Avoiding the guessing game: excess aboveground pool inventory can leave a retailer strapped for space … and cash. Here's how to minimize the problem

Pool & Spa News, Dec 10, 2004 by Julie Sturgeon

Adjust delivery methods.

Ruffing uses the software data to implement what manufacturers and distributors formally term "just-in-time" delivery (or JIT). In this strategy, retailers aim to schedule their shipments to arrive just as their current stock runs out.

This may not be ideal for every above-ground-pool retailer, but Pete Papineau, the general manager of Bachmann Pools & Spas, used this plan to his benefit this past summer. It worked, in part because his manufacturers, too, sat on large inventories thanks to weather woes.

The downside: The Madison, Wis.-based firm had to absorb higher product costs and freight bills, which added a few hundred dollars onto each pool. However, Bachmann Pools was willing to pay the price in this case. "Not having the inventory and worrying about it in most cases was worth it for me to make a little less margin," Papineau says.

If only it were that easy for Eastgate's West. Frankly, it's never been the first order of the year that causes him fits. "It's the one you place that comes in June 1 ... and all of a sudden, it starts raining, the temperature drops into tile low 70s and people don't come in," he says. "That's the inventory you sit on from one year to the next."

The JIT system would work with his domestic pool brand, he acknowledges. "We're usually backed up on installations by a few weeks, and they can get us an order in that time frame," West says. His imported aboveground-pool line can't accommodate that quick turnaround, though. He must make yearly purchases because these pools require container shipping.

Another point to consider: Retailers who rely on this option run the risk that their manufacturers/distributors won't have enough stock on hand to send to them during the height of the season, if there's a shortage of raw materials or finished pools, for example, retailers could be left with fewer items to sell.

To hedge its bets, Bachmann Pools currently is considering a small early buy with its manufacturers next season, its order may translate to less than 20 pools, but it will keep the relationship with its pool makers intact and ensure that there will be product on the shelves. Papineau's also angling to align with a distributor to expand his pricing options a bit. "But I really won't do anything drastic. I'd rather be at the point where the season hits and I'm running low on inventory, and have to make a big buy and earn a little less money," he says. "It beats taking the risk."

Handling the overage

When excess inventory begins to loom, retailers have a few options to deal with the surplus, including holding giant end-of-season sales or increasing their storage space.

This autumn, Papineau and West ran deep discount sales to dump some of the extra pools in their possessions--Papineau slashed price tags by as much as 35 percent.

Bachmann Pools even offered to store the purchases throughout the winter as an incentive, which still depletes the space available to display and store the 2005 models.

Eastgate Pools also opted to look for more storage opportunities. The firm recently bit the bullet and leased 5,000 square feet of warehouse space for the first time in its 25-year history. The company plans to build its own warehouse adjacent to the store location in the future.