News / Industry News & Events / How Retailers are Profiting with Ponds (03/27/19)

How Retailers are Profiting with Ponds

03/27/19

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Though the pond hobby faces some headwinds, superior service and competitive advantages allow retailers to carve out an economic niche for themselves.

Pond retail has changed with the times, and, increasingly, specialty storeowners are relying on high-end installation and maintenance services to keep their ledgers in the black. That said, many retailers are still experiencing growth and success with pond equipment and food sales.

The pond hobby is traditionally most robust in upscale markets where space and disposable income make installation and maintenance feasible, and retailers report that customers are seeking even larger installations than what has been typical in the past.

Customers are going bigger, said Mike Lucas, owner of Garden Ponds and Aquariums Unlimited in Moore, Okla. We started as an install-and-maintenance pond company. Really the only reason we started the store was because we needed so much product at the time.

In a move that is somewhat atypical in the pond segment, Lucas saw enough business come in from installation and maintenance services, that he expanded into a retail location to meet demand.

We had enough inventory to be a store for years, [and then] we finally bought a nice retail establishment, Lucas said. We didnt even plan on the store being successful. We just really wanted to build our customer base. But having the retail side has helped sell ponds.

Lucas said that most of his businesss growth has been in maintenance services, as retail sales are being eroded by online competition. Still, he noted, retail remains an important part of his business.

Hard goods and food sales are a large percentage of our overall revenue, Lucas said. We hit keystone on all our products. I would say its almost half and half. Its really close. I would say construction accounts for around 55 percent of revenue and the rest is retail.

For some retailers, competition for installation and maintenance business has meant they stick exclusively to equipment and food sales.

We dont do too many installs, said Mike Calli, president of Global Aquatics & Pet Supplies in Ontario, Calif. I have a good guy who I pass people to for that. He sends people here for all the foods and everything else.

Of course, the pond industry is extremely local in nature, meaning broad regional or national trends are hard to identify. In some places, for example, pond equipment and food retailers have struggled to maintain brick-and-mortar business models.

We realized that really nobody was coming to our location, said Zachary Krohne, owner of Krohne Tanks and Ponds in Atlanta. Everyone was pretty much expecting us to bring it to them.

As a result, Krohne changed his business model, dropping his retail location in favor of a mobile installation and maintenance business model.

We market ourselves as a traveling store, Krohne said. Nearly half of our income is through sales. Very rarely can someone present us with a problem that we cant fix with whats on the van.

We dont get by on massive service charges or bulk service, he added. Every invoice has between 20 and 40 percent of revenue in taxable sales.

Although retail locations have faced competition in hard goods and foods from online sources, for installation and maintenance providers, there is a very stable barrier to entry in to the pond hobby that keeps their business secure from competition.

Customers may go to the internet for a little while until they get to the part about digging a hole, Krohne said. Then, all of a sudden, it means getting landscapers involved. When it comes to equipment, we have a policy that if we didnt provide it, we cant service it. That goes a long way to promote sales too.

At the end of the day, the internet is not suited to provide information or services for such a specialized and resource-intensive hobby without creating additional problems for customers.

Hands-on and personal contact is still the best, Calli said. Were finding constant problems with the internet. Theres a lot of misinformation out there, and we end up having to combat that.

On the Market

Selling for Success

The pond hobby is well established, and the marketplace is relatively stable when it comes to supplies and food offerings. As such, new product offerings are generally few and far between. That said, several products and food offerings are doing well, industry experts reported, as customer demand continues for pumps, filtration and other equipment from pond installers or local pond stores. Hobbyists are showing renewed interest in lighting solutions for their ponds, for example, and some newer offerings are catching retailers attention.

The underwater, color-changing lights have impressed me, said Mike Lucas, owner of Garden Ponds and Aquariums Unlimited in Moore, Okla. Im eager to try Aquascapes new lights. Although there have not been too many technological developments in pond keeping as of late, customers are seeking products that mirror trends in other areas, especially in the aquarium hobby.

One of the most significant trends is controllable lighting, said Sean Raines, director of aquatic marketing product development for Spectrum Brands Pet, Home & Garden Division in Blacksburg, Va. Pond keeping has always been about customizing a space with personal style. In recent years, consumers have turned their attention toward lighting to take that personalization to the next level. Of course, some products need more of a hard sell sometimeseven when the retailers advice is in the best interest of the shopper.

I still like the UV sterilizers, said Mike Calli, president of Global Aquatics & Pet Supplies in Ontario, Calif. Some people try to argue you dont need UV. One customer came in and told me he didnt want UV, but he took my advice. Guess what? He came back in about six months ago and said he had a big algae bloom, and he found out that the UV bulb was burned out. Its hard to measure sometimes because you cant really see whats going on, but [UV] does work.

The pond hobby doesnt lend itself to impulse purchases, so retailers have to design their business around the long-term success of their customers.

A properly set-up pond lasts an incredibly long time, and pond customers tend to make large, bulk purchases of supplies, said Rachel Torrence, marketing specialist for Seachem Laboratories in Madison, Wis. Retail stores that install and maintain ponds often find that these types of accounts are fantastic long-term customers that are very unlikely to lose interest in the hobby or dismantle their pond the way a keeper of a reef or planted tank might.

The pond hobby is also uniquely sensitive to the housing market, experts stated. Paying close attention to the economy overall, as well as local real estate conditions, can help retailers plan and grow business. As the economy continues to roll along, we see more homeowners looking to upgrade their yards, said Chris Clevers, president of Hikari Sales USA in Hayward, Calif. Ponds that were downgraded to water features are once again becoming ponds with fish, and smaller water features are being expanded into ponds. Its wonderful to see. Installers are telling us they are busier than ever, and retailers are reporting fish sales have improved. These are all signs that home equity is back and home improvements are at the top of consumers minds.

Education and Merchandising

Online Outreach

Retailers can help drive their success in the pond segment by making a long-term connection with customers and leveraging their expertise to help drive sales.

It is, unfortunately, quite difficult to create impressive pond displays in-shop, said Rachel Torrence, marketing specialist for Seachem Laboratories in Madison, Wis. This is an instance where online and social media marketing is key.

This outreach is effective for many pond industry retailers, and keeping an online presence is vital, especially for those with a reduced brick-and-mortar business.

Most of our presence and marketing is carried out online, which can be tricky, said Zachary Krohne, owner of Krohne Tanks and Ponds in Atlanta. We also advertise on our vehicles. Customer service is a pretty big part of our business.

It is not always the case that pond displays are prohibitively difficult or expensive to set up or maintain in a retail location, however.

Customers buy what they see, said Mike Lucas, owner of Garden Ponds and Aquariums Unlimited in Moore, Okla. When I had smaller ponds on display, I built smaller ponds. Then we started noticing people wanting a little bit bigger ponds, and I wanted to update my displays. I made larger ponds, and now customers are buying larger ponds.

Lucas has had success going against the trend, he noted, and said he might even upsize his display ponds yet again to help drive sales.

A mixed approach, using both in-store displays and social media outreach, might be best. Retailers can make a great experience for customers by including opportunities for interaction such as live store installations and pond tours, said Sean Raines, director of aquatic marketing product development for Spectrum Brands Pet, Home & Garden Division in Blacksburg, Va. In addition, having a presence on social media platforms can also help retailers stay connected and engaged. Though future economic conditions are uncertain, it might be time for some retailers to take another look at brick-and-mortar as a viable tactic, especially where competitive insulation might exist, as it does in the pond segment.

A larger number of retailers have exited the pond business as a result of the Great Recession, said Chris Clevers, president of Hikari Sales USA in Hayward, Calif. Given the flurry of activity in the past few years, they may want to revisit this category to avoid losing customers to competition. If you dont have the products in your store, the consumer will find them somewhere else. In this day and age of over-optioned consumers, do you really want to risk [losing] a customer.