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Improving the Self-Service Laundry Industry (Part 2 of 3)

Paul Partyka |

CHICAGO — The self-service laundry industry, like other industries, continues to evolve, especially during challenging economic times. Owners must adapt to stay profitable. How can you improve your store? How can distributors and manufacturers contribute?Several of the major manufacturers share their views on how each segment of the industry can contribute to its overall success.SUSTAINING PROFITABILITYMany self-service laundries are well-maintained, good-looking retail establishments that improve the perception of the industry, says Jay McDonald, vice president of business development for Alliance Laundry Systems (Speed Queen, Huebsch, IPSO and Cissell).“However, stores that are not well-maintained, and are dirty and look terrible, create negative customer perception — not only with people who use a laundry out of necessity, but also with potential drop-off customers, potential investors and neighboring businesses,” McDonald adds. “One way to improve the industry is to make sure that your store reflects the coin-op business in the best possible light.”McDonald sees an opportunity to increase the customer base through marketing drop-off service. “This potential will only increase as the number of dual-income households grows. For these customers, a laundry becomes a convenience instead of a necessity, and we need to put our best foot forward to attract them. If you are the owner of a store you are not be proud of, you can help the industry by refreshing the look of your store or selling it to someone who would be willing to make the necessary improvements.”He believes customers are having their needs met, but recommends some of the focus be placed on trying to understand the needs of new and potential customers in the area of drop-off service as well as commercial accounts (small hotels, restaurants, clinics, etc.).“It is possible that new government requirements on small business may cause some of those companies to start outsourcing tasks like laundry, which can be good news for us if we are ready for it.”The manufacturers also play a role in improving the industry, he believes. “The responsibilities of manufacturers continue to be focusing on continuous improvement of product quality and energy efficiency. We need to be creative and bring forth new features designed to add revenue and margin for the store owner. We also need to continue to work with distributors to make them better and more efficient because local expertise and support cannot be matched by a single-location manufacturer.”McDonald knows that distributors play a key role in the industry, with the good ones receiving training and support from their manufacturing partners, and passing on a wealth of experience and expertise to customers. With any investment, the odds of success are greater when you base your decisions on more than just  your own “gut” feelings or experience, he adds.McDonald sees sustained profitability as the industry’s largest challenge. “We have all heard stories of laundries that have not raised their pricing for five years. Many store operators fear if they raise their prices, their customers will go to a competitor.“However, at the same time, their costs for labor, insurance, utilities, etc. have risen. The end result has been a decrease in profitability, which is not healthy for any business.”Reduced profitability makes it more difficult for owners to invest in property upkeep and new technologies, McDonald notes. “Store owners should analyze their own situation carefully and do what is necessary for their financial health. Raising prices only after a competitor does so isn’t the best method of success. By staying in tune with your customers and continuing to provide quality services, you will be able to retain existing customers and attract new business despite price increases.”Owners are also challenged with credit concerns, McDonald says. “During the recession, the credit crunch really impacted store owners and those wishing to become store owners. Current owners were having a difficult time obtaining loans to purchase newer equipment or acquire an existing store because of many banks’ more stringent requirements.”In some cases, investors were unable to get deals done, and if they could, the capital was more expensive as banks viewed start-up businesses as riskier for their portfolios, he explains.“As we come out of the recession, we’re seeing more lending institutions ease up a little on stringent requirements, credit markets untightening, and a renewed focus on growing the laundry industry. Our current economic conditions have created excellent opportunities to open new Laundromats, especially in regions where lease rates have become more competitive.“I feel that one of the best times to expand or enhance your business is when the economy is poised for a nice rebound. That time is now. While some have had a rough couple of years, we really expect to see a turn for the better as we move forward.”GIVING CUSTOMERS MOREWhen planning for the future, it’s important to realize that the nature of your customers is changing, warns Gary Gauthier, national sales manager, vended laundries, Milnor Laundry Systems.“Customers will demand more from vended laundries in the coming years,” Gauthier says. “We’re already seeing those older, poorly maintained stores with marginal equipment and no amenities be closed permanently. Laundromats are retail environments and — like any shopping experience — they need to deliver more than what the customer expects. The challenge is that our customers are growing to expect even more from us as they encounter changing retail experiences with other marketplaces.”Gauthier also believes operators need to focus on offering clean, attractive and well-maintained stores.Milnor’s goal is to focus on adding energy-efficient features to its machinery, he says. “Vended laundries can either barely survive or clearly thrive based upon their efficient use of utilities. More profitable operators lead to stronger store operations, and those are the businesses that become leaders within their markets.”The distributor-operator relationship is a mixed bag, he admits. “I’ve seen markets where dealers have worked for decades to cultivate strong, mutually beneficial relationships with the operators in the area. There are also some areas where — for a variety of reasons on both sides — distributors and operators have less of a partnership. I think the vast majority of distributors are strong businesspeople and they should continue to look for ways to become a larger part of their marketplace. Operators should rely on distributors who can bring value to their customers through new technology, equipment support or just good, old-fashioned free advice.”The lending markets represent both a curse and a blessing for the industry, he believes. “Limited access to capital makes it more difficult for operators to bring new equipment and other improvements into their operations. But some areas of the country have been overbuilt with vended laundries.“The credit crunch is halting further development in those regions and allowing existing operators to try and grow their local market share without further increases in redundant competition.”Gauthier always recalls something a multiple-store owner told him. “Listen to your customers, write down their comments, and give careful thought to what they tell you.”Please check back Friday, December 3, for Part 3 of this story.Click here to read Part 1 of this story.

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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