How to Respond When a New Laundry Business Enters Your Market

Bill Gates has carved into his desk a quote by Andy Grove, one of the founders of Intel.

It states: “Success breeds complacency… complacency breeds failure.”

This may sound strange or surprising, but there are many examples of this in our business – illustrating that success is one of the biggest contributors to the failure of an established laundromat when a new, larger, more modern store opens nearby.

Savvy and professional new investors are developing and opening much larger vended laundries in the middle of mature areas, where smaller, successful stores have been doing business for years. Of course, it makes sense – go where the customers already are.

Your laundromat has been doing well for so long, and by all measurements, your business is a success. However, as we all know, “good is the enemy of great” and when the competition moves in you will need to be great.

Like so many of us in this business, perhaps you have been slow to replace those old washers and dryers with new, state-of-the art machines over the years. It always seemed to be cheaper to just keep fixing them.

You also probably haven’t thought very much about an important statistic that you no doubt learned a long time ago. Your neighborhood’s renter population changes every seven years. And, as you think back, you can’t seem to remember the last time you did any sort of marketing or advertising within your community.

At this moment, a quote by Benjamin Franklin seems quite poignant: “Love your enemies for they tell you your faults.”

To many of us a very natural initial reaction to new competition would be to panic and see your life pass before you. Then, after settling down a bit, you begin to strategize in your head…

“I’ll drop all of my vend prices! I’ll offer free dry to my wash customers! I’ll give away free soap… a new flat-screen TV… an all-expenses-paid trip to Bora Bora…”

There are differing schools of thought on the subject of competition with several approaches you can consider. Some very experienced laundry owners will tell us to lower our vend prices or offer free dry for several months – assuming the new owner’s rent is high, and he or she probably has a huge monthly equipment note. This new owner can’t possibly compete on vend price for very long, one would think.

On the other hand, many veteran operators feel that you may be trapping yourself with this strategy, becoming the guy who sells only price and not so much quality.

In the end, I believe the reality of this strategy is that you would slowly lose your existing self-service customer base over time, without being able to replace them with new customers. Couple that with the unrelenting increases in the cost of doing business, and you may be painting yourself into a corner, with the inevitable selling or closing of your business as your only remaining option.

It’s possible you can maintain a number of your regular self-service customers and especially your wash-dry-fold clients, if they like you and your friendly attendants. These are important strengths that the new owner has yet to cultivate. Your customers will appreciate the reduced vend prices each week and remain loyal even though the new store is offering spaciousness, new technology and much larger machines. However, over time, it still may not be enough – especially when you inevitably have to return to your normal pricing, while your store remains in the Stone Age in terms of equipment, amenities and overall vibe.

Drop the Gloves

With that said, I’m solidly in the camp that espouses taking off the gloves and getting serious. Keep your vend prices exactly the same, while creating a store that’s better than ever. You are now in a battle, not of your own choosing – and you must start thinking like you are opening a brand new laundry business for the first time.

As soon as you discover a new laundromat “Coming Soon” or “Now Open,” I recommend you begin telling all of your customers about it and asking them personally or through a written survey what improvements they would like to see in your store. Get in front of it and show no fear.

After all, your customers are going to find out about the new store anyway. I believe it’s better that the news comes from you first. You will be amazed at some of the valuable insights and suggestions your customers will come up with. You’ll be wondering why they never told you that before. (It’s probably because you never asked before.)

Get in touch with your local distributors – except the one building the new store across the street from you – and start pricing the new washers and dryers being manufactured today, along with all of the ancillary equipment and available financing. Take note of the newest technology, payment options and other bells and whistles now on the market.

Next, be certain that your laundromat’s infrastructure is solid. And, if at all possible, retool your business with some new, larger machines. It has never been beneath me to send a “secret shopper” into a new laundry to see what it’s got in there and what the owners are offering the neighborhood.

If you are currently providing a wash-dry-fold service, turn it into a first-class operation and take your quality to the next level. Also, seriously consider starting a pickup and delivery component, possibly using a third-party to pick up and drop off while you process the laundry.

I strongly recommend that you get out and into your local retail community to begin signing up commercial accounts each week. You should be looking for small businesses that generate some type of laundry on a regular – and there are plenty of them right near you. Also, visit the schools in your area, and leave flyers for all of the teachers and administrators, offering them one free wash as a way of re-introducing your laundry business to the community.

An area where you’ll definitely have a leg up on your new competitor will be all of the clothes left at your store by customers and never claimed. If you’re already donating these items to churches, schools and other organizations that distribute clothing to those less fortunate, continue to do so.

If you’ve never donated clothing before, it’s time to start. I’ve typically waited about three weeks before the unclaimed clothes were then rewashed, dried, folded and bagged for donation. Towels, washcloths and rags went to animal shelters. Of course, you also can request donated clothes from your regular customers, with your laundromat serving as a drop-off hub for the entire neighborhood.

Another great way to maintain strong community ties is through the LaundryCares Foundation (www.laundrycares.org). Perhaps consider holding a free laundry event at your store. Or, if you can make some extra room in your laundromat, install one of LaundryCares’ new Read, Play & Learn spaces, which feature books and other learning materials for children. Your customers’ kids can read and be otherwise engaged in literacy activities, while the family laundry is being washed, dried and folded. These types of community activities and offerings go a long way toward fending off the competition. After all, doing good for others is always good for your business.

Of course, consider new light fixtures, new flooring, fresh paint on the walls, and enhanced signage. A large portion of the cosmetic improvements won’t break the bank, but they’ll make a big impression with your customers.

You’ll also want to use every form of marketing and advertising available to you (digital and otherwise) to help promote your laundromat’s new features and improvements to the neighborhood.

Clearly, you’ll have to spend some money. However, if you don’t, that cash may be going down the street to your new competitor in the form of lost customers anyway.

It will be hard work, and there is no cookie-cutter solution for this challenge. But you have to do everything you can to compete and survive. As you go about the business of preparing to take on your new competition, be mindful of something Will Rogers once said:

”Even if you’re on the right track, you’ll get run over if you just sit there.”

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