Whether Selecting a New Laundry Site or Keeping an Established Store Thriving, Industry Experts Reveal the Data You Need to Know
The age-old adage for retail success – which most certainly includes vended laundry businesses – has long and invariably been, “Location, Location, Location.”
However, perhaps that axiom should really be: “Demographics, Demographics, Demographics.” After all, without solid demographic data, finding a winning business location would be an even less exact science than it already is.
“While many people frequent laundromats to occasionally use these services because they want to wash larger items or just get the job done more quickly, the successful laundromat owner knows that they need to cater to the people who need to do their laundry outside of their home or living community,” said Alex Kane of Equipment Marketers, headquartered in Cherry Hill, N.J. “One of the best ways of identifying these potential clients is to examine demographic reports.”
Demographic information is a great indicator of the trends in a given area. Is the area undergoing an economic change, either via economic growth or an economic downturn? Is the area undergoing gentrification? What might this mean to your business? Is there increased home ownership in the area, or more apartment complexes being built? The data presented in demographics can help you to answer these questions and then apply that information to your business model.
“Your business model can remain fluid, changing as it needs to in order to adapt to current trends,” Kane explained. “Also, demographics can help to provide information on how you should be interacting with your customers. The current world is a diverse place, and you must understand your customers and their needs in order to maintain a viable business.”
For example, is there a large population of a specific ethnicity within your market that embraces specific cultural habits or requires language considerations? How can you capture these potential customers and provide a welcoming environment? Are there particular laundry products that might be popular with these consumers? Does your equipment perhaps need to support different languages?
“It’s important to know two things about your area,” explained Bryan Maxwell of Western State Design in Hayward, Calif. “What are the demographics of the area now, and are those demographics changing? Try your best to determine what the neighborhood will look like in five to 10 years, and evaluate the demographics the same way you would evaluate the long-term impact of your lease or pre-approved utility increases.
“Gentrification is probably the greatest demographic shift impacting the industry in urban areas today,” he continued. “Historically low-income areas with large rental populations are evolving into trendy neighborhoods with high-tech, high-income millennials moving in. And, obviously, their needs will not be the same.”
Crunching the Numbers
To Kane, housing units are the most important demographic statistic to examine. Those who are able to afford a home most likely have a washer and dryer in that home, he noted. Newer construction also is likely to feature in-unit washers and dryers. As such, they are less dependent on vended laundries to do their wash on a daily basis. By contrast, an area with more apartment dwellers or a large renter population most likely will have a much higher demand for laundry services on an ongoing basis.
Clearly, households will have varying laundry needs, depending on the number of people within those households and the ages of the household members.
“Examining households with children provides a good picture of the volume of laundry created by each household, with these households generating a lot more laundry than, for instance, a senior-aged customer,” Kane noted. “You also may have a large immigrant population, which traditionally may have a large number of family members living in a single home. In these cases, we often find that those housing units don’t have laundry equipment, and the residents will need to use outside laundry facilities.
“Another important consideration to examine is the income level in your area,” he added. “If the population doesn’t earn substantial income levels, there is a possibility that, even if they are in a detached home, they don’t have laundry facilities within that home – or their laundry equipment is compact or not very good or fast.”
Also, the age of the population will impact your laundry business. Seniors are not as likely to use a laundromat location, due to limited transportation options and the simple fact that they don’t create as much dirty laundry as younger people.
“Reviewing demographics can help a store owner determine the proper equipment mix, as well as what kind of vibe or ambiance a store should have,” explained Brad Steinberg of PWS Inc., based in South Gate, Calif.
“Opening a vended laundry and creating an environment in which the public feels comfortable staying in while their laundry is being washed and dried is an important aspect of this business,” Kane said. “Making sure that you are serving the community is a key to achieving this goal. To understand the community, you need to know about that community. Although nothing beats actually spending time in your store and connecting with your customers, demographics are a tool for helping you better understand the community. The numbers can provide data to clue you into the area’s cultural background. Combining this information with other research will help your laundry business become an integral part of the community it serves.”
“Running a demographic report and analyzing it properly can help existing store owners figure out their market share,” noted Bob Eisenberg of Fowler Laundry Solutions in Union, N.J. “Doing so periodically will help owners discover if they’re gaining or losing market share. They also can determine if the market is growing or shrinking – and, if it’s growing, in what manner it’s growing.”
Of course, it’s important to understand that demographics can’t provide the complete picture or 100 percent of the data a laundry operator will need to know – but the numbers will reveal strong indicators as to the location population.
“There is still a lot of legwork to do once you’ve examined the demographics,” Kane pointed out. “It would be good to know what apartment complexes have in-unit laundry equipment. Is that laundry equipment full-sized or compact? Are there central laundry rooms, and what condition are they in? Do the renters have to go outside to get into the laundry room? It would be helpful to know how much older construction exists in the area.”
“Not all rentals are created equal,” Maxwell agreed. “Neighborhoods where most of the apartments were built in the past decade are the size of city blocks and may have their own washers and dryers, offering less business potential than the same number of rental units built in the 1960s, which were mainly smaller complexes of six to eight units each, with little or no laundry facilities.”
All in all, the more information you can gather the better prepared you will be to service your potential customer base.
The Stats That Matter
This month, we reached out to a wide cross-section of successful laundry owners to discover the data – demographic and otherwise – that they use to keep their various laundry businesses on track and profitable:
Spin City Laundry Co.
We just opened our third laundry in September, and we relied on the demographic reports that were obtained by our distributor. We looked at areas that had low percentages of home ownership, households in excess of 3.5 family members, and an annual income that was at or below 25 percent over the poverty level.
But, more than that, we also looked at overall traffic counts, high-density housing and street visibility.
We’re planning to open our fourth store later this year and used similar criteria for that site as well.
In order of importance to me, I look at the total number of households, the number of renter-occupied households from one to three miles (amoeba-shaped, not radius), family size, ethnicity and household income.
I want the major portion of revenue to come from self-service customers, as this requires minimal labor on my part. However, since my stores are always fully attended and I emphasize my wash-dry-fold component, I want to know that those customers are out there as well.
What is not shown in a demographic study are the number of local retail businesses, schools, hospitals, etc. surrounding your site, which draw employees from outside of your immediate population. These people also are important in building a drop-off service.
Going beyond three miles, is there potential to establish a pickup and delivery service? How has the community been changing – percentage-wise – over the years and in what direction is it headed? If my self-service customers will be dwindling over the next five years, I want to know that now. Maybe I will add a drop-off drycleaning component to my business.
I’m very interested in the quality of my staff to put out a quality product. I always try to hire individuals from the neighborhood, because they tend to draw friends, school contacts and family members to my store.
A stark example of shifting demographics is a 5,000-square-foot store that I watched open some years ago. It thrived in a low-income, heavily Hispanic, family-oriented neighborhood – perfect for a huge coin laundry with some wash-dry-fold. However, blocks of rental units recently have been demolished, and a large portion of the shopping center has been sold and will be dismantled to make way for something new. This is a permanent, negative shift in demographics, and the self-service business there is slowly dying.
BBM Coin Laundry
The level of family income is the greatest demographic statistic I look at for both of my laundromats. Also, renters obviously tend to prefer to use a self-service laundry facility.
The other statistic I review is the type of housing market in which I’m located. I have discovered that renters search for housing that meets their need for bedrooms, bathrooms and an affordable monthly rent. However, most renters aren’t overly concerned if their housing features a washer and dryer hookup. They would rather use a self-service laundry, compared to owning a residential washer and dryer. Washers and dryers are additional items that have to be moved and that increase utility costs for renters.
Wash It Kwik
I look for a 60/40 homeowner-to-renter mix. That’s ideal for me. It provides me with a piece of wash-dry-fold business, as well as self-service business.
I prefer dense areas without any “holes” – such as parks, golf courses or other large tracts of land with no hope of future development. I also look for a dollar stores, pawn shops, check-cashing locations, large drug stores and grocery store in close proximity. Any of those businesses nearby are good signs that you may have found a winner.
My laundry business has been helped by a 200-acre business development less than a mile from the store. It features a Walmart, a Sam’ Club and all sorts of other retail, which brings in tons of cars and has helped our visibility.
Bruce E. Rocha, Sr.
I look at the wealth of the community. With our wash-dry-fold service in mind, we try to present an upscale facility that appeals to wealthier customers. We offer the opportunity for customers to save time. Those who have higher incomes tend to value their time more and worry less about the cost of a professional laundry service.
For our business model, we also look at the availability of seasonal residents. These customers value their time at their vacation homes and are appreciative of our service – because it enables them to spend their time on vacation activities, rather than doing laundry.
We’ve made the decision that the “product” we sell has less to do with laundry, and more to do with service. In today’s fast-paced society, quality professional service is what the public treasurers most.
In addition, we added a drop-off drycleaning service to our business last year. Our drycleaning partner picks up and drops off every day. And the benefit to us – beyond a commission on the drycleaning business – has been an influx of new wash-dry-fold customers.
Woodward Coin Laundry
I pay a lot of attention to total individuals within a prescribed trade area radius, the amount of households, the percentage of renter-occupied households, and the per capita income. These are important variables to help determine the potential amount of business a site will likely generate.
The per capita income must fit certain parameters so that I know the people within my target area have sufficient income to own a vehicle with which to get to my laundry. Additionally, I want to examine the ethnic and cultural mix so that I can install the correct equipment to meet the needs of various cultural habits and preferences.
I also like to review the age distribution within the marketplace. Typically, the more diversified the better, because different age groups use vended laundries for different reasons. I don’t want to put all of my eggs in one basket.
Beyond site selection, demographic information can be used primarily to help determine the nature and quantity of machines to use at the specific site.
The Wash House
The most important statistic, which may easily be overlooked or discounted as a given, is the total population of a geographic area you expect your company to serve. No matter what desired percentages you predetermine as being favorable to your business’s success (percentage who are renters, female head of households with children, etc.), without a solid number of potential customers provided by the total population of the specified area, you may incorrectly forecast revenues based on percentages rather than being based on the hard number of the total population. This is the foundational information you will build all of your analysis upon.
Once you have an idea of the total number of residents of your potential market and the current competitive landscape for that market, then you can begin to extract the detailed demographic information that corresponds to a successful laundromat. This information may include: ethnicity and diversity of your market, the total number of households, how many residents on average those households contain, the housing mix – single-family vs. multi-family units, the percentage of households that are rented, and the median rent. Who is your ideal customer? You must know the answer to this question. Picture that person in your mind and search for the demographic information that shows you where that person is most prevalent. Without this person identified and pictured, the demographic information you possess is of little value.
Your overall marketing strategy – which you should have or should be creating – will be shaped by the demographics of your market. Reaching potential customers for the new store owner or generating additional business for the existing store can be achieved by understanding your market better through demographic information and analysis. If your market is older, retired individuals in south Florida, then you will build your marketing campaign around that information to reach those individuals. If your market is large, lower-income households in a working-class neighborhood of a large urban area, your marketing plan will look much different. Demographics are dynamic. Don’t be afraid to generate additional demographic reports throughout the life of your business, especially if you are in a growing area and the demographic makeup of the area is changing. Detroit remains the largest city in Michigan, but its population has shrunk by nearly 300,000 people in the last 20 years. Such changes should have an impact on your business decision-making, as well as your long- and short-term strategy.
The Wash House operates in several diverse parts of North Carolina. Consistent throughout all of our markets has been the increase in the Hispanic population. This has lead us to ensure that nearly everything we communicate to our customer base is in both Spanish and English. Televisions in our stores are tuned to a mix of English- and Spanish-speaking programming. Many of our employees are bilingual to ensure that we can assist each customer.
In terms of overall growth, the eastern-most portion of our market has not seen much change over the last 25 years. In the larger markets we serve, such as the Raleigh-Durham area and the Fayetteville/Fort Bragg area, we have seen tremendous growth in the last 25 years, with both areas doubling their populations during that timeframe.
It is also important to look back after several years in business to discover what impact demographic factors – either positive or negative – have had on the success of your business. Would you open your store knowing what you know now? If you are opening a new store, what do the current trends tell you about the future of the area you are considering? Place yourself into the future and visualize what the demographics of the area look like five, 10 and even 20 years down the road. Demographics can help to answer important questions for existing store owners when looking back at the impact those factors have had on the business. And they can help lead the way for new store owners or those looking to expand their footprint with additional locations.
Whether buying or leasing your next location, you want to ensure that you have a successful future in the space you choose to open for business.