Long considered the pinnacle of the aquarium hobby by many in the industry, reef aquariums afford retailers high-margin coral and equipment sales. But as product innovation continues to make coralkeeping easier than it’s ever been, new opportunities are opening up for industry participants to generate profit and keep customers coming back.
When it comes to coral livestock, many retailers reported that high margins and relatively low competition is keeping the market attractive and lucrative.
"Livestock has got to be your bread and butter because the internet is killing everything else," said James Minigh, owner of Bluewater Reef Aquatics in Daytona Beach, Fla. "A lot of people don’t want to buy livestock offline."
The reefkeeping hobby also is more accessible than ever, meaning retailers have access to a wider customer base.
"Innovations in lighting technologies and feeding and filtration have really made reefkeeping so that honestly anyone can do it now," said Bruce Kelley, manager at Aquatek Tropical Fish in Austin, Texas. "And you don’t have to have a 200-gallon tank; you can do it in a 10-gallon tank and be successful at it."
Nano tanks are still drawing newer, less-experienced hobbyists in, primarily because of low entry costs. However, low cost does not necessarily equate to user friendly. Nano tanks are an exception to the trend of easier-to-master reef setups.
"Nano tanks are still the rage, with consumers finding the lower price point for these setups compelling," said Chris Clevers, president of Hikari Sales USA, based in Hayward, Calif. "The downside is that these aquariums, while viewed as easier to keep, are actually more difficult. Retailers find they have to spend considerable time working with consumers to keep these tanks in balance."
Having a wide variety of coral in stock is key, because customers often are seeking new specimens, and different species become popular for various reasons.
"The whims of coralkeepers change, I’d almost say monthly," Kelley said. "Right now, balance mushrooms are fairly hot. Last month it was zoanthids. The month before that it was Acanthastrea, or torch corals."
Other retailers also reported that mushroom corals are popular right now.
"Mushrooms definitely are the craze," said Jess Viscovich, manager at Diablo Corals in Concord, Calif. "These odd-ball, Rhodactis-type mushrooms normally go for about $30 wholesale; people are now paying $250 to $300 per rock wholesale."
For specialty retailers that sell coral livestock, big-ticket equipment sales are important.
"Everybody is going to hybrid [LED/T5 combo] lighting," said James Minigh, owner of Bluewater Reef Aquatics in Daytona Beach, Fla. "Usually big ticket things like that are kind of slower [to sell]."
LED fixtures continue to be popular as well, and Coralife recently came out with a new setup. Called the Coralife LED Aqualight-S Fixture, the line features bright white, blue Moon Glow and color-enhancing RGB LEDs, said Pamela Morisse, digital and media marketing manager for Central Garden & Pet Co., based in Walnut Creek, Calif.
"LED lighting is still most in demand, particularly controllable fixtures," she added.
Coralife also released the Coralife LED Bio-Cube, which features increased tank size, a revamped hood and increased light output, among other design changes, Morisse said.
Interest in new tech is popular, and features such as controllability are top of mind.
"Right now, for us, the biggest thing is automation," said Jess Viscovich, manager at Diablo Corals in Concord, Calif. "It doesn’t have to be one controller company or another. They’re all making leaps and bounds as far as where the automation has gone."
Another major factor driving coral sales is the wide variety of foods available on the market.
"[Manufacturers] have gotten very good at producing and doing consistently high-quality coral foods," said Bruce Kelley, manager at Aquatek Tropical Fish in Austin, Texas. "Everything from Hikari’s coral foods to PE Mysis to Cyclop-Eeze are popular."
Several manufacturers have introduced new lines, including Hikari’s Coralific Delite, which is formulated to be an easy-to-feed, multiuse coral food, and the company’s recently introduced Cyclopod+ line, said Chris Clevers, president of Hikari Sales USA in Hayward, Calif.
Additionally, Quality Marine is the exclusive distributor for the Nutramar and Benereef food lines, said Cindy DeLillo, media manager of Quality Marine and Aquatropic in Los Angeles. The Benereef line is formulated to feed the whole aquarium—not just corals, she added.
"Good coral foods have been even more important these days due to the trend of retailers recommending that customers run super-low nutrient systems," she said.
Retailers said that coral food offerings are selling well and helping them retain customers.
"Right now, there are definitely some interesting coral foods that have been doing well for us," Viscovich said. "The whole line of LRS fish food from Larry’s Reef Services has been doing huge [business] for us. It’s been a great game changer."
Though the conventional wisdom is to keep lots of flashy, eye-catching display aquariums when it comes to selling aquarium products, displaying expensive-to-maintain reef aquariums in-store isn’t necessarily always the best—or easiest—approach.
"We have three coral displays—a mixed reef, a soft coral tank and a SPS-dominated tank," said Bruce Kelley, manager at Aquatek Tropical Fish in Austin, Texas. "I see a lot of coral shops that light their coral tanks with nothing but 20k light, and the corals look fantastic, but they’re not real. I don’t do that. Our corals look like what they’ll look like in [a customer’s] home."
One way to showcase corals without having to invest in a gigantic display aquarium is to focus on smaller offerings.
"Stores that have frags from $5 to $10 and up always seem to be doing better than stores that don’t," said Chris Clevers, president of Hikari Sales USA in Hayward, Calif. "Frags seem to keep consumers coming in, and that is a key to successful retailing: customer flow."
Another important aspect of reef aquariumkeeping that many new customers aren’t aware of relates to the power needed to keep these tanks running. Many customers also
need to be brought up to speed on how to keep power consumption in check.
"We all know the cost to operate a tank, especially in a home, is quite expensive with power," said Jess Viscovich, manager at Diablo Corals in Concord, Calif. "Now every manufacturer has their own line of DC pumps, skimmers and powerheads. The cost to operate a system now gets cut 30 to 40 percent … so that’s huge for the customer, too."
The Personal Touch
Customers are increasingly savvy on keeping reef aquariums, and thanks to the internet, many know what they want before they set foot in their local specialty shop.
"The average hobbyist is better informed, very much so," said James Minigh, owner of Bluewater Reef Aquatics in Daytona Beach, Fla. "There are a lot more reefkeeping groups, a lot more localized fish groups and all kinds of things that are helping newbs out tremendously."
However, retailers still need to focus on offering quality information and a personal touch.
"By consistently providing customers with good advice and helping them make sound buying decisions, retailers will ensure that shoppers return to their stores," said Pamela Morisse, digital and media marketing manager for Central Garden & Pet Co., based in Walnut Creek, Calif. "The bottom line is, if hobbyists are successful, they’ll want to keep doing it."
Being honest with customers about what they need to be successful is important, retailers reported.
"If you tell people the truth about the complexity of coral, that really makes a difference in long-term customer retention," said Bruce Kelley, manager at Aquatek Tropical Fish in Austin, Texas.
The more retailers are able to help customers make good purchasing decisions, the higher their chances of keeping customers loyal.
"I always keep people informed to make a good decision without leaving too much of the bad out," said James Minigh, owner of Bluewater Reef Aquatics in Daytona Beach, Fla. "I’m always 100 percent upfront with them and let the cards fall where they may."