Justin Gregoli's Posts (5)

       I was just reading the latest article in Aqua titled "Fight For A "Cleaner" Sales Channel" by Scott Webb. It was well laid out and I have made some responses to the article.

Here is the body of the article:

When Internet retailing began over two decades ago, traditional retailers with storefronts and parking lots and cash registers immediately perceived a threat. It has taken time for that threat to reach crisis proportions for smaller, local dealers in the pool and spa industry.

Most people are aware of the vague outlines of the case. Scott Long, a dealer from the bellwether state of Ohio, laid them out as we stood in the aisles of the AC show in late January. “The dealer advertises, builds the pools, delivers and installs the spas, provides the showrooms, warranty support, etc.,” he said, while the Internet retailer bypasses all those expensive and time-consuming tasks and simply takes the order and mails the product, tax-free, to the consumer.

Even more galling to dealers is when the Internet retailer is able to boost this considerable natural advantage with volume pricing from the manufacturer and offer a product to consumers for less money than the traditional dealer’s wholesale cost.

This is an enormous competitive advantage, which, over time, threatens to crush the storefront retailer.

Big Seller

Much of the attention has focused on the automatic pool cleaner due to its growing popularity, especially the robotic cleaners. Traditional dealers have been particularly incensed to lose out on sales of this well-received, time-saving invention to Internet retailers. It’s one thing to watch sales drop in a diminishing market or even a static one, such as filters. It’s quite another to see one of your few gushing revenue streams being diverted into a competitor’s territory.

Jami Pittman is an independent rep who has spent his whole career selling pool cleaners — he started selling Kreepy Kraulies door-to-door in South Florida in 1984 — and he believes robotics are now the fastest growing segment of the automatic pool cleaner market. He has noticed a big push among the big three manufacturers to capture some of that growth.

“Robotic cleaners are joining the list of premium, energy-saving products that a savvy builder uses to sell a pool, along with variable-speed pumps, etc.,” he says. “You can’t sit there and say you’re offering the same old suction or booster cleaner, because a robotic cleaner is just a lot more efficient.”

This general acclaim — the units are popular with consumers and even service people as well due to their convenience — and resulting market demand left dealers such as Wade Fowler hoping for a profit-winning product that could ease the strains of the recession. But it hasn’t worked out as well as he expected.

Fowler is general manager at Falco/Fowler & Sons, a dealership in Texarkana, Texas with more than 50 years in the business. He says the Internet price of an item comes up constantly in his interaction with customers, and for some of them, it’s part of an overall strategy that takes advantage of the dealer’s physical presence and expertise while getting the low, tax-free price from the e-tailer.

“I’ve had incidents where I’ve had customers come in say, ‘Hey Wade, I’m interested in an automatic cleaner.’ And I’ll say, ‘Sure, I’ve got a unit you can demo. We’ll bring it out for 48 hours, let you try it.’

“When we go out and pick it up, they say, ‘Yeah, we loved it, I’ll call you tomorrow after I talk to my wife.’ A week goes by, and I call them up and say, ‘Are you about ready to get that cleaner?’ And they say, ‘Oh, we found a unit at pool.com for less.’

“The buyer doesn’t care, they’re just looking for the cheapest price. This kind of thing is common here in East Texas — very common.

Why should we care?

Many theorize that larger dealers and chains in densely populated areas will be able to survive growing Internet competition by using their greater clout with manufacturers and focusing on other areas of the pool and spa dealer trade. But Long points out that if the industry loses dealers in smaller towns like New Philadelphia, Ohio, and thousands of others like it, what will replace them? And more importantly, who will serve the pool and spa customers there and promote the industry to new ones? Can an industry struggling to grow afford to lose these dealers?

Long asks a more fundamental question, “If all it takes is a website and a storage room, what does it mean to be a pool dealer? Is there value in that service?”

When these questions are posed to dealers under threat, they often respond that this cut-throat Internet business model is fine for commodities like books and toys. But pools and spas require some expertise and support, and by killing off the source of expertise, you will eventually kill off part of the industry, as pools go unsupported and customers spread tales of frustration to their neighbors who then choose to spend their discretionary dollars in Cancun. Eventually, this will result in an overall drop in pool equipment sales for everyone.

United Front

Some dealers believe the solution to this problem is an organization of retailers that can press their arguments. It’s an extremely difficult enterprise to undertake — the gathering of independent and competitive retailers into a united front. It’s a job that takes enormous amounts of time, while dealers are some of the busiest, most time-starved people in the American economy.

One successful regional group is the Arizona Pool Dealers Association, which has pressed for MAP (Minimum Advertised Pricing — a policy in which both traditional retailers and e-tailers are prohibited from undercutting some minimum price) as a possible solution to the problem.

Bart Mitchell of Litchfield Park Pool Service in Litchfield Park, Ariz., is one of the founders of the AZ dealers group. He believes public statements by his dealer group have gotten the attention of manufacturers, and says other dealers should do the same. “It takes a lot of work to organize dealers,” he says, “but I have received interest from other dealers nationwide.”

Mitchell thinks that while much damage has been done to the traditional retailer’s ability to compete for cleaner sales, the situation has gotten slightly better due to manufacturers more stringent enforcement of MAP.

“I’ve been watching, and Internet pricing is definitely moving up. I think manufacturers are enforcing their programs,” he says.

“The way it has worked is the Internet retailers sell the cleaners below my cost, at very low margin, but then make their money on back-end rebates from the manufacturer or point systems where they get rewards. Well, with the new program they can’t do that as easily.”

Another hope of some retailers is a change in government policy toward the Internet. For years, there has been increasing pressure for the federal government to begin regulating the Internet, and it’s fair to say that the current administration in the White House is more pro-regulation than any in decades. Regulation by its very nature increases overhead and cost, and such burdens would fall on e-tailers who now operate freely with a minimum of constraint.

Perhaps more important is the enormous desire of state governments to tap into the tremendous untaxed commerce of the Internet. Should state sales tax be added to Internet sales price of pool and spa items, the financial equation for consumers to buy online would be altered significantly.

Manufacturers Respond

The cleaner market is as important to manufacturers as it is to retailers, and companies that build automatic pool cleaners have searched for ways to address the concerns of traditional dealers while being fair to their online customers. It’s a fine line, notes Marchal DePasquale, senior vice president of sales and marketing at Smartpool.

“We recognize that we serve two distinctly different retail business models,” he says, “and both of them are trying to attract the same consumer.

“So what Smartpool has done is create different cleaner lines for each business model. One is designed for the Internet retailers and the way they go to market and service cleaners — that cleaner has a different warranty and different features than what the traditional retailers have in their stores. We’re trying to segregate the market so that both of these kinds of retailers will have an equal shot at that same consumer.”

Separate-cleaners-for-separate markets is a concept used by several manufacturers. For instance, Aqua Products has introduced its BMO – Brick and Mortar Only line of products that may not be advertised with any price or price promotion via the web.

“This product line addition gives all brick and mortar outlets the confidence to stock and sell the Aquabot brand knowing that the consumer cannot price shop and deteriorate fair and equitable margins,” says Steven Ferry, vice president of marketing, Aqua Products.

Maytronics also offers different cleaners for its e-tailers and traditional dealers, and if a brick-and-mortar cleaner is sold on the Internet, the warranty is void. Fowler is a fan of this system.

“That gives us mom and pop stores a little something we can work with,” he says. “I’ll demo a unit and somebody will say, ‘Hey, I saw this unit online for this price.’

“And I’ll say, ‘Yes, ma’am, I’m sure you did, but did you also see that if you buy this unit online, you do not have a warranty. And 95 percent of the time I get the sale from that.”

MAP AND LAAP

The most frequently discussed means to even the playing field for dealers is Minimum Advertise Pricing (MAP). This policy, in force at several automatic cleaner companies, seeks to prevent any retailer from selling product below some pre-set base price.

Of course, enforcement is the crucial element of the plan. Manuela Rief, vice president, Poolvergnuegen, says that is the focus of the company’s effort. “We police it as stringently as we can, and we pursue our MAP policy to the utmost. And we have a rewards program and if somebody doesn’t abide by the rules we take it away.”

Zodiac (along with its subsidiary Polaris) refers to this general concept as LAAP, or Lowest Acceptable Advertised Price. This applies to advertisement, as the company points out is has neither influence nor control over the pricing set by dealers.

But Zodiac and Polaris have recently made a significant change in their manufacturer’s rebate structure by redefining consumer rebates to provide higher rebate rewards based on the amount spent. This impacts the cleaner sales dynamic as manufacturer rebates are an important part of the overall financial calculus of the cleaner purchase.

“Under the new ‘Get Rewarded’ tiered rebate schedule,” says Michelle Kenyon, vice president of marketing at Zodiac, “consumers will have the opportunity to earn a larger rebate based on higher net prices paid for cleaners within any of the following categories: suction, pressure or robotic, under both brand names. This program, the largest consumer rebate program in the industry for automatic pool cleaners, will provide a strong incentive for pool owners to purchase the best selling cleaners throughout the 2013 peak pool season and will drive sales for dealers while protecting margins and enhancing brand credibility. Zodiac’s tiered program will provide a compelling enticement to support sales for all dealers across the industry while maintaining the value of Zodiac brands.”

In addition, she adds, “Local pool companies that invest in providing service and education can leverage the tiered rebates in their stores to be more competitive in their local markets. The ‘Get Rewarded’ rebate program pertains to consumers who purchase Polaris and Zodiac branded automatic pool cleaners. We have received great response from our customers on the improvement of an already successful program.”

A Fluid Market In A Fluid Industry

Measures such as MAP and LAAP and segregated cleaner lines are being taken in the midst of an evolving market. With variables in play such as intense dealer interest, manufacturers looking to preserve the goodwill of their various distribution channels and the spectre of regulation, the only certainty is that the situation a year from now will be different than it is now.

“At the end of the day, is what we’re doing perfect? Probably not. Will it be like this next year? Probably not, because it’s such a fluid situation in retailing right now. But we’re doing the best we can to protect our brand and protect our customers’ margins,” says DePasquale.

“I owned retail stores for 15 years, and I know it’s hard. And as a manufacturer I understand the issues. You have these two different business models going to the same consumer. As a manufacturer, we have to come up with strategies that enable both of them to buy from us, while we protect them.”

These are the responses by myself and another:

The reality is much simpler. I have been in the industry over 20 years and have had many discussions on this very topic. First the model of we make 2 different models, one for brick and mortar and one for internet is serving a much larger disservice to everyone; the consumer, the sellers and the manufacturer. The customer is confused and may think they are getting one thing and they get another, the internet sellers still get it for less than the brick and mortar while the brick and mortar does not have a product to compete with head to head, the manufacturer is hurting it's reputation by offering an "inferior" product online just to increase it's bottom line, it will backfire.
Second the MAP or LAAP systems are an improvement but again all three get hurt; the customer when no one will service it due to the fact it was purchased elsewhere, the store for the fact of tax at it's very least, the manufacturer when the customer can not get the service it needs.
Here's the deal, the manufacturers need to support the business model that will benefit the most. Sell to brick and mortar only. The customer will always know what they are getting, if the map or laap is still in effect, the customer will choose by an entirely new method, the most deserved dealer. The brick and mortar will benefit by the fact they can stand on their own strengths and die by their own weaknesses. The manufacturer wins by a devoted following, a stronger customer base and simply a much better experience. And most of all our industry wins. The mom and pops are what makes this industry different. Go buy lumber, go buy a pair of jeans, heck go get a haircut. The mom and pops are just about dead in the majority of industries. What are your complaints as a customer at these "big box" stores and chains? Revolving staff, lack of knowledge, inconsistent  accountability, low or no customer service. Sound familiar? Don't let this happen to our industry, let's keep our industry strong and improve the respectability not take it away for the all mighty buck, which will not exist if we keep going in this direction.

Justin gregoli

4/2/2013 4:29:46 PM #

Federal Law is an important detail missing from this discussion, it limits manufacturers in ways that make some ideas illegal. For example, manufactures can't set the price either brick and mortar or Internet retailers charge.

Steve

4/2/2013 5:54:58 PM #

If you look in the manufacturers remarks it clearly states "This applies to advertisement, as the company points out is has neither influence nor control over the pricing set by dealers." There is no law, local or otherwise, that states who the can sell to, and that's the real point here. The killer here is money plain and simple. The volume buyer gets the best price, thus the lowest selling price to the consumer. The table needs to be leveled, either require everyone to go through distribution or make the cost for the same item the same for all. We lost another larger dealer in the north east 30+ stores, hundreds of people out of work and everyday we are on the verge of loosing more. It simply has to stop and everyone needs to take responsibility. We can stop the bleeding and stop making it about the almighty dollar and start thinking of the consumer. These mom and pops are going to be the savior of this industry. The internet and the big box stores will destroy it.

Justin gregoli

 

I would love some other views on this; I really believe this can very much be the turning point of our industry. We are falling over a precipice without any rope or hope for rescue. We, as a group, are over 3,000 strong and our voice can be heard if we care for our customer which will ultimatly decide our individual fates.

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What is going on?

This headline is what first came to mind when I was told, on the phone no less and it was my day off!!, that I was being laid off due to restructuring. My first response was "what is going on?" feeling a bit skeptical about the initial reason. You see the store I was managing was having the best month of July ever, the customer retention was at an all time high and the store morale was as if we were a family.Let me give you a bit of background, I accepted the role of store manager as a courtesy to the owner of a small chain of pool and spa stores due to the fact that they had a store that was under-performing, had ridiculously low customer retention and horrible employee morale. I accepted due to the fact I am a sucker for a good challenge. It turned out that I would manage the store and be it's sole salesman for both pools and spas. "No problem", was my response, and to be honest it really turned out to be no problem. The employees joined the program right away and the customers were nothing short of amazing, all they needed and wanted was a crew that understood their needs and cared to actually solve issues for them with honesty and respect.During my tenure I was asked to help the other stores with chemistry problems that cropped up, equipment repairs and a host of other issues without complaint and, to be honest, I truly enjoyed every bit of it. As the season progressed my staff and I noticed a shift in behavior by the owners of the company. They seemed a bit off and I felt as if something was coming, evidently I was correct.Now maybe they are going to truly restructure the store, or the whole company, but at this point I see it as a cost savings to them by eliminating me and bringing in an under qualified manager that will re-create all the problems they started with. This seems to be a trend in business in these uncertain times, kill the quality for the cheaper route. Ask some of the big box retailers that have gone out of business how it has worked for them.It brings back the question of "WHAT IS GOING ON?"JustinP.S. please visit the pool careers group, I am now available and willing!!
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Green, Green or Green. What is the motivation?

This is a question I asked myself a while back.After 18 years in the industry I was trying to figure out, What's next? What am I destined to do in this industry? Am I just going to continue with what I am doing?Let me start with a bit of background.I started in the pool and spa industry in March of 1990 as an assistant manager for Leslie's Swimming pool supplies. I had never owned a pool or spa, the only exposure to the industry was going to a local chain of pool stores that supplied Christmas items during the Holiday season. I grew up in Brooklyn, NY and the swimming pool of my youth was a "johnny pump" (fire hydrant), we would open these up with a large adjustable wrench and let the water flow, I guess you could call this an early spraypad. Anyway, I started as the assistant manager of this store and I had to learn EVERYTHING and as the season went on I realized I enjoyed the repairing of equipment, cleaners etc that the customers would bring in. Another aspect I was enjoying was the chemistry involved in maintaining the swimming pool. After the first year I came to realize that this was the industry for me and decided to put as much effort as possible into my advancement of this "new" career.Over the next 12 or 13 years I have spent time with a couple retail dealers, owned my own service company and even ran a spa division for that very company that sold my parents the Christmas decorations when I was a kid. After that I decided to move my family south to Maryland and I realized something, Somewhere along the way I fell in love with this industry and I could not tell you when the change happened or even why, but it did.Now that this revelation has happened it was time to decided what's next in this industry for me and my family. While spending the next 5 years selling pools, spas, supplies etc. at the dealer that I am with now I have been working on that "what's next?" question trying different things to see what fits. I did take a year and a half of that time and ran another spa division for a very large company that primarily sold fitness equipment, what a mistake that was, live and learn. I have been back at this dealer for just under a year and it has been a great fit, but that still does not answer the question of, "what's next?"About a year and a half ago I was sitting on the couch looking through the television guide and came across a note stating a new channel was coming to the cable line up, "Planet Green". My first thought was "oh great a channel that is going to tell me how bad I am taking care of the planet, how we should all walk the 50 miles to work I drive or I am going to kill some far away endangered bird by smoking cigarettes out on my front porch". Well let me tell you I wasI wrong, this channel has opened my eyes more than you could imagine. I realized the things we should be doing for the benefit of everyone including myself and most of it is just simply logical.This is when the light bulb went off in my head, I looked over at my wife and asked her "what do you think about a Green pool or spa?". She said "yuk!!, a green pool? Isn't that what you try and avoid everyday for your customers. Why would you want a green pool?" I told her, "no, not green as in algae, green as in sustainable, maybe self- sustainable like the home construction and renovation we watch on Planet Green". Her response? " oh, whatever you want dear".My problem now was, why? What is my motivation for such an undertaking? Is it for Green, Green or Green?-The first Green is for, the obvious, the environment. Do I want to try and save the planet?-The second Green is for my profit. Will I make money? To make more money than I am now?-The third Green is for the customer saving money. To help them save money on the bills that are mounting and increasing every day. Am I trying to save them money?After a bit of thought my answer came to me. Why can't it be all three? Why can't I help the environment, save my customers money AND make a profit?This is how I reached the point of my slogan "Where Green Meets Blue" I think it can be the answer to every question that pertains to the Green movement and the pool industry.Justin
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Another Hot tub trade association?

The other day I recieved my newest issue of Pool and Spa News and right there on the front cover, "New Hot Tub Association Formed", my first reaction was "What?".As I started to read the article I realized it was an organization that is being supported by true leaders in the industry, including Watkins and started by Andrew Tournas (owner of Thermospas) now that got me a bit intrigued and as I read further I noticed representatives from other associations were bad mouthing the new association and basically saying that this would be a hinderence to the efforts that they are trying to make to promote the industry. Maybe I am a bit under-informed but how in any possible way could this hurt the industry. I understand what was said and written but isn't anything that tries to promote the industry a good thing? So I read on.As I finished the article I was still confused so I read it again. Now just for clarification, anything that Andrew Tournas does makes me a bit concerned. Maybe I am bit skewed since his company does quite a bit of advertising and selling in my area of Maryland and Delaware. In this instance however I think Andrew is on the right track and may be doing the industry a favor. For the past number of years the APSP has been trying to collect money to promote the spa industry and has had a tough time of it, maybe it is time to see what someone else can do.This industry is in trouble, with the down economy and efficiency concerns it seems everyone is running in different directions and can not get their act together. I for one absolutly love the spa industry and would love to do whatever I can to help promote and support it. It seems that others, at least in this article, just want to be all about them and how it affects their standing.I say if anyone wants to bring this industry to the top then count me in and how can I help?Justin
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Go GREEN!!

At this time of the year when all the trade shows are heating up and we are trying to get our ducks in a row for next season why not consider starting a little "GREEN" movement of your own. Over the last couple of years I have been increasingly focused on "green" alternatives for our industry. Don't misunderstand, I am not a fanatic or someone that lives entirely green, actually quite the opposite. My initial motivation was to save money on the consumables that my family uses and as I have spent more and more time investigating all the choices of alternatives that are available the more I realized that this is NOT a fad, this has real value.It has reached a point that I made it a large part of my daily business thought. It seems everything I look at in a magazine I try and determine "is it green?". We, as an industry, have an opportunity to take the economic downswing and turn it into our advantage and what's more interesting is that the customer wants exactly that!Our customers come in all the time and request items that will save them money on the pool or spa maintenance and upkeep. Very often it is a question pertaining to Salt systems or solar heating, but I have had customers ask how far can they go to save the most money. When answering this question and explain to them that you can go as far as your budget will allow, some are amazed with the choices and some are amazed how much some of it costs up front, but either way they are amazed and want to talk about it. This year I will be pushing the "green" products more than ever and I think that anyone interested in getting a jump on the next season should do the same.I spend about 2 hours a night watching "Planet Green" , it is a television channel, just to get new ideas. I read about 5 trade magazines per week from all the industries, including ours, that in any way can increase my knowledge of "green" building techniques and of the related products in other industries. I have researched countless products from all types of industries on the Internet. This curiosity of mine has reached a bit of an obsession.
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