Is a retail location the right move for your service business?
By Sarah Protzman Howlett
For service-based pool businesses that have demonstrated growth and success, adding a brick-and-mortar location often tops the list of natural next steps. But even if the bottom line can absorb the associated overhead costs, long hours and extra staff that comes with a physical location, it can be tough to know whether it will prove a true benefit. While everyone’s transition will look different, these retailers say there are many factors service owners often overlook in weighing whether to make the leap.
Derrick Todd, owner and service manager of Aquanut Pool Care in Greer, South Carolina, started his company as a service business in 2008 and moved to retail two years ago. He says he was eager to add a retail component to his business and saw it as a way to generate leads for the service side.
“I knew it would be an extra avenue to get eyeballs on us, a way to advertise,” he says, “and we needed a home base.” Owning a store had been his goal for a couple of years before purchasing one from its retiring owners in 2016.
“Since about 2014, I was looking at markets and graphing out where retail stores and builders were,” he says, adding that he also knew he wasn’t interested in competing with an established retailer.
Taking over a store that had been a part of the community for 35 years — and in the same location, no less — was not without its snags: Though it maintained most of the former owners’ customers, Aquanut had a different billing process, which turned off some older patrons. But more so, Todd says, it was the hiring: They just couldn’t keep up, and further, they had no experience culling candidates or interviewing. But they needed service managers and salespeople.
“We made a lot of bad hiring choices,” he says. “In three years, we have had three retail managers. We haven’t kept the same staff for more than 12 months. Learning how to hire is a major hurdle.” His wife, Suzanne, dived into a retail manager role, learning from scratch.
In 2016, the company grew revenue 800 percent due to combining new service routes with existing ones, Todd says. “It was probably too much growth too fast,” he says. “It was hard to handle the retail store. Thursday to Saturday, the line of people waiting to get their water tested was out the door.”
Growth shrank to 10 percent the following year “because we were having to turn down $150,000 to $200,000 of work per year that we simply couldn’t get to,” Todd says.
These days, he’s better at hiring and has “an awesome staff,” but still needs four to five people to cover 150 to 180 cleanings a week. “I probably go through 15 to 20 weekly cleaning guys every year,” he says. “We really haven’t grown a ton since we bought the retail store.”
Riding the Coattails
About five years after establishing The Pool Doctor of Rhode Island as a service business in 1989, Ron and Debbi Leclerc saw an opportunity to move to retail after a major player went out of business.
Weather King — a large, full-service pool company — left town, and “there was going to be a big hole to fill,” Debbi Tillson-Leclerc explains. They identified an available storefront, studied demographics and figured out approximately how many people would be passing on daily commutes.
The store was little — “like walking into a hair salon” — Debbi says of the 1,200-square-foot post where The Pool Doctor operated until 2001. Reflecting on the success of its retail venture, Debbi says it helped immensely that The Pool Doctor was already “a legitimate business,” with business cards and vehicles outfitted with branded magnets. “We just had to open the location and get the word out,” she says. And Debbi loves marketing, so that came naturally: She had the good sense to call The Yellow Pages and buy Weather King’s old phone number.
“I told Ron, ‘All these people were serviced by Weather King, and they’re going to call that number,’ ” she says. “It rang directly into our little tiny building.”
In 2001, the company built and moved into its current, 7,000-square-foot location. “It feels like a boutique,” Debbi says. “It was an easy transition and one of the best things we did for our business.” (Additional perks included not having to park company vehicles in their driveway at home anymore.) The store carries a full supply of retail products, a fully functioning display pool, portable spas and more.
For Robert Blanda, president of Mill Bergen Pools in Brooklyn, New York, adding retail to his pool-installation business in 1986 had everything to do with appearing more credible and trustworthy.
“Walking into a location is different than just having a person on a truck,” he says. “If they have a complaint, they can drive to my office and there’s somebody there. There is value in that feeling.”
Blanda says while some may be fine with the firmer hours that accompany a brick-and-mortar location, he has never had a weekend off since he started in retail — and he would be apprehensive today telling anyone to make the move without additional revenue from construction or service.
With the prevalence of online shopping and big-box stores, Blanda’s sense is that the customer is willing to pay about 15 percent markup — and no more — for the ability to come in and talk to somebody. “But that’s not enough to support labor, inventory, insurance,” he says.
James Burns, social media manager for Doc Dean’s Pools in central Florida, doesn’t see the need for his family’s service company to have a storefront. He likes the idea of a physical location only insofar as it would allow him and his parents, with whom he works, to have an office outside of their home.
“There is something special about going to a place to do work as opposed to working from home,” he says. “However, I don’t believe opening a store, having a single store, is the best route to go,” adding that he is wary of large overheads and holding an inventory, which he says means charging high prices for basic products. “That doesn’t fit if your mission is to provide value,” he says.
By way of example, Burns shares that Doc Dean’s ran out of test strips the other day and, in a pinch, ducked into a nearby chain: “They charged $17.50,” he says. “At my supply house I pay $7 or $8 for a tube. The margin they have to play with is so big in order to cover costs.”
Instead, Doc Dean’s makes use of a storage unit for its vehicles and equipment, he says, with the added benefits of tight security and great insurance. Burns says a service company is better off leveraging money that would be spent renting a storefront on Google, Facebook and Instagram ads, as opposed to using a store as advertising. Likewise, Burns says he isn’t interested in being pulled away to general housekeeping duties a store would require.
“Growth for us looks like a larger top line,” he says. “More employees, more trucks, working with more people. I don’t think a store is saying, ‘We’ve made it.’ I’d rather have 100 trucks on the road.”
For service companies tempted by retail but cautious of missteps, there are options beyond going it alone. Founded 25 years ago, the Poolwerx franchise now has more than 150 stores and 500 service trucks, CEO John O’Brien says.
Initially Poolwerx was only focused on service, but 10 years into business, O’Brien realized he was leaving a lot of DIYers’ money on the table. Poolwerx began a new approach, opening its first retail store with the idea that retail and service can co-exist. In Poolwerx’s model, franchisees are encouraged to move from one van, to multiple vans, then to one or more retail locations. Through on-site training, coaching via a five-year rolling business plan and assistance with site selection, Poolwerx helps its franchisees overcome many common pitfalls of getting retail up and running.
O’Brien says he believes service-only companies are missing out on revenue from, among other things, repair and replacement and chemical sales.
“The majority of cleaning companies do it all-in,” he says. “Their service guys drop a bit of chlorine in, scrub and get on to the next. So there are no specialty chemicals being sold. When you have a retail shop, people come in with a problem with red eyes or green hair, and all of a sudden you’re selling them $150 worth of chemicals.”
The Fine Print
Opportunities to upsell are one thing, says Debbi Leclerc, but service-based companies with no retail experience often don’t think about the details that keep a DIYer coming back. “Every weekend should look like a celebration,” she says. “We do popcorn, we grill outside, we have giveaways for kids.”
Retail can also mean late nights, she says, and losing the flexible schedule many service-company employees enjoy. She also cautions against the assumption of overlap, saying that few to none of The Pool Doctor’s service-side customers visit its brick-and-mortar location.
“Retail is DIYers,” she says. “Very rarely do I see our service customers, but homeowners come to us. We also have the people who don’t touch their pool; we do everything for them. We never see [those customers] in the store either. If those are your only customers, be careful about going into retail.”
O’Brien mentions that stock and inventory cost, which he says Poolwerx can help alleviate due to its banking relationships, shock many first-time retailers.
“It can total $50,000 to $75,000,” he says, “and a lot of people don’t factor in that they have to pay for that 30 days after opening.” As such, he highly recommends negotiating opening inventory terms with suppliers.
Regardless of the path from service to retail, Aquanut’s Todd says it takes more than accounting for possible stumbling blocks: It takes whole-body preparedness.
“You have to be mentally, emotionally and physically ready for it,” he says. He and Suzanne have both put in many 18-hour days since his store’s inception, but he says it’s worth it: The phone still rings nonstop, year-round. “If you’re looking for your next phase in life and can do that for a reasonable price,” he says, “it can open a lot of opportunities for you.”