CHICAGO — Mention the word “competition” to operators, and you will get a wide range of responses. It seems that competition breeds both panic and defiance.
What does a good scouting report on the competition entail? What effect, if any, should the competition have on your pricing? How much business can you take from a competitor?
We asked several distributors to tackle these, and other, questions regarding the competitive world of self-service laundries.
FORGET FREE DRY
Whether you are a laundry veteran or rookie, you shouldn’t be surprised if a competitor decides to move in right next door, says Dan Tipps, Tipps Service Co., Lubbock, Tex. “I don’t care for this practice. I try to find a spot where a store is going out of business for some reason, or one with ideal demographics,” Tipps says.
How close is too close? Tipps says any laundry that opens a quarter-mile away or closer is a major cause for concern. “Plus, there are a lot of small towns, and most can’t take many stores.”
In Texas, pricing is a major concern, especially in certain markets, Tipps believes. “In my area, I would rank pricing’s importance pretty close to an 8 (on a 1-10 scale). Some people are tight and watch every quarter. To counter pricing concerns, it helps to have a better dryer, one that’s faster. The recession has put more glare on pricing because so many people are out of work.”
When scouting the competition, look at the general condition of the store, the lighting, the number of working machines and whether the store is attended, he suggests.
Marketing should never be ignored, especially if a new competitor is impacting the market, he says. “There are simple things you can do to win over customers, such as giving away free Coke and candy. Some are offering free dry, but I don’t support this. If you do free dry for a time, people will expect it all the time.”
Having a friendly attendant is one way to keep customers coming to a poor store, he adds.
PATIENCE AND CONSISTENCY
“Competition weighs on a decision to open a new store, but it’s not crucial,” says Michael Finkelstein, Associated Service Corp., Danville, Va. “A couple of laundries a couple of miles away is not the end of the world. However, I have advised against opening a store because of competition. Sometimes a town’s population just can’t support more than what is currently open.”
In rural areas, people may drive five or 10 miles to get to a store, he says. “In a major urban area, having a store a block or two away may not be a big deal. I have a store with a competitor in the same shopping center as me!”
Store quality impacts the competition. “If the competition is an unattended, dingy store and you’re going to put in a bigger, better store, you shouldn’t be discouraged by the competition because you are going to appeal to a different clientele who want something new for the neighborhood. Some people won’t mind paying an extra quarter in this case.”
The importance of pricing at competing laundries varies by market. “In some areas with bigger and better stores, an owner may counter with a bare-bones operation and lower pricing; in other areas, a fully attended store can charge more than a quarter for comparable machines. Some owners may counter with free drying. I won’t do this. I make my price every-day fair. My dryers may be a quarter vs. free, but the competitor’s washers may cost more than mine.” In the end, customers weigh pricing with other factors, such as equipment quality and store cleanliness, he adds.
When scouting a competitor, focus on the size of the store, equipment type, equipment brand, whether it is attended, cleanliness, lighting, and security, he says. More specifically, look at the equipment, and think about what the area needs, and what was present in the store, he adds. “If you put in an 80-pound washer in a store with older people or singles, it’s probably not going to do well with those folks. You may find that an area needs more top loaders. Then you have to decide how many top loaders are needed.”
If a competitor is starting to cut into your profits, common things to check include your pricing, how many machines are out of order, and whether your rent might be too high, he says. It also doesn’t hurt to have your distributor check out your store.
If you market, don’t mention the competition, he says. “Emphasize your positives, what you offer. Don’t slam the other guy. If you have the biggest machines in town, simply say it without mentioning the other stores.” Also, don’t be fooled by a competitor’s special offers, he adds. “If someone wants to have a $1 coupon for a top-load wash, that’s their business. That store may only have one working top loader.”
When trying to win over customers, remember that people do “trade” stories from time to time, he says. “Word-of-mouth advertising really helps.” People will ask friends why they aren’t using a better store. New signage or even some type of banner also helps attract customers, he adds.
“The basic approach to winning customers is to be consistent. People will get fed up with stores that have half of the machines out. Even if you do a remodel, the rule of thumb is that it takes about six months for you to see if business has picked up. Patience is required.”
Click here to read Part 1 of this story.