also changing. For one thing, many businesses across the industry slowed or even stopped marketing efforts over the past few years, simply because demand was high enough to render it unnecessary. For another, much of the communication that was happening was drowned out by the spread of critical information: pandemic mandates, trichlor rationing, equipment shortages. Now, with COVID restrictions easing up and the market cooling down, some businesses have been able to get back to the essential message.
“When the shortage hit, the marketing that we did at the time was mostly brand awareness, ” says Bjekich-Wachowski. “It was, ‘We're the experts, let us help you.’ Other than that, you really couldn't have a sale, because you had no idea what you were going to have at any given moment.”
“We were actually screening people, like, ‘Have you bought tablets from us before?’ If they hadn't, they had to buy a three-step program to become one of our VIP customers, because I didn't want to just be a tablet factory,” she continues.
Eventually, that stopped: “This year, I feel like I have enough surplus to not screen…and I have ramped [marketing] back up. I'm doing more email campaigns, text campaigns with season's usages, stuff like that,” she says, although it may take longer for product promotions to return in full swing. “It is extremely hard to discount chemicals right now, because they're so costly.”
At this point, certain challenges associated with the pandemic have just become part of a new norm. “A lot of consumers are so used to everything else taking so much longer that when they find out it's going to take until October or November to get a hot tub, it doesn't surprise them,” says Riling. “They come in to hear that the tub they want is going to be here in October, and some of them are okay with that.”
Riling is appreciative of this change. “I hope our industry never goes back to immediate gratification,” he says. “I hope it's always a three to four month timeframe for folks to get hot tubs. I think that's much better for a lot of our small businesses as a whole, because you can plan your revenue, and you can project better in terms of expenses and other things that will happen. I'm hoping that our mindset as an industry and as business owners changes, so we're okay with people waiting to get the right thing.”
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