{"id":3813,"date":"2015-01-26T11:47:37","date_gmt":"2015-01-26T17:47:37","guid":{"rendered":"http:\/\/bob-nieman\/2015\/01\/26\/the-x-factor"},"modified":"2019-01-28T18:03:55","modified_gmt":"2019-01-29T00:03:55","slug":"the-x-factor","status":"publish","type":"post","link":"https:\/\/planetlaundry.com\/the-x-factor\/","title":{"rendered":"The X Factor"},"content":{"rendered":"

\"detergent\"<\/em><\/p>\n

Originally posted – Dec 26, 2013 <\/em><\/p>\n

Detergent.<\/p>\n

Besides water, natural gas and electricity, it’s perhaps the hottest commodity at your self-service laundry.<\/p>\n

Whether you sell it in your vending machine or over the counter, or simply prefer to let your customers bring in their own, detergent \u2013 and other related laundry supplies \u2013 is a big part of your everyday business life.<\/p>\n

These products directly affect the final results customers get at your store \u2013 which directly impacts your bottom line.<\/p>\n

So, what’s the latest on this sometimes-forgotten (but crucial) X factor in your laundry business equation?<\/p>\n

“The detergent industry is a mature and highly competitive category with more than $7 billion in sales,” summed up Bill Schwaikert, president of First Preference Products, based in Lakeville, Conn. “The largest entity is reported to have almost a 60 percent share of the market \u2013 more than four times higher than the closest competitor.” <\/p>\n

Although category sales for the past five years have been “flat to modestly declining,” the major brands continue to look to innovation for further sales, Schwaikert added.<\/p>\n

“The overall detergent industry trends surround sustainability, saving time, simplicity and safety,” explained Brian Sansoni, vice president of communication and membership at the American Cleaning Institute, which represents the producers of household, industrial and institutional cleaning products. “Certainly, the unit dose \u2013 the laundry packet products \u2013 has really crystalized this trend. Whether it’s in the home or the laundromat, the laundry packets are probably one of the best inventions ever. It’s a lot easier to bring in a little packet than a whole jug of detergent.” <\/p>\n

Single-dose detergents and stain removers continue to gain in popularity, according to Mary Marlowe Leverette, editor of About.com’s Laundry category.<\/p>\n

“They are especially convenient for those who use laundromats,” she said. “Detergent and laundry product manufacturers will continue to reduce water content in products to reduce packaging and transportation costs. Powdered formulas of popular brands have already increased in price, due to the expense of transporting heavy shipments to retailers.<\/p>\n

“I predict that powdered formulas will disappear in many brands \u2013 and there will be continued improvement in formulas as we use more cold\/warm washes, as well as diversification for segmented markets.” <\/p>\n

Regarding the sale of detergent and other laundry products, the future is limited only by the technology laundry owners have to work with, according to Andy Wray of Sudsy Laundry Systems in Westminster, Calif.<\/p>\n

“Owners are moving toward vending larger products, multi-pricing availability, more money\/product controls on machines, and additional products entering the vending space,” Wray explained. “Meanwhile, laundry customers are looking to save time as well as money, and having different brands, sizes or price points in product vending is going to be the key moving forward.” <\/p>\n


\nSelling Soap
\n<\/strong><\/p>\n

On the vending side, detergent sales in self-service laundries continue to be dominated by one major brand, Tide.<\/p>\n

“Increasingly, due to limitations in vending machine space, store owners are replacing some other detergent brands with a more diverse line of products, such as detergent additives and special-purpose products,” Schwaikert said. “The combination of lower cost and increased sell-through provides more profitability for the valued machine space.” <\/p>\n

In addition, recent trends indicate a move toward larger vending machines, newer upgraded equipment with multi-vended price capabilities and different types of venders that can carry wider ranges of products to try to cover their laundry customers’ needs.<\/p>\n

According to Wray, today’s vended packaging is brighter with more multi-lingual designs that ever before.<\/p>\n

“We’re seeing the 2X, 3X and 4X products being distributed in clever multi-use and reusable bottled packaging,” Wray said.<\/p>\n

Bill Mark of Norton Supply, based in Providence, R.I., is seeing more focus on high-efficiency formulas on the vending side, as well as more diversified offerings within the same number of vending machine slots.<\/p>\n

As for over-the-counter soap sales, those are expanding in most markets, whether represented as single-use or multi-use sized packaging.<\/p>\n

“There is certainly the trend of attended stores selling more over-the-counter products,” said Minnesota laundry owner Jeff Gardner, who writes PlanetLaundry’s monthly “The Laundry Doctor” column. “Because of today’s large-capacity washers, the single packets don’t satisfy what many customers need to do their laundry.” <\/p>\n

If customers are going to need use two or three packets in a 60-pound washer, Gardner reasoned, why not sell them a small container of soap over the counter, from which they can clean 12 to 14 loads.<\/p>\n

“With over-the-counter sales, there is room for our industry to come down with 2X products, because they can make them smaller and more manageable,” Mark explained. “You can make them fit so many wash loads in a small 10-ounce bottle, which for us and our customers makes a lot of sense, because the typical end-user who walks into a laundromat doesn’t need a 50-load jug of detergent.” <\/p>\n

Over-the-counter products are offering more choices, sizes and brands, Wray pointed out.<\/p>\n

“We’re also seeing more and more ethnic products being introduced to capture regional markets,” he explained. “Tapping into the local customers wants and getting it to them.” <\/p>\n

“OTC sales represent an additional revenue stream for the laundromat owner,” Schwaikert noted. “No investment in vending equipment is needed, and wages are usually already built in for the attendant, making this an attractive opportunity.<\/p>\n

“During the last several years, the most noteworthy laundry product has been the single-use dissolving pouch,” he added. “Although in existence for some time, this technology received a substantial boost through the focus of the major brands. However, these products have not achieved the market share originally projected.” <\/p>\n

Although many manufacturers hoped that single-dose sales would boost profits, detergent sales have remained relatively flat for the last several quarters, Marlowe Leverette agreed.<\/p>\n

“During difficult economic times, consumers turn to less-expensive brands or use fewer products as their income is diverted to other needs like food and shelter,” she said.<\/p>\n

Schwaikert also warned that laundry owners are now increasingly in competition with supermarkets, dollar stores, drug stores, convenience outlets and mass merchandisers for detergent and laundry supply sales.<\/p>\n

“The number of retail sources has grown exponentially,” he explained. “Dollar stores are particularly relevant, as they are frequently located in close proximity to laundromats and represent the most rapidly expanding channel with well over 30,000 stores among the top three chains. These chains continue their expansion by many hundreds of stores per year.” <\/p>\n

Detergent pricing is reasonably stable; however, retail promotions are aggressively used. Therefore, laundry owners need to be mindful that dollar stores and mass merchandisers often use laundry brands as low-profit incentives to generate traffic to their stores.<\/p>\n

“Grocery chains often operate with higher profit margins, punctuated by vendor-sponsored promotions as buy one, get one free,” Schwaikert said. “Laundromats need to carefully evaluate their product selection to meet the competitive challenge by retail sources.” <\/p>\n

Convenience of purchase is what the laundromat offers, but the value proposition cannot be ignored, according to Schwaikert.<\/p>\n

“There has to be a balance between convenience and value for the laundromat patron to make an on-site purchase,” he noted. “The price and product offered by the laundromat must be competitive and this can be challenge for the store owner.” <\/p>\n

“Larger packaging and multi-use concentrated products have pushed vend prices higher at the store level,” Wray added. “Also, newer venders can allow for multiple-price points on similar-sized products. And, now that card readers are more widely used in the self-service laundry business, owners can vend products like in a store \u2013 in penny or dime increments \u2013 but through a vending machine.” <\/p>\n

“Vend pricing is very regional,” Mark said. “We have owners in the greater New York area who are still charging 50 cents a vend, but I think more and more are vending soap for $1. We’ve broken through that 75-cent barrier. It’s like the slice of pizza mentality \u2013 a slice isn’t $1 anymore, it’s $2.50. Detergent vending is going up, and it should continue to stay that way.” <\/p>\n

From a sales standpoint, laundry owners should view detergent vending as offering their customers an option, rather than expecting it to be a booming profit center.<\/p>\n

“Owners have to realize that they are there to make their money on their washers and dryers,” Wray suggested.<\/p>\n

Then again, because detergent and other products are indeed convenience items for the laundry customer, owners shouldn’t be afraid to price them to make a profit.<\/p>\n

“Your laundry products aren’t for the customer who comes in every week,” Gardner said. “Those people are going to bring their detergent to the store. Your vending and OTC sales are for people who don’t want to get back into their cars, drive to get something and then come back. Those people are paying for the convenience.<\/p>\n

“For a long time, owners weren’t willing to go to $1,” he added. “I think they’re consistently getting the $1 pricing now. But don’t be afraid to go to $1.25 or higher.” <\/p>\n

Stocking the Essentials<\/p>\n

So, what essential detergent and laundry supply items should all owners have on hand for their walk-in customers \u2013 either in their vending machines or for sale over the counter?<\/p>\n

First of all, laundry owners need to know what products their customer base actually uses. Close observation \u2013 and even a peek inside your trash cans \u2013 is a valuable source of information.<\/p>\n

Next, visit the retail sources in close proximity to your store to see what type of selection and pricing they are offering. After all, these outlets are often the sources of products carried in by your customers. Also, consult your supplies distributors, as they are valuable resources for information and product supply.<\/p>\n

For Marlowe Leverette, here are the basics for producing clean laundry:<\/p>\n