Spa Dealers Find Sales and Promotions Help Manage Inventory
When faced with excess inventory, sales help meet financial goals
It would be an overreaction to say excess inventory is every spa company owner’s nightmare, but it can cause a serious financial drain to have money tied up in products that aren’t returning a profit, especially when it comes to planning a fiscal year and balancing the books. Spa companies may need to get creative when considering ways to bring in customers and move inventory.
Ambra Welton, co-owner and manager at Welton Pool & Spa in Saint Augustine, Florida, focuses on word-of-mouth and customer reviews for advertising.
“We continuously have customers who come in and praise us over our good reviews,” she says.
Welton also takes advantage of early buys from manufacturers that offer incentives at the beginning of the year. It was especially helpful during the pandemic because Welton Pool & Spa had inventory when competitors were out of stock. Welton tracks inventory closely and makes sure employees have a list that gets updated daily.
For customers, Welton Pool & Spa provides purchasing incentives by offering longer terms for financing through Wells Fargo Outdoor Solutions with approved credit or a special discount when paying with cash or check. The finance company charges a fee that cannot be passed on to the customer, so Welton Pool & Spa adjusts their prices to account for this and for the cash discount. Customers who do not use financing then get a discount.
Lately, Welton says, it’s been about half and half — half of customers pay in cash and half use financing.
The financing option can make a $15,000 investment more affordable for customers who may be able to spend $200 a month for a spa but not necessarily pay for it upfront.
One thing they’ve noticed, Welton adds, is having a large sale on one brand’s spa brings in customers and introduces them to other brands that might be a better fit. While the sales and incentives bring them in the door, it’s not always what gets customers to make a purchase. It’s more of a long game, she says, where you foster a connection and eventually, those who are interested make the decision to buy.
“We’re always doing some kind of sale or some kind of special,” Welton says. “It’s generating traffic and getting the word out and grabbing attention.”
We’re always doing some kind of sale or some kind of special. It’s generating traffic and getting the word out and grabbing attention.”
Concord Pools & Spas takes a different approach to reducing inventory. Gregg Pidgeon, director of strategy and spas, says being able to see and touch the inventory is more effective than lowering prices when customers are already coming in.
With two large showrooms, Concord Pools & Spas has the luxury of being able to showcase many spas on its floor. Concord Pools & Spas also hosts external expos — including a major sales event at a stadium in Troy, New York — and those who may not already be coming into the store are often attracted to the event. From there, offerings that have been in inventory longer than others can be sold with reduced costs.
“I don’t think there’s any foolproof method of reducing your inventory,” Pidgeon says.
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However, leveraging your brand and reputation helps to market spas. The sales spike many retailers experienced starting in 2020 — whether spas, pools, RVs or boats — has settled down, he adds.
“We as a company realized that those were anomaly years, and now we’re tracking against the previous years leading up to COVID-19,” Pidgeon says.
Jody Stewart, owner of Hot Tub Brokers LLC in Nebraska, agrees balancing inventory isn’t as difficult now as it was previously; she can place an order and receive inventory within three weeks, rather than a year and a half.
Stewart offers sales to attract customers approximately every two months.
Her advice to companies with excess hot tub inventory? “Advertise, advertise, advertise.” Although she advertises on Facebook and has a company website, radio ads have proved to be the most fruitful, Stewart says.
Sometimes the illusion of a sale is all it takes for potential customers to become hot tub owners. Either way, business owners need to run the numbers and be mindful of profit margins.
“But in an ideal world, you would not have any inventory ever,” Holland says. “People would buy as much as they were going to buy, and you could get it almost instantly and install it and never have to carry it.”
Not having inventory isn’t realistic, but reducing the price might not be ideal, especially as a price reduction cuts into profits.
“People think, ‘Well, if I discount 20% but I sell 20% more, it’ll be the same,’ ” he says. “They’re not, and the reason for that is discounts come entirely from your share of the sales dollar … The manufacturer didn’t sell it to you for less just because you discounted it.”
To help business owners with pricing and sales, Anneal Business Coaching offers free price increase and discount calculators on its website.
Holland reminds business owners that the cost of advertising campaigns also have to be added to the calculation of the cost of the discount, how much has to be sold and the cost of marketing.