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Covid accelerates retail exit plans
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EO John O’Brien says Poolwerx has noticed an increase in pool shops wanting to exit the industry since covid started. This is despite growth in the overall swimming pool retail market. “Covid-19 has made people reconsider their life aspirations,” he says. “For the industry veterans, the pandemic has often left them nervous and even scared in some cases. Their business wasn’t necessarily future-proofed. It’s often not the first economic scare they are facing, with many having had to navigate the global financial crisis in 2008 before it.” O’Brien says this has affected the number of enquiries from people contacting them wishing to sell. “The pandemic has bought the decision to sell forward for many – the world has just become a bit too uncertain for many small businesses and their nest eggs are now more vulnerable. As a result, we have helped a record number of independent stores sell in the second half of last year, in the midst of covid-19.” Poolwerx uses a matchmaker model when an independent operator looking for a short term exit strategy in a high demand territory approaches them. Poolwerx drives enquiries initially for the sale of the business, which is converted to Poolwerx branding upon finding a suitable franchise prospect who is locally based or looking to acquire in that region. This process, led by Poolwerx franchise development manager Mike Geddes, allows a short term exit strategy from the industry for the seller and allows Poolwerx to expand its retail/mobile footprint. The time to sell is dependent on how sale-ready the business is, but on average takes between three and six months, and involves no cost for the vendor. This strategy has been in place for more than 10 years, and O’Brien says they have helped convert more than 60 independent stores over that time. The same system has been in use in the US where Poolwerx is growing its market share and increasing its footprint to eight states, with more than 30 existing US independents transitioning. He says the feedback has been very positive as the system offers an easy solution that provides access to more qualified buyers, often with deeper pockets. “For potential buyers, it’s giving them access to an established territory and clientele to take over. It therefore makes bank finance easier as well.” Through the matchmaker process, Poolwerx aims to acquire about 200 more stores. “There are around 1000 pool stores in Australia,” says O’Brien. “700 of these are independents and of those approximately 200 are considering retirement – these are who we can help. There isn’t a city or town with an independent pool store in Australia or New Zealand that we haven’t already spoken to about helping them sell.” 32 SPLASH! April/May 2021
Cory Harris with his family and team in front of his old independent store
“Quite often, we find independents don’t necessarily realise the importance of a succession plan until a crisis hits.” When to move
O’Brien says a majority of their stores turn over more than $1 million per annum generally, and they had seen an increase in sales across the retail network – up to 23 per cent. Considering this coincides with other retailers in the industry experiencing excellent growth, it’s clear profitability issues aren’t behind the accelerated plans to exit. It seems more likely that general uncertainty in the current environment has affected some people’s decisions. “Each independent and scenario is unique,” he says. “But quite often, we find independents don’t necessarily realise the importance of a succession plan until a crisis hits – be it a health emergency, a family crisis or a global pandemic threatening their business. “Others wake up one day and simply decide it is time to take their foot off the pedal and enjoy their retirement.” O’Brien says that, generally, independents looking to exit are nearing retirement. “We see demand from all over Australia and New Zealand. They are usually loyal industry veterans who have achieved a huge amount through the years, but might have lost their mojo after decades in the business. “They want to plan their exit carefully and ensure the business they have built over the years, as well as their staff and clientele, will be looked after. They are entrusting us with their legacy and life’s work.” n Contact: www.poolwerx.com.au