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Are 'Hybrid' Stores the Wave of the Future? (Part 2)

Paul Partyka |

When constructing a self-service laundry, many difficult decisions need to be made. What type of equipment mix do you favor? Does the layout have the proper customer flow? Do you want a coin or cashless store?To many owners, the coin/cashless question offered no middle ground. However, other payment options are now available. Can a “hybrid” system work for your laundry?Representatives from companies offering hybrid systems share their views.HYBRID STORES ON THE RISE“I’m always a bit surprised how ‘black and white’ it’s been in the coin laundry industry concerning options on payment, considering the rest of the world has the philosophy of ‘accept as many forms of payment as possible,’” say Ryan Carlson, WashCard Systems.He says operators are surprised to hear that they can keep coin acceptance and add credit cards to the mix. “I sometimes feel as if what we are proposing is some kind of mythical taboo that has always been just out of reach for operators.” He believes that with additional manufacturers introducing cashless options that allow owners to keep coins, it’s going to change the perception that one can only have coin or card. “The message is, ‘You can have your cake and eat it, too!’”The spectrum of hybrid options available are varied, ranging from the cumbersome to the highly convenient, he says. Hybrid options will allow an operator to keep coin acceptance and add small RFID readers to the face of a unit that will also take a prepaid card with an embedded SIM chip that stores the balance information. In this scenario, he explains, customers are still required to get cash, load money onto their SIM chip card, then walk around the facility. “This is certainly a convenient way to handle coins since it will speed up the transaction and keep people feeling as if they are at the casino playing (old) slots.”The second option is to give consumers the option of using their bank card, credit card, and prepaid VISA card directly on machines outfitted with a reader. The prepaid cards are available at a variety of locations, and the beauty of this option is that you can get out of the card management business and still take cards in the way consumers want to spend their money, he says.“These systems will generally have the option to have a prepaid card for marketing and promotions.”Carlson says the pros of going to a hybrid system are:

  • Stores reduce the time it takes to pay for machines with high vend prices.
  • Operators will get, on average, an additional eight to 14 turns on their equipment before the coin vaults fill up.
  • Washing equipment that charges for different wash cycles or services (such as higher vend for hot water or a “super cycle”) will see cashless consumers purchase the “super cycle” 76.8 percent of the time on average (based on two years of case-study data).
  • Dryers that have a cashless option with “bonus dry cycle” programming steps will have customers adding “bonus dry time” beyond the basic cycle 61.4 percent of the time.
  • Operators accepting card claim that once word gets out that people don’t need cash-in-hand to activate equipment, an entirely new type of clientele will visit their business.

The cons of going to a hybrid system are:

  • A hybrid system still has the liability of having cash in the store, so if security is a concern, it will continue to be a concern.
  • These systems are not inexpensive. This is a planned investment with an average payback period of two to three years. Plan to spend thousands of dollars and know that some amount of advertising is going to be needed.
  • There are only a few years’ worth of data available on hybrid systems, and although the data shows a growing trend, there is no guarantee of success in every location.

Is a hybrid system for you? “The primary contributing factor in whether someone should be going this route is to evaluate who their customers are and what customers they would like to attract.” College students could be drawn with a hybrid system, especially if you offer free WiFi. If you have a Wal-Mart nearby, chances are the customers have a Wal-Mart money card (pre-paid VISA card that can be redeemed anywhere VISA is accepted), he adds.“Is your location in a seasonal area that has tourism? If you have tourists coming through your area to stay during certain seasons, offering credit-card [acceptance] is an amazing way to get into the deep pockets of upscale customers away from their in-home washing equipment.“As for store size and number of machines, we have yet to find any conclusive data that points out whether one size of store is more successful than the other.”Another challenge is deciding how many machines should utilize hybrid equipment. There are several different ways to view this question, Carlson suggests.“Successful operators with hybrid systems are generally outfitting about 50 percent of their store, doing a smart mix of washers and dryers.” Consider putting readers on machines in the middle of an aisle, in the very back of the store, etc., instead of “popular spots.” “This balances out the wear-and-tear amongst the less-popular machines.”You can also drive customers to the more expensive machines. “Some operators have decided that they want customers with a credit card in hand to spend a few more dollars by upgrading to a larger machines that is generally a higher vend price and more energy-efficient.”There is also the level of convenience to consider. Find out how many cash and card customers you have using equipment at the same time. Look at a dozen machines, and expand as needed if it’s a good fit, he suggests. “If the machines with readers are always busy and the others are not, you know it’s time to add more readers to your equipment.”Carlson says statistics show that 38 to 52 percent of the income of a hybrid store is generated from card sales. “The more interesting statistic is that cash deposits only drop by 22 percent to as little as 4 percent after the introduction of a cashless system.”He isn’t surprised that there aren’t more totally cashless stores. It’s simply not in the best interest of the Laundromat consumer, he says. “Consumers don’t want to be forced into loading money onto a card and have no ability to get money off the laundry card. Consumers have been spoiled by every other business that lets them use their credit card and spend exactly what they want. Self-service laundries that go completely cashless will crop up in high-crime areas in regard to traditional card-store technology.“The use of prepaid credit cards is near to doubling year over year, the use of bank cards is about 70 percent of the business at a gas station, and as an older generation of die-hard cash users passes on, the younger generation of washers will take their place with plastic in hand.”In the next decade, the number of hybrid stores offering more options for payment will outpace the number of straight cashless stores purely by consumer demand, he predicts.“Cashless-only locations will remain the leader in route-laundry systems, but the future of the independently owned coin laundry is clear. The ability to pick and choose equipment to install readers on is going to be key in getting the best of both worlds.”To read part 1 of this story, click here. 

About the author

Paul Partyka

American Coin-Op

Paul Partyka was editor of American Coin-Op from 1997 through May 2011.

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