FORT WORTH, Texas — When examining the textile care industry today, it seems that the lines separating the laundry and drycleaning segments are blurring, according to Brian Wallace, president/CEO of the Coin Laundry Association.
“Self-service laundry is blending with full-service laundry and commercial accounts and pickup and delivery and the commercial/industrial side of our business,” Wallace says while speaking at the Southwest Drycleaners Association’s Cleaners Showcase in April. “Cleaners are getting into wash-dry-fold. These pretty distinct buckets are starting to blend together.”
Wallace was on hand to share his thoughts on What’s Next: The Future of Vended Laundry.
In examining the industry and predicting the path it will take, he offered a SWOT—strengths, weaknesses, opportunities, threats—analysis.
What does he see as strengths?
- Improving image and customer service.
- More active management style.
- Greater business experience, especially in financials, among owners.
- Greater ownership focus on vended laundry as sole or primary business.
- More information is readily available and sharable: Internet, associations, trade journals.
- Technology advances: data-driven management; equipment offers greater utility conservation; advanced payment systems; remote store monitoring.
“The most dramatic impact of the new technology is the fact that we’ve got washers and dryers that use, conservatively, 20-30% less utilities,” Wallace says. But in some cases, when vintage equipment is replaced by today’s state-of-the-art models, the savings could be closer to 50%. “Those are game-changers.”
- Delivery of time savings and convenience.
“From the customer’s standpoint, they’re looking for a hassle-free experience,” he says. “Not only does that help you get the lion’s share of the traditional customers, it starts to entice that non-traditional customer” to visit your clean, accessible, safe Laundromat.
- Demographics that increase consumer demand for laundry services.
“Our most key demographic, the renter market, we went from beginning of the recession with record vacancy rates to the end of the recession with record occupancy rates, and now record rents and record housing starts,” Wallace says.
It would be nice if the industry had no weaknesses, but that’s not reality. He identified a few:
- There remains a significant share of “inferior laundries” with outdated equipment, poor store conditions, low level of service, etc.
- Certain owners are satisfied with the status quo, which tends to inhibit innovation.
- The industry has exhibited an inability to sufficiently raise vend prices in correlation with increasing operational costs.
But some of these industry weaknesses can lead to opportunities for forward-thinking investors and business owners, Wallace says.
“Not to aim low, but even uttering the word ‘marketing’ will probably put you in the top 1% of your peers, let alone proactively deploying a marketing plan, let alone being really good at it.”
Wallace spoke of differentiation, setting your store apart from your competitors.
“(Customer desire for cleanliness) really hasn’t changed much in 25 years. … Larger capacities on the equipment side, I think that’s a significant point of differentiation today. That double-load machine that used to be the purview of only the Laundromats … is in the home environment now more than it ever was before, and it’s in the apartment environment.”
Plus, getting involved in your community further establishes your identity there, and utilizing payment systems that offer flexibility can be another feature unique among your competitors.
So, what are some of the threats facing vended laundries?
“The multi-housing laundry industry is a big business, folks,” Wallace says. “They have, conservatively, 70% of the market share … In other words, we’re living off of 20%, maybe 30% of those renter households. Most of those folks never leave their building to do laundry.”
Building laundry service contracts can be quite lucrative, he says, so when route operators vie for a fiercely contested contract, they may be willing to install brand-new equipment and/or even remodel the laundry room to land the deal.
“We don’t have to go running for the hills here, but I think we have to be aware of what’s happening with our primary competitor,” Wallace says.
Home laundry equipment is also becoming more advanced.
Increasing utilities cost is something that laundries will continue to face. “As long as you’re in the Laundromat business for another day, a week or decade, you’re going to have steadily higher water and sewer costs to contend with.”
As municipal water systems grow older and cities embark on costly infrastructure replacement projects that will lead to higher rates and impact fees, it’s more important than ever that store owners take active roles in attending any related meetings and voicing their opinions, Wallace says.
Understanding the strengths and weaknesses, the opportunities and threats, what will a vended laundry look like 10 years from now?
“It’s probably part of a small owner-operator chain, two to five stores,” Wallace says. “It’ll probably have some kind of payment system. You’ll be really good at digital marketing, making sure the people looking for you can find you. You probably have some big equipment in your store. … And you’ve got that technology leveraged … to make you a better operator.”
Editor’s Note: Tim Burke, editor of sister publication American Drycleaner, assisted in reporting this story.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].