Published in Pool & Spa News, January 2003
By AmyJo Brown
The peak sales season was less than a month away, but Richard Jones was ready. His store was known for carrying hot tubs, propane and fireplaces, and Jones had carefully placed his orders, received his inventory and set up displays.
But then he decided to make the leap into casual furniture.
"Crazy as it was, we made the commitment to start selling furniture only a few weeks before the season," says Jones, owner of Youngstown Propane in Youngstown, Ohio. "My brother and I had a long conversation with [a casual furniture retailer] over a couple of drinks. We got back to the store, yanked out the fireplace displays and remodeled in three weeks."
Did it pay off? Jones initially ordered $50,000 worth of merchandise. He ended up selling $180,000, easily.
"The nicest lesson is that it is an easy business, from A to Z," Jones says. "It's an easy presentation, an easy sell, easy delivery and easy service. I don't mean to make it sound like it's nothing because it's not. But for guys used to making a hard sell on a spa, this is nothing. Pool and spa retailers? They'd be nuts if they don't get into it."
Perfectly Positioned
Experts couldn't agree more. They say that pool and spa retailers -- in their role as backyard professionals -- are perfectly positioned to corner this lucrative market.
And it will only become more so. At an annual current rate of $3 billion, sales are expected to grow $1 billion over the next five years, according to U.S. Outdoor and Casual Furniture Market Report, published last year by Packaged Facts, a division of MarketResearch.com.
"The market has just never slowed down," says Larry Watt, CEO of Leader's Casual Furniture in Clearwater, Fla. He attributes much of the market's success to low interest rates -- the lowest, in fact, since the 1960s. Many of the same factors that make it possible for consumers to buy new houses also make it possible for them to afford backyard furniture, says Watt. He adds that first-time home buyers also are more likely to set up furniture schemes that may include outdoor and casual furniture products.
Still, retailers need to be aware of what their competition is doing.
Mass merchandisers, who already snare the majority of sales, are featuring expanded patio departments, and new designs and styles, according to Packaged Facts.
The other major competitor -- specialty outlets -- grabbed an estimated 40 percent of casual furniture sales in 2001.
Other casual furniture sales take place through mail-order/ catalogs, the Internet, home-shopping networks and factory outlets.
'Owning' the Backyard Market
As specialty retailers entering the market, pool and spa business owners have an advantage. "We have a captive customer," says Tod Bessery, vice president of Leisure World Inc., South Burlington, Vt. His company just added several models of casual furniture this year to its showroom floor, in addition to its spas and pool supplies.
Retailers, for instance, can offer package deals to customers already buying pools or spas. Conversely, backyard furniture can attract new pool and spa buyers.
The idea is catching on in the industry.
"The first lesson we learned was that the amount of stuff we could sell in a half hour was greater with the furniture than with the pool supplies," says Bruce Aronson, owner of The Pool & Patio Center in Metairie, La.
Aronson's father, Norman, owned a pool-building business before adding casual furniture to his retail store. After he did, he left the pool-building business behind and turned all of his attention to the furniture.
"My father always said the furniture forms the frame around the pool," Aronson says.
Karla Carey, director of the Chicago Casual Furniture Mart, says she, too, has noticed more pool and spa retailers interested in the backyard furniture industry.
"The pool and spa retailer is definitely becoming a good portion of our audience, and I do see that [portion] growing," she says. "I see the show trending toward the outdoor room, with the pool and spa a noticeable part of it."
She adds that 7 to 8 percent of last year's attendees to Chicago's casual-furniture trade show (held every September) were pool and spa retailers.
Selecting Your Products
But before entering the furniture market, retailers need to be aware of what their local merchants are selling, and how they might differentiate themselves.
"My thinking is that you don't want to compete with the mass merchants," says Rick Baker, president of the Casual Furniture Retailers Association and vice president of Patio Enclosures in Macedonia, Ohio. "You can offer service and quality and knowledgeable people, but my suggestion is to stick with furniture that is different, that customers can't find everywhere else."
The trick for survival of the pool and spa retailer wanting to diversify is to choose a product selection that appeals to consumers with high expectations.
"I call them our 'better' customers," Baker says. "They've had their first apartment or set up their first life and tried all the cheap stuff. Now they want stuff that's going to last."
Baker recommends stocking high-end, fashionable items. Talking to manufacturers' representatives and other retailers at trade shows is a good way to identify these items. Many casual-furniture retailers also introduce products and styles that play off colors, materials and designs found in nature.
When it comes to the furniture's frame, cast-aluminum furniture has been an especially hot product over the last couple of years, says Baker. "And I don't see it slowing down."
He recommends offering consumers a wide price mix -- $699 for a five-piece set and up -- as well as the option to customize.
"If you can't do custom, you're not a specialty retailer any more," Aronson says. "Not to offer custom orders would be like telling a pool customer he could only build a 15-by-30-foot pool. You, as the pool builder, would miss out on so much business."
He also says it's important to offer speedy delivery. "Get in with a couple of companies that special order and that ship quick," Baker says.
When it comes to selling, he recommends a 40- to 50-percent profit margin. A 20- to 30-percent margin won't cut it, he says, because you'll end up using a lot of time and space trying to sell the merchandise -- time and space that could be used to sell other products.
Marketing a Lifestyle
That's why emphasis needs to be placed on the outdoor lifestyle as much as the furniture -- not price.
"It's difficult to be in a price war in this industry," says Connie Post, CEO of Connie Post Companies, in Barboursville, W. Va., a design and strategic brand development firm in the furniture industry. "You need to be different, and people are looking to make their backyards their living spaces."
Watt says retirees represent the majority of customers. These customers are more active than they used to be, leading them to invest in their backyards. But he's also seen younger generations spending more on furniture lately.
"We've noticed the baby boomers, Generation X, lots of married couples coming in," Watt says. "Buying a house is now more accessible for young couples, and baby boomers can help their kids out, too."
Letting those people know you're in the casual furniture business is the way to be successful, even if it seems obvious you offer products for the backyard.
Jones says that was the key to his success. "I spent about $40 grand in advertising," he says. "Also, I ripped down our road sign and put up a new one. It still had our logo on it (Youngstown Propane and Fireplace), but the new sign read 'Fireplace and Patio' and it was lighted at night. I think it really helped: People knew we were a patio store."
