Ohio spa dealer reflects on 2008 recession, now faces COVID-19
Photography by Kaitlin Walsh
Ted Dellas has been through a recessive economy before, and the first time, he didn’t fare so well.
In 1988, Dellas left the food industry to open his first hot tub retail store. Spa sales were complemented by casual outdoor furniture in the summertime, and tanning beds, billiards and fireplace equipment in the winter. By 2007, his company had grown to four retail stores, 110 employees and over $13 million a year in sales.
Then the recession hit in 2008. His bank wrote him a letter and called his loans. “I had 30 days to write a check for $1.4 million,” he says, “which I could not do.”
Dellas was forced to liquidate the entire company to pay off the bank.
“It was very upsetting to me,” he says. “I didn’t do anything wrong. I didn’t have any bad habits. The business was still OK [even though] the recession was curtailing sales.”
Upon liquidation, Dellas signed a noncompete with the hot tub manufacturer. To support his family in the meantime, he took a job in the mortgage industry. Once the noncompete expired in 2011, Dellas received a call from Bob Lauter, CEO of Master Spas. Dellas told Lauter he was unhappy in his current job. Lauter asked Dellas if he wanted to get back into the hot tub industry and offered his help.
In 2012, Dellas opened a distribution center called LeisureTime Warehouse, selling hot tubs and hot tub products to consumers through online sales rather than a showroom. (Dellas didn’t have the funding at the time to market a retail space.)
By 2018, things had changed. With the business thriving and Dellas’ son, Teddy Dellas, now also with the company, Dellas considered a retail expansion at his son’s persuasion. “I told [Teddy] I will never open a retail store unless I find a brick-and-mortar building on a highway with 100,000 cars driving by, with a glass front, that is $4,000 a month or less,” Dellas recalls. “[Teddy] found one literally within 24 hours.”
Dellas says the retail store has been doing fantastic since it opened. “If I had known it was going to do this well, I would have done it a lot sooner,” he says.
Here We Go Again
Early on, the coronavirus pandemic had the makings of a recession recap.
“I [started] pushing my customers to buy online,” Dellas says. “Our shipping went from an average of four or five packages a day to 15 packages a day. A lot of those are customers who were coming in the store and buying.” He also spent $3,000 to update the shopping cart feature on his web store to keep up with demand and customer expectations for online shopping.
The website, however, does not allow customers to purchase a hot tub online. All of the information is there, Dellas says, but customers have to call the store and talk to a sales rep to finalize the sale, even if that means live video conferencing so they can see the hot tub in person.
During the shelter-at-home order, LeisureTime was still able to deliver spas while everyone abided by social distancing standards, which Dellas believes will be a long-term normal.
“Since the customer buys it sight unseen, we take a set of steps with us on the trailer for delivery,” Dellas says, “and they climb up and look at it there. So they’re really shopping at that point, looking at the product before we deliver it.”
Dellas says these customer considerations and others prove that attitude is everything when surviving a national crisis. Whatever it takes to stay open, he says he’ll do it: “I decided that I was going to somehow prevail. It’s that approach that will get you through the moments when [it seems] impossible. We’ve decided our company and the format we’re doing with our vendors, employees and customers is going to prevail in the marketplace.”
Dellas also made sure he accepted help where it was provided, starting with SBA grants and loans offered through the government stimulus program approved in late March.
All business people should familiarize themselves with such opportunities, Dellas says; he also recommends hiring an expert adviser to assist with paperwork, which can help avoid delays in securing the necessary financial assistance.
Additionally, Dellas reached out to his database of nearly 10,000 customers with weekly emails. “I’m saying to them, ‘I want to stay in business — I want to be able to address your problems and we’re here to answer your questions,’ ” he says. “We are offering specials on chemicals, filters, accessories and I give them really good discounts, saying, ‘We’d really like to earn your business, so spend your dollars locally.’ ” He asks that if a customer has friends, neighbors or relatives who need anything related to pools or hot tubs, to send them his way.
It’s working: He’s had to stop taking calls on his cellphone because he was fielding 60 to 70 a day.
Dellas’ experience in the 2008 recession prepared him for COVID-19. While having the right attitude, accepting help and reaching out to customers are all critical during uncertainty, his biggest takeaway from the recession was to minimize overhead costs.
In his first run as a spa retailer, Dellas says rent alone for his four locations was costing nearly $35,000 a month. “Stop and think about what you have to do,” he says. “If you’re working a 50% margin, you’d have to take in $70,000 a month just to pay the rent. If your average sale is $6,000 to $7,000, think about how much you have to sell just to cover rent. That’s crazy.”
Now, however, Dellas says he could lock the doors of LeisureTime Warehouse for a year and still be OK. He pays lower rent, low utilities and uses cash as much as possible. “My slogan now is ‘I’m keeping it small,’ ” he says. This strategy has paid off not only during the coronavirus, but also in general: He expects to be a $10 million company next year. Regarding the hot tub industry as a whole, Dellas thinks it will remain strong, possibly even stronger, despite the pandemic. “I don’t think that anybody in our industry should feel they’re at a gross disadvantage,” he says. “People are going to want their hot tub; they’re going to need service. Now people are in their backyards. And hot tubs are it. Hot tubs are going to be fantastic.”