shutterstock_649970758

Retailer Roundtable Participants:

  • Steve Richmond, owner of Lovely Pets Aquarium Store in Kingston, Mass.
  • Mike Hresko, owner of House of Tropicals in Glen Burnie, Md.
  • Howie Berkowitz, owner of Aquaridise in East Brunswick, N.J.
  • Cameron Laufman, store manager of The Wet Spot Tropical Fish in Portland, Ore.

Pet Product News: How do things stand in the aquarium industry, and what trends are you seeing right now?

Steve Richmond: I’m seeing things go back to normal, as far as the surge in business we experienced during the pandemic. It’s horrible to say it like this, but we were riding the wave of COVID and the effect it had on the industry. All the extra business we were getting seems to have leveled off to where I’d expect it to be right now. If anything, it might be slightly declining with the uncertainty in the economy. I think it’ll level out because typically even when the economy is in a downturn, the aquatics industry always chugs through it or does well through it.

Mike Hresko: Business has been leveling off following the pandemic. It was really growing [by] leaps and bounds. Everybody was stuck at home, and a lot of people started aquariums. The good news is, [most of those new customers] are pretty much happy with them. We’ll see what happens. Hopefully they don’t lose interest. Business isn’t growing like it was, but we’re still selling a lot of fish.

Howie Berkowitz: We have never been busier. I’ve been in business a long time, and there’s been nothing like what we’ve experienced since the pandemic hit. People were home. They were buying fish tanks for their house. We do a lot of outside maintenance, and [these new customers] were hiring us to clean their fish tanks. Fish sales have been going through the roof. Obviously, the supply chain is broken, but it’s starting to return to normal a little bit. Overall, business has been extremely exciting. 2020 was the busiest year I’ve had in 35 years of being in business. The volume was the highest it’s been in 35 years, and 2021 was 20 percent above 2020.

Cameron Laufman: There’s a lot of new interest from folks that have been keeping fish for a long time, and from all-new customers. Also, there is a lot of cool new stuff entering the hobby, whether it’s products or fish, inverts and plants. Based on the supply line shortages we’ve seen and how busy we’ve been, I don’t think anyone’s giving up on the fishkeeping hobby yet. That’s obviously a great step in the right direction. … Business is going really well, and it’s exciting to see all the new people entering the hobby and everything that comes with it.

PPN: Where are customers spending money at the independent aquatics retailer level?

Richmond: Livestock is definitely still our strongest category. Customers aren’t shying away from buying livestock. I am seeing the dry goods sales slow down just a little bit, but that has more to do with the time of year. People are budgeting their money towards other things right now. I’m not seeing demand for maintenance services increase, but we are no longer offering maintenance at our new location. We made the decision a couple of years ago not to take on new maintenance customers, but we are still getting quite a lot of demand for [those services].

Hresko: Planted aquariums have taken off a lot. I’ve seen some customers get rid of their reef tanks and go with a planted aquarium. [Those setups are] a little easier to maintain and less expensive than some marine setups. Customers are opting for smaller, more manageable tanks overall. A lot of people are getting into the smaller desktop tanks or 15-, 20- or 29-gallon aquariums that are a little easier to work with.

Berkowitz: We do a lot of corporate [aquarium maintenance] work, we do a lot of custom work, and people are buying fish tanks. The supply chain issues were real tough to deal with for six or eight months [in 2021]. If someone wanted a 125-gallon fish tank, it was really hard to get it. But that is starting to get better. Business is very strong in all aspects, both on the services side of the business as well as in walk-in retail.

Laufman: Livestock is still our core business. I also see a trend where customers come in wanting a whole tank setup, especially for larger [tank] sizes. Those setups are rising in popularity, and customers are buying everything [they need] all at once.

PPN: How have you dealt with the dry goods out-of-stocks and shipping issues?

Richmond: I am very heavily invested in inventory when it’s available. I’m stocking up more now than I ever would have before, because I never know if it’s going to be available again. Who knows what the next shortage is going to be? When it comes to our inventory right now, we are loaded for bear. When a manufacturer brings in a container or something like that, and I know [something is] in stock, I may triple up on what I would normally buy, just so I know I’m going to have it for a while.

Hresko: The out-of-stocks have been tough to deal with. For a while, we couldn’t find any large tanks. Now, we’re seeing fish being ridiculously, outrageously priced because of the freight issues. It’s not as noticeable on the freshwater side as it is on the saltwater side, but freight prices have gone up. … It’s getting a little better now, but still there’s a lot of stuff sitting out on container ships somewhere in the ocean waiting to get here.

Berkowitz: As far as supply chain issues, we do the best we can. The consumer for the most part understands what’s going on. And when we’re out of stock on a product, they don’t give us too much of a hard time. At the same time, I have a relatively small store, and we can only stock a certain number of brands and products. … When [a particular product] became unavailable, I just went in and found another brand and bought that other brand to replace the product that I truly wanted to carry. And every week, my computer would order [the out-of-stock item]. Once they became available again, I would not reorder the other [replacement] products. So there wasn’t any product that customers needed to buy that I couldn’t offer an alternative for. Most of our customers fully understood the situation. … I started back ordering aquariums. I would tell my customer, “[Pay] a $200 refundable deposit. At any point you tell me if you want your money back, and I’ll give you back your money. But as soon as the tank is available, it comes in and it’s your tank.” That approach worked. I made multiple sales that way.

Laufman: We’re just trying to do the best we can. Everyone has been very reasonable and understanding when it comes to supply issues. We’ve had frustrated customers, but that’s more directed at the situation. [Product availability] has been a lot better, but there have been a lot of cases where we’ve had to essentially apologize and say, we’re sorry, but we just don’t know when this very popular, very important product will be in. We’re rolling with the punches and being as flexible as we can.

PPN: Are there any legislative hurdles on the horizon, and is the Hawaii aquarium fish ban still an issue?

Richmond: [The Hawaii ban] is definitely hurting us. Not having fish that were previously available to us can be challenging to explain to customers. Most retail customers just don’t understand why it’s happening, and as much as we tried to tell people that this was a problem, and to contact their senators and congresspeople and let them know what is going on, it really seems to fall on deaf ears. … We’ve had to hunker down. I used to be very active in paying attention to [legislative issues affecting the hobby], but lately, with some of the challenges going on in the business, it’s has made me focus on my little bubble right here.

Hresko: The Hawaiian ban has been the most prevalent issue we’ve had to deal with. We’ve had to deal with a lot of legislative issues. Years ago in Maryland they tried … to [mandate] a license for every pet. So for every fish I sold, I would have to provide a license.

Berkowitz: I want legislature to do what’s right. I see both sides of it. … I truly don’t want our industry to create extinction in our oceans, but at the same time … most legislators have no clue when it comes to many things that they are voting and making decisions on. The good news is, with all this hormone technology, they’re even breeding fish that 20 years ago we wouldn’t even dream of being able to breed. With marine fish, it’s a whole different story. … Controlling things like this through regulation and permitting would be much better than the legislature just banning it outright. That’s the lazy way of controlling the trade.

Laufman: The Hawaii ban happened right as I exited saltwater for the time being. So that hasn’t affected us as much, because we’re freshwater only, but I’ve definitely seen the impacts. I’m keeping a close eye on Germany. Some of the legislation that’s been popping up there is concerning. There have been some proposals to completely ban wild-caught export of fish. I can definitely see why, from an environmental standpoint, they’re considering it, but it’s just not a nuanced approach. … At the very least, talented, passionate aquarists can help save species. I just don’t think [banning exports] is the solution. So I am nervous of that passing. I don’t think that it would happen here in the United States, but it’s definitely something to keep an eyeball on for the whole industry, because it can severely complicate things for the trade.

PPN: What challenges and opportunities do you see for independent aquatics retailers?

Richmond: The biggest challenge right now is figuring out how much I can actually raise my prices to make up some of these cost increases we’re dealing with. It’s hard to raise prices without turning off my customers, without people think that I’m price gouging them, because no matter how much I explain to people that we’re having to raise prices because of fuel and shipping cost increases, people really don’t understand. The biggest opportunity for us is, if we can keep stuff in stock, the demand is there. We have a lot of tanks in stock right now, and when the busy season hits, and there may be another shortage, hopefully we get all those customers.

Hresko: If we can get a good variety of livestock in, that would help a lot. With dry goods, we can stay ahead of things, buy stuff when it’s available and sit on it, but we can’t really do that with livestock. Our busiest time starts right after Christmas through March. So as long as we have stuff in stock to carry us through, we’ll be good. You hate to be out of stuff when everybody wants it.

Berkowitz: When you own a retail business, you come in in the morning, you turn the lock, and then you cross your fingers, hoping for customers to show up. You do a lot of things to ensure that they will come in, from advertising to providing a good product, good pricing and good service. But the bottom line is, if there’s a deluge of rain going on out there, they’re not coming. Whereas, the aquarium service business acts like an established monthly annuity. It creates that ongoing income. I see the growth in that. Just like I can’t compete with Amazon on price, they can’t compete with me when I’m cleaning fish tanks. The last two years have been spot-on beautiful. As an optimist, I expect those numbers just to keep climbing.

Laufman: For an independent storefront like ours, the internet era has changed so many things with regard to how we do business. It’s something that we have to try to capitalize on. For example, starting a YouTube channel and promoting [our business] via social media is a huge opportunity. We want to embrace it, instead of letting the competition capitalize.

PPN: What do you see coming for the aquatics industry and hobby in the next year to two years?

Richmond: I try to stay optimistic that we will keep growing and the new people who have come into the hobby will continue to enjoy it. If we keep doing a good job of retaining all the new faces in the hobby, we’ll be in a good position as an industry. A lot of the young people that are now in the hobby hopefully will grow into it and stay with it. There’s also the other side of it, where the industry seems to be under attack from people who don’t like the idea of us having aquariums and having pets at all. Ultimately, though, I think people will still continue to get into the hobby and we’ll be able to thrive.

Hresko: It’s hard to say exactly where things will go. Usually, in our business, when inflation is high, we do better, and it looks like we’re going to go through a few years of inflation. I’m looking at maybe some hard times, and then maybe a small period where growth stalls. Then, if we’re there to pick up again, business might take off. If it plays out the way it has in the past, we should be OK, and we might even see another pop in business.

Berkowitz: I always see the glass as three-quarters full all the time. Looking back, 2020 was the busiest year we ever had up to that point, and 2021 was up 20 percent from that level. I don’t necessarily expect to see 20 percent increases over the next two years, but I do think we’ll see double-digit increases in 2022. I have to take into consideration that when I look at my numbers at the end of 2022, with so many price increases, as much as 10 percent, I’ll have to ask myself whether I’m really up as much as it looks like I’m up. That being said, I do expect to see continued growth in the industry.

Laufman: I think we’re going to see customers continue to move more to online retail. Also, I think the hobby is going to benefit tremendously from social media and YouTube content. That’s a very big part of the hobby and where a lot of money can be made. Some of the rarer fish are going to start becoming a little bit more popular, especially given that many people will get their feet wet with small tanks and some will shoot for something a little bit more out there. I’d love to see a few more people splurging for a big tank and for really cool big fish again. That’s just a lot of my own bias, but I’m not holding my breath. We’re dealing with the price increases … but that’s a necessary evil. We try to be very competitive and just go from there.