Originally posted – Oct issue/2012

Alliance Laundry Systems Helps Grow the Self-Service Laundry Business on a Global Level

(This is the first in a series of articles that will focus on the international scope of the self-service laundry business, while examining the steps some of today’s leading manufacturers are taking to grow the industry beyond U.S. borders.)

The history of self-service laundries around the world has been varied and based strongly on individual markets – to say the least.

For example, coin laundries have existed in markets such as England and Germany for many years, while markets such as China and Portugal still have very few laundries today. You will not find coin laundries in much of Southeast Asia, but you’ll find many in Australia. And very few exist in Africa, except for South Africa. You’ll find laundries in the United Arab Emirates, but none in Saudi Arabia, and only a handful in India. Of course, many coin laundries exist throughout Latin America.

Most of the time where markets don’t have laundries, it is due to either low-cost labor being available or for cultural reasons. For instance, in Ghana, labor historically has been so inexpensive that laundry is done by hand by laborers. As for cultural reasons, those vary – in Spain, for instance, it was long considered uncouth to wash one’s “delicates” in public.

With approximately 30 percent of its overall business coming from sales outside of North America, Alliance Laundry Systems, headquartered in Ripon, Wis., clearly understands – and has accepted – the many challenges of doing business on a global level.

“We’re developing products and placing more people in the field internationally,” said Michael Schoeb, president and CEO of Alliance Laundry Systems. “Over the last three years or so, we’ve really been pushing that more aggressively. We see huge opportunities for growth.”

The International Marketplace

Alliance has organized the global marketplace into four distinct regions: (1) Europe; (2) the Asian Pacific region, which includes China, Southeast Asia, Japan and Australia; (3) the Middle East, Africa and India; and (4) Latin America.

“There are some established laundromat marketplaces in the U.K., Japan, Australia and France,” explained Rick Pyle, vice president of international sales for Alliance Laundry Systems. “Those are marketplaces that would not rival North America, but in terms of laundromat presence and a mature marketplace, those would be some that are further along the development path. There also is a large group of countries and regions that have only dabbled in it.

“And, then, there is a group of countries that doesn’t even know what the word ‘laundromat’ means. However, the demographics and population growth are strong there – all of the things that make laundromats successful here in North America. Those demographics are attractive, so it’s only a matter of time before laundromats develop, but currently there is nothing in place.”

Particularly in these emerging markets, Alliance has found more dual-income families, incomes rising rapidly and urbanization that is generally higher in the U.S.

“There are a lot of factors that are very favorable to the laundromat business,” Schoeb said. “Over time, there is no doubt in our minds that self-service laundries will be just as significant there as they are here in the United States.

“The U.S. market is about one-third OPL, one-third multi-housing laundries and one-third laundromats,” he continued. “The rest of the world doesn’t look that way today, but it will. There are new markets emerging, and we’re confident in terms of our value proposition to those distributors and those store owners, as well as to the end users. We’re not just selling equipment; we’re selling a business, and we have many success stories across the world and people who are doing quite well for themselves because they understood the opportunity.”

As a general rule, laundries overseas are typically much smaller in size than they are in the U.S.

“You will see a smaller footprint,” Schoeb noted. “Also, in general, the wash-dry-fold model is a bigger piece of the business, versus self-service. Those two differences are fairly common.”

Many international laundries offer no amenities other than seating areas, folding tables, change machines and a television. However, others, in more sophisticated markets, might offer Internet kiosks, and vending machines for cold and hot drinks and even snacks. And a few offer more comfortable seating and a place for children to play.

“It’s all over the board,” Pyle said. “It varies by region.”

Although the stores may vary from country to country, the laundry owners share one thing in common – an entrepreneurial spirit.

“You’ve got to have that,” Schoeb said. “You’ve got to be willing to take some calculated risks.”

Facing the Challenges

One of the most common challenges prospective laundry owners and, in turn, Alliance face in the international marketplace has been access to financing for start-up capital.

“It’s a different profile of investor internationally, simply because the ability to secure financing is generally not there,” Schoeb explained. “These investors tend to be better capitalized. We’ve done more than 16,000 stores in North America, and we financed them. However, the ability to do that in another country is much more limited and more challenging.”

Natural resources and utilities also remain obstacles in many emerging laundry markets around the globe.

“Water quality and availability can be at different levels than in the U.S., as can electrical service and natural gas quality.” Schoeb pointed out. “Particularly in these emerging economies, if we can improve consumption and efficiency in terms of water and energy, there is an advantage for the laundromat segment, because it’s such a big part of an owners’ costs.

Of course, cultural differences continue to be stumbling blocks to industry growth in several countries and regions. However, headway is being made.

Pyle noted the example of Italy, where the concept of a laundromat wasn’t even culturally acceptable just 10 or 20 years ago.

“Beyond trying to propose or promote a business opportunity, there are cultural barriers,” he explained. “Fortunately, we have distribution partners there who understood the concept, and they did the heavy lifting to change the culture. For instance, the early stores didn’t have any dryers. The mindset was: ‘Why would I pay for that, if I can just hang the clothes outside?’ So, it’s been small turns of the screw, and now we have a more mature marketplace, where the laundromat concept is more accepted. And there are a number of countries going through that cycle as we speak.”

Overall, progress has been made in spreading the self-service laundry concept into many international markets. Although the stores are typically smaller, they are very clean, offer multiple services and are growing in popularity.

Currently, Alliance Laundry Systems – which markets its Speed Queen, IPSO and Huebsch brands to laundromats outside of North America – operates in more than 100 countries.

“We believe we have top-tier distribution in just about every market,” Schoeb said. “We’re really only as good as those distribution partners who are critical to our success.”

“Having those distributors in place is crucial,” Pyle concurred. “But so is having Alliance in place on the ground in those countries, whether it’s a salesperson dedicated to a certain country or a training specialist who might cover an entire region. To think that we can do that from Ripon, Wis., in the central time zone from 8:00 a.m. to 5:00 p.m. every day doesn’t make sense. That presence is huge.

“You can’t just take what works in North America and put that exact model into Country A, B or C. That doesn’t work. You have to actually be in that country. Otherwise, you are just an exporter of equipment.”

#PlanetLaundry #Public #FeaturedArticle #BusinessManagement #Article

Share This