SUFFICE IT TO SAY THAT RETAILERS have complex feelings about chart-busting
sales the past couple of years. The money is nice, but the abundant stress is
unsustainable. On what appears to be the downward slope of COVID, there’s
a collective breathing out that brings opportunity for reflection — and that’s
exactly what we’ve asked these five dealers to do. Here, a region-by-region
glimpse into record-high demand, supply-chain issues and never enough time.
West
Mountain Hot Tub
Montana
2021 was a good and largely predictable year at Mountain Hot Tub, says owner Kelly King. He says the company got what it needed from suppliers with few exceptions — and when exceptions happened, customers were understanding.
This year, King is simply shooting to sustain last year’s numbers — with no growth. (Yes, you read that right.) “There’s nothing wrong with that,” King says. “I want a lot less stress.” He predicts the company will still grow about 10% this year, mainly through service and other controllable factors, but adds that “most manufacturers aren’t promising 10% growth over last year.”
Since March 2020, MHT has gone from 32 employees to over 60 — and each hire takes a great deal of energy and time, King says. Finding good people was hard enough, but the company has also now outgrown the 20,000-square-foot building it moved to in 2019. Material handling and receiving product caused headaches. “A lot of customers wouldn’t take delivery,” King explains, “until their house or deck was done.” (The company has since leased additional offsite workflow space.)
King also made product cuts across its three locations. MHT carried swim spas since 2012 but King dropped them last year, along with some brands of specialty covers. His reasoning: “They’re not hot tubs, and we’re in the hot tub business. I want to get rid of anything that distracts us.” Hot tub growth has been significant for King, who picked up two lines — American Whirlpool and Nordic — in 2020 and 2021, respectively.
MHT has also carried Finnleo saunas for 30 years, a segment in which King doesn’t expect a slowdown. Service and valet are also strong categories for the business. King purposely grew MHT’s valet department in 2020 when he saw that manufacturers may not be able to deliver as many hot tubs as MHT could sell. In turn, hot tub sales supported its service department, which maintained lower costs “to protect our reputation,” King says. “Looking at our status board, everything is green.”
The company now operates eight valet department vehicles and is adding to its fleet at a constant clip. “We always have an order in for a truck and a Jeep Renegade with a local dealer,” he says, “because it’s one to four months to get a vehicle.”
2020 to 2021:
Overall: Over 50% increase
Hot tubs: 50% increase
Service revenue: 30% increase
Saunas: 25% increase
Swim spas: Ceased sales in 2021
2022 projections:
“We didn’t see any slowdown and we don’t expect to,” says King. “If I’m down 25% in 2022, that’s still a lot higher than the trajectory we’ve been on.”
Southwest
Sunset Spas of Arizona
After 35 years in the hot tub business, Dave McKibben says last year was the best he’s ever done. He manages the Tucson location of Sunset Spas of Arizona, and among the company’s five locations, that location also had a record 2020. The only problem: His manufacturer, MAAX Spas, could not keep up.
Though MAAX’s factory is only about an hour away from Sunset Spas, “they simply got inundated with orders and weren’t even capable of building the spas we sold.” It was one month, then it was three, he says, and it was no better with swim spas. So Sunset Spas picked up a second line: Jacuzzi — and sold out of those in a month or two as well. In a matter of weeks, lead times went from one or two months to six. MAAX also raised prices in that time, McKibben says, and “Jacuzzi inflicted us with stiff ‘COVID surcharges.’ ”
“We still sell every spa we can get,” he adds. “Absolutely amazing.”
Nevertheless, McKibben felt it wise to continue to resist selling his floor models. “A lot of our competitors made the mistake of selling their floor models,” he says. To meet demand, Sunset Spas private labeled made-in-China hot tubs; selling a blend of three manufacturers is part of why McKibben has enjoyed record sales and record profitability.
“We make sure it’s all American-made major components,” he says of the foreign-made tubs, “and we make sure we put our flavor on it. Our customers are unwilling to wait six to 18 months for American made.”
At this stage, McKibben is relieved to be able to keep up with volume and sales are still strong: In January this year, the company delivered 60 spas from its Tucson location alone. McKibben anticipates a downturn in a year or two, but for now expects a robust 2022.
2020 to 2021:
Hot tubs: From 500 units in 2020 to 600 units in 2021 — “and this from a store with two salespeople.” (By contrast, the company sold 300 units in 2019.)
“Every spa we can get is sold before it gets here.”
Swim spas: “We have not seen as big of increases due to supply, but pre-COVID, we were selling two to four a month,” McKibben says. “We are still selling the same amount — because we just can’t get them.”
2022 projections:
“We’re still selling every single spa that three different manufacturers will sell us,” he says. “I don’t know how much better you can do than that.”
Northeast
Valley Pool & Spa
Pennsylvania
Eric Cassidy, vice president of the nine-location Valley Pool & Spa, also had a record couple of years — and says they could have been even bigger were it not for the near-ubiquitous inventory issues.
“We are used to growing year over year and change year over year,” he says, “but that growth is usually limited to 10% or 20%.”
For the past two years, Valley has grown a whopping 60% a year — some of which is due to adding a store location in both 2020 and last year, on top of COVID-led demand. Despite how it shines on paper, though, Cassidy says they were the two most stressful years he’s had in the industry.
In 2020, he recalls, staff was on board and understood the situation. They looked at the record demand as a blessing, and were thankful not to be worried about their jobs. Then came the second year, and the pressure became too much. “It was like, ‘I can’t,’ ” Cassidy says. “We need more people — we can’t just stop selling stuff.”
Turnover became commonplace, and while hiring was easy, retention was harder. There was inventory but not enough delivery capacity, among other front-end challenges. Hot tub and swim spa service revenue were kneecapped by constraints on available labor — which Cassidy feels won’t abate any time soon. “I feel the industry will struggle to maintain and service the hot tubs and swim spas they sold [in the past two years],” he says. Last July, Valley finally started to amass unsold inventory for the first time in 18 months or so. Cassidy says he sees many positives to going back to something resembling normal.
“It’s better for day-to-day business and the employees,” he says, adding that he does worry about holding onto salespeople as commissions decline.
Last fall, Cassidy saw demand begin to slow, and in December, the company spent lead-generation dollars for the first time since March 2020. At the time of this interview, those efforts hadn’t brought sales back to what they were “even as recently as September,” and he suspects inflation may be a factor. “The same tub today costs 15% to 30% more than it did at this point last year,” he says. “Consumers see that, and there may be a subset that says they’re too expensive now.”
However, he says he has plans in place to offset the slowdown in COVID demand, and that he still expects a stronger than normal (pre-pandemic) year for hot tub sales.
2020 to 2021:
Overall: 60% increase 2019 to 2020
2022 projections: “While 2022 is not projected to see the significant increases that we saw the last two years,” Cassidy says, “we still are budgeting to have a double-digit percentage growth in unit count, as well as average-sale price. The higher end units are still seeing the most sell-through, as that type of clientele is still making buying decisions at a faster than normal rate .”
South
Family Leisure of San Antonio
Slowed production times didn’t step on COVID-led sales at Family Leisure of San Antonio, says general manager Austin Lampkin. The rush came in spring 2020 at the pandemic’s onset and never stopped — and thanks to the store’s buying power, sales kept pace with supply.
Family Leisure carries multiple lines of spas from three manufacturers — Artesian Spas, LPI and Best Spa Co. — as well as Artesian’s Tidal Fit Swim Spas. “Inventory from stock was gone by mid-April 2020,” Lampkin recalls. “We usually get another truck in May and it’ll replenish for that month, but that truck in May didn’t come. We had to keep orders consistently coming in, and we sold the incoming inventory because of demand.”
Like McKibben, one thing Lampkin was not willing to do was sell floor models. When a customer came in who didn’t want to wait for a hot tub, it was tempting to sell one — but he held out, reasoning that he’d have a harder time selling what the customer couldn’t physically see.
These days, Lampkin has to plan much further into the future, compared with the pre-COVID sales process when he could get a hot tub in a week. “I’m not having to predict next month anymore,” he says, “I’m having to predict May and June [in winter].”
Family Leisure also moves a lot of patio furniture. Since it always buys early — Lampkin orders from July to September and takes deliveries from January through March — in 2020 it had plenty of warehouse stock.
“Customers could walk in, pick a set, drive around back and take it home,” he says. Family Leisure had already committed to last year’s inventory by mid-2020, so it maintained growth in 2021 — before a couple of snags: One of its vendors’ wait times ballooned to 22 weeks, but it’s gotten better now, Lampkin says. Orders this year were written in May/June 2021 to ensure inventory.
At one point, the sheer number of customers waiting for their furniture was difficult to manage, he says, because Family Leisure likes to maintain a connection with them in the interim. “They need updates and communication about how good the product is,” Lampkin explains. “When you have a long wait time, you start to wonder if you’re ever gonna get it. So I try to think how the customer is thinking and be empathetic.”
Accessories like covers and lifts also became harder to get between 2020 and 2021: Seemingly everyone who bought a hot tub also wanted steps and a cover — right away. Family Leisure works with about six accessories vendors, but once demand spiked, Lampkin says, “we let the one who could get product to us get the lion’s share.”
2020 to 2021:
Patio: 35% increase
Hot tubs: 40% increase
Swim spas: 45% increase
“The volume of our swim spa business is smaller. We typically sell one a month, maybe 12 to 20 a year,” Lampkin says. “For 2021, we’ll get to 35 or 40, though some of those were purchased in 2020. Average lead time in 2019 would have been three to four weeks. Now it’s 12 weeks or more.”
Overall: 35% increase
2022 projected increases:
Patio: 15%
Hot tubs: 10%
Swim spas: 10%
Overall: 15%
“We’re optimistic for 2022 growth,” Lampkin says. “However, matching growth from 2020 to 2021 is unlikely but not impossible.”
Canada
Beachcomber Hot Tubs & Patio
Alberta
Like many retailers, Beachcomber Hot Tubs & Patio in Alberta, Canada, is not spending much on advertising these days. Warren Yadlowski, general manager of the 39-year-old company with three locations, says right now those dollars are better spent taking care of customers. And, to stack the deck for this year, Yadlowski bought deep and bought early across several of his categories.
Demand was massive over the past two years and could have been higher, he says, with greater access to inventory. Pre-COVID, his lead times with Beachcomber, his primary supplier, averaged four weeks — but once that company had no inventory for Yadlowski to buy circa May 2020, he was losing sales. Though he has sold rotomolded Fantasy Spas for the past five years, he was an exclusive Beachcomber acrylic supplier for a long time and sought to procure those tubs however he could.
“I shipped some Beachcomber tubs from Ontario to Alberta just to get my hands on inventory wherever there was available stock,” he adds. “It logistically didn’t make sense, but I was trying to be proactive.”
That same month, the company also started to run out of chairs and fire tables from its main supplier, OW Lee. Orders he’d placed with that company in August 2020 showed up a year later. “We missed a whole season selling with them,” he says. Though he carries patio products from about 12 suppliers, “they are one of our higher-end suppliers and we couldn’t show it.”
Yadlowski says it was difficult to see money walk out the door when his competitors had inventory. “I didn’t know what to tell people who were standing there with a $10,000 check in their hand,” he says. Regardless of where the product was being manufactured, the company experienced supply challenges and late shipments. His hot tub lead times are still eight months to a year.
From last year to this year, the company is also carrying over hundreds of sales that, due to ongoing supply issues, have yet to be invoiced. “When we talk about projections for this year, they’re even greater in terms of overall revenue,” he says. While he expects some customers to return this year to purchase an accessory, his focus remains taking care of the customer once he or she walks out the door. “It’s why there should be a gas station on every car dealer’s parking lot,” he says. “If they come in to buy water-care products, they may just trip over a fire table.”
2020 to 2021:
Hot tubs: 14% increase
Patio furniture and accessories: 32% increase
Grills: 57% increase
Swim spas: 96% increase
Yadlowski started carrying swim spas in 2019, and notes that the “ridiculous growth” here is skewed because “we started with nothing,” he chuckles. He still expects supply to be an issue for swim spas, however, and says he’ll buy whatever comes available.
Overall: 13% increase
2022 projected increases:
Overall: 12%
Hot tubs: 24%
Patio furniture and accessories: 2%
Grills: 5%
Swim spas: 15%