Sunday, August 3, 2003

Owners not afraid to expand from spas



By Laura Baverman
The Cincinnati Enquirer

[IMAGE] Donald Oeters (left) and Jim Kathmann, co-owners of Watson's of Cincinnati
(Glenn Hartong photo)
| ZOOM |
When Watson's Superstore owners Don Oeters and Jim Kathmann told former owner Bill Watson that they were building a 150,000-square-foot store in Evendale in 1996, he thought they had gone mad.

He knew the owners were successful in the 29-year-old pool and spa business that they bought from him 12 years earlier, but he thought such a large place was not worth the high price.

"I was very critical of them. I thought they were making a terrible mistake when they decided to build such a nice, big store; but they proved me 100 percent wrong," Watson said.

When Oeters and Kathmann bought the company, Watson's revenues were $4 million a year. Since then, it has experienced 750 percent growth.

About 100,000 customers walk out the door of their Evendale store with a purchase every year. Oeters attributes the growth to the superstore concept employed in 1996.

They added new product lines such as grills, fireplace items and outdoor furniture. They expanded their showroom to 50,000 square feet, including 50 spas on display, 85 pool tables and 250 different bar stools "for the most budget-minded to the most extreme in taste," Kathmann said.

But what seems to be a massive endeavor is really just a regular business run by two Cincinnati guys who started out working in the shop 30 years ago and worked their way up.

"We were employees first, invited to be limited partners second; then the opportunity to buy this business came and we did it," Oeters said.

Watson, an entrepreneur, was ready to move on to something else and saw in Kathmann and Oeters the drive to succeed and make the business grow.

"You have to dream big all the time, and Don and I always did that," Kathmann said.

Dreaming big has turned into opening 11 franchise stores nationwide. They directly control five stores in Dayton, Ohio; Louisville; St. Louis; Grand Rapids, Mich.; and Cincinnati. They also own six satellite stores in the Tristate that sell pool and spa accessories.

Even with the faltering economy, sales have steadily increased over the years.

"The economy for the most part has not had as dramatic of an effect as you'd think. Many people are cocooning, fixing up their home and enjoying their home more than ever," Oeters said.

As a result, items such as spas have become a year-round business for the store, adding a punch to the business, they said.

The owners have also noticed the trend toward media rooms and expanding forms of entertainment in the home. This fall's line of products will incorporate that trend in hopes of adding to business during the off-season.

Ken Kromme, regional chapter president of the National Spa and Pool Institute, said Watson's success comes from its ability to generate revenue year-round.

"I think they've been taking a chance in the market, and they're also trying to maybe smooth out their downtrends during the off-season by selling pool tables and fireplaces. It's just a way to keep the bottom part of the year leveled out - keeping the income, in other words," he said.

He calls the chain's growth exceptional, noting that it is ahead of its time compared to most pool and spa retailers.

The pool industry as a whole has grown over the years. A 2002 study by P.K. Data Inc. for the institute, showed that pool and spa sales have increased 17 percent since 1997. The industry contributed $20 billion to the nation's economy in 2001, compared with $11 billion in 1983, the last time the economic impact of the industry was studied.

The study also showed that more pool and spa retailers are branching out to include other items such as furniture, pool tables and bars.

But none has branched out to the extent of Watson's, Kromme said.

Watson's has established relationships with many of its manufacturers, in which Oeters and Kathmann can give them ideas for products that their customers would buy.

"We're the innovators," Kathmann said.

As a result of these relationships, Watson's has been included in the Aqua 100, the 100 best retailers in the industry in sales, for 10 straight years.

Such a relationship is evident to longtime customers such as Nils Kahlson, who buys from Watson's two to four times a year.

Kahlson has always been impressed by the variety of products available.

"They are always looking for other lines that they could add," he said. "I've discovered kinds of casual furniture that I never knew existed."

Kahlson has purchased a pool, patio furniture, a gas grill and all of his pool supplies and accessories at Watson's. Right now, he's in the market for a pool table, which he expects to buy from the store.

The owners say they will continue to stay on the cutting edge of their industry, mostly because they love the business.

"We are just as excited about this business as we were 10 years ago, 20 years ago and 30 years ago," Kathmann said. "We are driven to want to be the best in our industry."

Watson's timeline

1967: Bill Watson starts J & J Distributing Co., a vending machine distribution company, on Reading Road.

1969: J & J begins selling swimming pools and pool tables and gradually phases out vending machines. Watson changes the name to "Pool City." It grew to be the city's largest pool store. The name changed to Watson's when new product lines were added.

1984: Jim Kathmann and Don Oeters buy out Bill Watson but keep the name Watson's. The same year, Watson's moves to 10725 Reading Road in Evendale for more space.

1996: Watson's builds a 150,000-square-foot store and distribution center at 2721 E. Sharon Road. Of that, 50,000 square feet is dedicated to showroom space, making it one of the largest leisure product showrooms in the United States. The name was changed to Watson's Superstore because of the many product lines and its size.

Since 1983: Watson's has opened six satellite stores in the Tristate. It has helped open 11 franchises across the country, five it has direct control over and six that have different owners but have rights to the Watson's name.

E-mail lbaverman@enquirer.com



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