Retail trends are being transformed by a customer-focused mixture of online, on-demand, and on-premise that many traditional retailers have yet to embrace and the pool and spa business is no different. The only way to survive, and indeed thrive in the new world of Retail 3.0 is to embrace the store as a destination, a fulfillment center, a source of data, and catered neighborhood experience. Central to the Retail 3.0 strategy is a consistent and data-rich connection to the customer as well as having a “premium” experience with the store. And this is exactly what Sutro intends to do. In our development pipeline is technology, best practices, and an ecosystem to enable pool and spa businesses to thrive in this new Retail 3.0 environment.
Retail 3.0 is driven by several trends that CB Insights categorized in their research brief Reimagining the Physical Store and Seeking Alpha’s post on We are in the Retail 3.0 Era. Although the trends presented are put in the context of big box retail, such as Walmart, Home Depot, and Target, the trends equally apply to the pool and spa industry. These trends are detailed below as well as what Sutro is doing to build a Retail 3.0 ecosystem that allows pool and spa businesses (retail, distribution, and services) to participate in this new retail environment.
Before we get into that, let’s address the 800-pound Gorilla in the room — Amazon. There is a lot of talk about how retail is dying and how Amazon is going to own the world. In some sense, Amazon is clearly a leader in Retail 2.0 (online) but also look at their expansion into brick and mortar — clearly brick and mortar retail done properly is a viable and profitable venture. This is perfectly explained by the chart below (taken from We are in the Retail 3.0 Era).
Notice that while Amazon is growing, so are Target, Walmart, Costco, and Home Depot. What all of those companies have in common is the Retail 3.0 mindset, which is a customer-focused mixture of online, on-demand, and on-premise.
This is not a new thing. Sears and Robuck (now bankrupt) was the Amazon of its day. They started out as a catalog company and then moved to brick and mortar. The downfall of Sears was that they did not fully embrace the online, on-demand, and on-premise balance. Instead, they doubled down on the old retail model with big stores packed with lots of stuff, which is an abysmal experience. — just like K-Mart and Toys “R” Us did. No wonder all three went bankrupt.
Next, we’ll go through the five trends on how Sutro will build Retail 3.0 for the pool and spa industry.
Trend #1: The Store as A Destination
People have limited time and are easily distracted. When we want to go out, we want the experience to be as meaningful and exciting as possible — it’s what we see on social media all day.
Brands like Apple, Build-A-Bear, Warby Parker, and Athleta all offer more than just products at their physical locations. This creates a sense of community and value that goes beyond just buying their products. It’s this community of like-minded people that form the base of “super fans” of a brand. The more “super fans”, the better.
Take-a-way: Pools and spas are natural community builders and so should the pool store.
Trend #2: Store As Fulfillment Centers
Our limited time makes most people too busy to waste time. That’s why services like InstaCart, DoorDash, and Caviar have gained in popularity. It’s also a reality that people will shop around online for the best price and the most convenient place to purchase. Of course, price and convenience are a continuum and when you need something now, you really need something now.
That’s why brands like Target, Best Buy, and Walmart provide the convenience of shopping online and picking up on-premise. For a busy person, this beats waiting in line to check out in a 10 deep self-service queue that never works right. It also solves the “last mile” problem that so many brands struggle to get right — although Doordash and Caviar are working on that for food.
This also has the benefit of being able to control and even reduce inventory at some stores — especially small ones where real estate is at a premium. Some brands, like Costco, even deliver out of their retail stores. This provides an additional level of convenience that builds brand loyalty.
Take-a-way: Pool and spa chemicals are bulky and dangerous. Being able to deliver or ship direct to customers, from your store, adds value to a busy customer.
Trend #3: Data Collection
Most believe that data is the new oil since data is what is driving the biggest advances in Artificial Intelligence (AI), Social Media, and Advertising. The best example of this is Amazon and their new Amazon Go stores.
Amazon Go stores are cashier-less since data and sensors figure out what you picked up and what you have bought. This makes it an environment where Amazon can track purchase intent as well as real-life abandoned carts.
Other sources of data are not as complex as Amazon Go. For example, collecting a customer’s email address, phone number, or address, while established, are still not routinely done. Combining this with purchase history and/or sensor data (like a Smart Pool Monitor) and you can start to get a sense of trends to help both the customer and the business.
Take-a-way: Pool and spa business owners need to embrace the reality of data collection and ensure that they have as much data on their customers as they can get.
Trend #4: Localization
By far the most exciting trend that pool and spa businesses can leverage is the idea of localization. By localization, we mean the unique and special conditions within a local area (town, city or region).
Pools and spa use and style are highly regionally dependent. Even the water to fill them varies by town, city, and sometimes even a block. This local knowledge coupled with the unique knowledge that pool and spa businesses have, makes catering to the local community a big win. Brands like Nike, Amazon, and Kohl’s are using localization to better serve local customers to keep them engaged and buying more.
Take-a-way: Pool and spa business owner should use their local knowledge to “super service” their customers by providing products and services that keep customers coming back for more.
Trend #5: Be Useful by Skating to the Puck
The last four trends are an entirely new paradigm in retailing and frankly, for most retailers, a little scary — especially small to medium businesses who don’t have the technical chops or budgets to compete.
Thankfully, the pool and spa business has some time to adapt to this new reality. Pool and spa supplies, especially chemicals, are hard to handle and require expertise to deploy. Although there are online retailers that will ship you chemicals, it’s usually not the most convenient option simply because it’s complicated to measure and monitor your pool or spa.
The complexity of pool and spa measurement and monitoring will get easier over time. We at Sutro are working on that with our Smart Monitor but just because something is easier to measure and monitor, it does not mean local expertise is not required.
In fact, the benefit of a pool and spa professional to an owner becomes more valuable in a Retail 3.0 environment because even with automation and piles of data, pool and spa owners will still want the comfort and peace of mind that they are keeping their pool or spa safe. The pool and spa business that can provide a simple, safe, and seamless experience to their customers will be the one that will win — even if they can’t get there all at once.
Take-a-way: Start the move to Retail 3.0 even if you can’t get all the way there. There is still time.
Our Pool and Spa Retail 3.0 Ecosystem Vision
We have been thinking a lot about how all these Retail 3.0 trends and our technology fits into the pool and spa business ecosystem. It’s clear that we can’t stop the Retail 3.0 train but we can build the kind of ecosystem that benefits everyone in the pool and spa industry. That might seem like a lofty goal, too idealistic, or maybe even naive (we have been called worse) but we feel that it’s the only way to go and here is why.
Owning a pool or a spa is a lifestyle that requires more commitment and time than buying an iPhone, a Nest, or a Tesla. It takes work to keep your pool or spa safe for your friends and family. It’s actually a major source of hassle and pain that if you get wrong, people could get sick.
That’s why our vision of a pool and spa retail 3.0 ecosystem centers around the ultimate source of truth and comfort for a pool or spa owner — their local pool and spa professional. We don’t see a world where local, knowledgeable, and useful pool and spa professionals go away. In fact, we see an industry that will grow and thrive under this new Retail 3.0 trend because pool and spa owners want to connect with brands that will make them love their pool again. It’s as simple as that.
At Sutro, we plan on building products and services that make the transition to Retail 3.0 seamless, painless, and lossless. This starts with our first product, the Smart Monitor.
To achieve this, we want to connect with pool and spa professionals all over the world to craft technology and services that cater to their local environment. We believe that the whole industry can win and win big in this new Retail 3.0 environment.
Take-a-way: Join us in the Retail 3.0 movement. Email us at email@example.com to get started.