Residential pool businesses are treading water amid an unprecedented combination of business challenges almost reaching biblical proportions, writes Christina Connor. From the impact of drought restrictions to, in some areas, 91 days of consecutive rain, the domestic water leisure sector has always been a hostage to fortune when it comes to the great British weather. Other major threats are lack of financial support from banks, lack of demand in a poor economy and spiralling overheads. But it is consistent pricing from suppliers as much as the weather and loss of earnings from Internet sales that is worrying pool and spa companies most.
MAINTAIN MARGINS
A Pool & Spa Scene survey of UK pool and spa companies revealed that 68% of businesses are worried about maintaining margins against Internet sellers. The Pool & Spa Scene survey involved 137 companies involved in water leisure. Of those who responded nearly three-quarters put Internet sales at the top of their anxiety list which read: • Internet Pricing • Controlling overheads • Bank financing • Weather • Economy “We have customers who show us sites where they can buy branded equipment cheaper than we can buy it – let alone sell it,” said one frustrated retailer, who asked not to be named. Chemical prices are a stand-out example with 5kg of Chlorine varying from a shop sale of £45 to an Internet sale of £10 inc vat. There are also wide variations on the price of bubble covers and winter covers with branded pool equipment especially pumps, heat pumps and heaters available at rock bottom prices for the persistent on-line shopper. The controversy is fuelling conversations about enforcement of minimum advertised pricing (MAP) where some manufacturers regulate the lowest price at which their products can be sold. British competition law prohibits almost any attempt to fix prices. However, price-fixing is still legal in the magazine and newspaper distribution industry. Retailers who sell at below cover price are subject to withdrawal of supply. The Office of Fair Trading has given its approval to the status quo. Commonly, goods can be advertised at RRP – recommended retail price. This policy is working in other retail fields such as cars, computers and domestic white goods such as fridges and washing machines. One company that is very diligent about monitoring the retail price of its products such as Clear ‘n Clean and Jolly Gel, is Mineral Solutions International. Managing director Bob Kent comments: “While you cannot fix prices, we maintain some products don’t need to have discounting. “The cut price culprits are generally profit-orientated companies that are interested in short term cash flow rather than sustained business gain. “The trouble with cutting prices is there is not enough left in the kitty to support after sales care. It is an interesting debate and one I think the industry should be having,” added Bob.
