Fiesta Pools & Spas held a large consolidation sale.
By no means was it a going-out-of-business event, but it did mark the company’s downsizing from three retail stores to two. Fortunately no employees were lost — they were simply absorbed into the remaining properties.
The closure was symbolic of retailers nationwide streamlining operations amid a sluggish economy.
“You used to pinch a penny to save — now you’re pinching to pay the bills,” says Erik de Sonnaville, sales manager with Fiesta Pools & Spas in Tulsa, Okla.
Indeed, there are countless areas in which management can choose to limit costs and improve efficiencies.
Recessions, though, don’t last forever. And business owners will have to decide which cuts are only temporary and which should continue through a recovery and become permanent.
“It’s like going on a diet,” de Sonnaville says. “You don’t want to turn around and put the excess weight back on.”
So are pool and spa retailers adopting a new — and permanent — mindset, or will the desire to expand when business rebounds ultimately prevail?
Temporary cuts
Officials with Fiesta began re-examining the business well before they decided not to renew the lease on their third store.
Around fall 2007, they started freezing select positions. In the warehouse, three staffers became two after one left. And when the second departed some time later, management decided they could live with a single warehouse employee, de Sonnaville says.
Today, a single warehouse manager — who doubles as Fiesta’s purchasing agent — coordinates and verifies which products have left the facility. All spa deliveries and aboveground installations, however, are now outsourced.
“And the guys we outsource to are good,” he says, “but there’s only so much you can control — things like dress code and so forth. Though we have since begun transmitting little elements that are part of our standard operating procedure to the companies we do business with ... we would eventually like to bring it back in-house.”
Also suspended were monthly, quarterly and annual bonuses for reaching sales objectives: “That allows me to keep the sales staff here at their current salaries,” de Sonnaville adds. “When the volume comes back, we can re-instate them.”
It doesn’t end there — despite its name, Fiesta last year jettisoned the annual Christmas party. And a window-washing service has been suspended, replaced instead by employees with squeegee and Windex.
In Gallatin, Tenn., Jay Tucker has revised his own business model. He hasn’t had to lay off any employees, but the owner of Swim World Pools is cutting back where it’s feasible.
“Normally we’d try out new product displays,” he says, “but these days we’re just using what we’ve got on hand. And we’re not really taking new products in, unless it’s something really special.”
Tucker also has identified savings in his company’s cell phone use. His carrier offers a service where, if the phones aren’t being used, they can be placed in a sort of hibernation, where the cost is a fraction of his usual monthly bill.
“It’s mainly for seasonal folks whose businesses are stronger during certain parts of the year,” he says.
Permanent changes
About three years ago, management at All Seasons Pools, Spas and Billiards in Lumberton, Texas, began examining their payroll. Positions and job responsibilities were analyzed, and the decision was made that several could be consolidated into just a few.
To illustrate, in 2001-02 the company had about 10 fall employees; in 2009 it had five. As part of the reorganizing, owner John Hasselbach even took on some service duties.
“It’s nice to see payroll go down that much,” he says. “We can do without as many people … I think I’m going to keep it down when business picks back up.”
Around mid-2007, Hasselbach also began more closely tracking his inventory. He put a stop to big early buys soon after.
For example, in the past he might keep 15 to 20 aboveground pools in stock. Nowadays he does about $10,000 in product, he explains.
It didn’t thrill his aboveground manufacturer’s rep, but “I can sleep a lot better at night,” Hasselbach says, adding that now, just about everything is paid for up-front. It’s a philosophy he expects to continue as All Seasons plans to expand into outdoor kitchen equipment.
“We’re going to be really careful on inventory moving forward,” he says.
In late fall, Backyard Spa and Leisure was preparing to meet with utility provider Pacific Gas and Electric to discuss curtailing the retailer’s energy use. The idea was to review the company’s lighting configuration and monthly bill to determine whether savings, or rebates, could be realized, said Tom Verduzco, owner of the Fresno, Calif.-based business.
Also under the microscope is the firm’s phone service, which management believes can be modified without missing a step.
“We’re looking to implement these steps permanently,” Verduzco says. “In hindsight, I should have looked at these things earlier. Years ago it would have seemed like we were tripping over dollars to pick up pennies. Not anymore.”
A self-described mom-and-pop neighborhood store, Sunshine Pool & Spa recently changed its health care coverage to offset the jump in cost of its previous plan.
In addition, the Santa Rosa, Calif.-based retailer now operates with six employees, whereas five years ago it counted 16. But trimming staff in itself wasn’t the store’s biggest change of late. Instead, it was what owner George Catelli did with those half-dozen employees that made the real impact.
In spring 2007, Catelli began cross-training his employees in service, maintenance and repair, with the owner himself acting as service manager.
“It’s actually less stress,” he says. “Smaller, in a lot of ways, is better.”
For the foreseeable future, Catelli says he also will keep close tabs on his expenditures. And included in that is making a concerted effort toward limiting mistakes and watching his profit-and-loss reports. Proper ordering and troubleshooting are just a couple of examples — the opportunities to save run the gamut.
“If a distributor accidentally sends you the wrong product, do you return it right away or do you keep it in your inventory for months?” Catelli says. “You can always try and cut down on mis-ordering of parts, supplies and equipment. Or a repair guy may drive out of the store with the wrong part. It’s just double-checking things closer.”
Indeed, most retailers agree the new economy has created new guidelines for doing business more efficiently.
For Verduzco, an added emphasis on e-mail marketing — less expensive than direct mail — has led to more frequent contacts with past and current customers. And that has paid dividends to his bottom line.
“We started asking people about winterizing, and no more than 10 percent of our customers actually knew they had to winterize their pools,” he says. “Over two weeks [in November] we’ve sold more winterizing kits than we did in full years prior. The income we got from that was shocking. From now on we’ll be doing this for openings in the spring and summer.”
Still, the big decision for many retailers comes back to inventory.
Katherine Bauer of Stuart Bauer Pools & Spas says her company now keeps a closer eye on its supply, and has become more cautious than ever about overloading on purchases.
“In the past we may have kept things like heaters in stock,” says the manager of the Louisville, Ky.-based firm. “Now some of those things we do on a special-item basis.
“As far as bringing that back, we’d like to have more inventory on hand,” she adds. “But a lot depends on what you’ve got coming in, in terms of business and work.”
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