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

"If you have the warehouse facilities and the cash flow, you've always got product you can buy," West says. His company's executive team realizes it's only one part of the solution. After all, in their system, it's vital to sell one season's products to make room for the next's.

Indeed, retailers who think they can buy their way out of an inventory problem with more space usually waste their money, according to Ruffing's experience. He finds that delivering the product to the store more often satisfies this perceived need. "But if you're turning the product well and still have outstanding orders, then you definitely need to increase capacity," he agrees. "If it gets to the point where they need more warehouse [space], they need more store, too."

Knowing why people walk out of a store helps with this decision, according to Bock. "Usually retailers can say the average guy who walks in here is a 53-year-old male in a technical profession, who spends an average of $25,000 and will come back six times for add-ons," he says. "But they don't understand what will tick him off and interrupt that sales projection"--and consequently leave aboveground-pool parts stacked in the warehouse.

It all comes down to compiling information and acting on it accordingly, experts say. "You have to have a plan, not where you want to be in 12 months but where you want to be in 60," West says. "Inventory is all about thinking ahead logically."

Deal or drawback?

One reason for the stockpile of products? Retailers often try to capitalize on too many deals.

To address this issue, retail experts pose a question to their clients: "If the deal doesn't match your cash flow, what have you really bought?" A headache, says Gary Ruffing, senior director at BBK, based in Southfield, Mich.

"The deal isn't always the most optimal way to go," he says. "You need to know if your cash flow can hold up through the length of time [the products will sit] on the shelf until you reach the [appropriate] selling season."

Count Pete Papineau among the converts. For years, the general manager of Bachmann Pools & Spas in Madison, Wis., took advantage of early-buy deals. In the preseason, he'd place a fairly sizable order for his aboveground-pool brands. He determined the amount he bought by matching the previous season's order and adding 10 percent to cover the growth demand.

But in 2002, his sales went flat, so he skipped the bump and ordered just 2001's numbers. A year later, he cut back from that amount. By 2004, he bought the smallest early buy possible and still ended the summer season with inventory in stock, thanks to Mother Nature's fickle temperatures.

"Now, I basically just go bare bones and get a good enough variety of sizes to get me started," Papineau says. "I don't think it's worth it to stock up on early buys any more."

--J.S.

Balancing the choices

Many retailers have found a simple strategy for keeping their aboveground-pool inventories in check. They prefer to keep the selection of brands, models and liner styles to a minimum.