CHICAGO — As business owners, there are many challenges coin laundry store owners and operators face on a day-to-day basis.
When problems arise, many store owners and operators should have a plan of attack in place—from effectively handling customer concerns or complaints, to having a protocol to follow for when a key piece of equipment goes out of commission.
But what is a store owner to do when a new competitor sets up shop across town?
What are the ways in which that established store can size up this new player, and what strategies should they have in their battle plan for when it comes time to face their new competitor?
American Coin-Op reached out to various industry experts for tips on how to effectively answer the competition, and to provide strategies for store owners to ensure they don’t lose their footing when they become involved in a proverbial tug of war with a new competitor.
ADDING SERVICES?
An established store owner may feel enticed to mirror the same extra-profit center/service that their new competitor is offering, particularly if they had not previously offered it at their store.
Should store owners be quick to follow suit? The majority of the experts believe store owners should be a little more calculating.
“It depends on the town that you’re in,” says Michael Finkelstein, president of Associated Services Corp., a distributor and chain of Laundromats in the mid-South marketplace. “If you’re in a town where wash-and-fold is not a big piece of business, and the time and the expense that may cause you to pursue that is taking away from what you need to do for your base business, then the answer is no.”
“It’s good to consider the possibility, but it isn’t a necessity,” says Joel Jorgensen, vice president of sales and customer services, Continental Girbau. “It depends on your goals and whether or not you can execute that service/revenue stream profitably, and with excellence.”
Kathryn Q. Rowen, North American sales manager, Huebsch, agrees, advising store owners to see how receptive customers will be to the service first before making any investments.
“Rely on feedback from your customers about their willingness to use something new and analyze your return on investment potential and timeframe,” she says.
For John Olsen, vice president of vended products, Laundrylux, considering the location’s demographics is key when adding an extra-profit center.
“It really depends on the service and if the specific service is appropriate for the market,” he says. “Do it if it makes sense, but don’t just follow because they are trying something that may or may not work.”
BRIGHT AND SHINY
Another piece of investment that established store owners may look at in response to new competition is newer equipment.
Should established store owners feel intimidated by the bright and shiny new hardware at their competitor’s store?
Before making an investment, Finkelstein advises store owners to make a few considerations.
“You have to determine, if you believe you’re going to be a player in that town for a long term, and if you’re making money in that store prior to that opening of a competitor,” he says. “If you’re happy with the economics of that town, and you believe that’s the right thing to do, then you should consider investing in new equipment if you’re there for the long haul.”
He also cautions, however, against store owners “overextending themselves” from a financial standpoint.
“If the other guy is open and he has all brand-new equipment and you go and you plow a lot of money into all new equipment because you think that’s going to keep all your business, that’s not a good strategy if the equipment is only 5 or 6 years old, and there’s nothing really wrong with it,” adds Finkelstein.
But for those operating older machinery, many of the experts agree that established store owners should consider making an investment.
“If your customers have complained about ‘out of service,’ or cleanliness of the machines, it may be time to replace your equipment,” says Rowen, who touts the utility savings that newer machines can bring.
Chris Brick, regional sales manager, Maytag Commercial Laundry, agrees, saying, “It’s most appropriate to invest in new equipment if a store owner consistently experiences machine failures, resulting in machines frequently being out of order and, therefore, loss of profit, or utility costs continue to rise because of machines’ inefficiencies.”
Investing in new equipment in response to a new competitor can be beneficial, according to Olsen, both from a competitive and utilities cost standpoint.
“If the current store is operating with older, less efficient equipment, it may be what attracted the new store to the market in the first place,” says Olsen. “The new store with new equipment will also have a significant advantage over the store with older equipment because their utility cost will be lower.”
“Don’t wait for a competitor to build a store near you to decide that you should improve your store and lower your operating costs,” adds Olsen.
Jorgensen agrees, adding, “Business improvements, including equipment, should always be on the ‘radar’ of a proactive business owner. Consider ways equipment can be updated or replaced for more profit potential and to promote customer loyalty.”
Check back Monday for Part 3!
Missed Part 1 of this story? You can read it now HERE.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].