By Bob Nieman | Nov 07, 2011
Who is your self-service laundry business’ leading competitor?
Is it that new 6,000-square-foot mega-laundry complex in the strip mall less than a mile from your store? The one that’s open 24 hours and has attendants who actually smile?
Perhaps it’s that smaller, well-established laundromat just down the road that has begun to offer free dry in a last-ditch attempt to lure your customers away?
Or what about that guy who just added free WiFi and drop-off drycleaning, and gives away doughnuts to seniors on Tuesdays and Thursdays? Is he your biggest threat?
Think again. Your stiffest competition may be coming from that nearby multi-unit apartment building, which should be supplying you with a steady stream of laundry-dirtying customers.
In fact, the apartment/rental housing laundry industry simultaneously presents one of the greatest threats to many self-service laundries’ customer bases, while also offering one of the best opportunities for laundry owners to grow their businesses.
The target demographics for coin laundries and apartment laundry rooms are identical. Yet, according to Coin Laundry Association statistics, only 20 percent to 30 percent of renters currently utilize self-service laundries. This is despite the fact that, according to the CLA’s most recent “Laundry Habits Survey,” 67 percent of renters live within a mile of the nearest laundromat, and nearly 50 percent have a store within six blocks.
To be sure, today’s multi-housing laundry facilities aren’t your father’s dingy apartment laundry rooms anymore. The operators are becoming increasingly more professional, and the equipment, in many cases, is top-notch. So, here’s a look at a competitor – and a potential customer source – you can’t afford to overlook.
Industry Snapshot: Rental Housing Marketing
Even during the home-buying boom, the share of U.S. households living in rental housing never fell below 30 percent, according to “America's Rental Housing: Meeting Challenges, Building on Opportunities,” a report on the state of the rental housing industry from Harvard University’s Joint Center for Housing Studies.
The study includes extensive data on the apartment industry in the key areas of market conditions, renter demographics and the rental housing stock. Among the report’s major findings:
• Rental housing serves a large and diverse population of nearly 39 million U.S. households.
• The number of renter households grew by almost four million between 2005 and 2010.
• Population trends should lift the number of renter households by more than 3.6 million between 2010 and 2020.
• Renters cover the age spectrum. While younger groups are much more likely to rent their housing, more heads of renter households are between the ages of 35 and 64 (46 percent) than under 35 (41 percent).
• Single-person households make up nearly two out of every five renters. The rest of the renter population is fairly equally divided among married couples with and without children, single-parent households, and other related and unrelated groups of people.
• Minority households contributed 81 percent of the renter growth from 2001 to 2010. Hispanics accounted for 39 percent and African-Americans for 27 percent of the increase. Over the last decade, the minority share of renters rose from 39 percent to 45 percent.
• The overall vacancy rate hit 10.7 percent at the end of 2009, up from 9.6 percent at the end of 2007.
A closer look at the apartment industry shows that conditions in the rental and owner markets have begun to diverge, according to the just-released State of the Nation’s Housing 2011 report, also from Harvard’s Joint Center for Housing Studies. While the ownership market continues to struggle with falling prices and high vacancy rates, the rental market is experiencing a lift in rents and property values.
And, while estimates vary, the Census Bureau’s Housing Vacancy Survey indicates that the number of renters swelled by 3.9 million from 2004 to 2010. Meanwhile, the national homeownership rate dipped below 67 percent in 2010, down from 69 percent in 2004.
Of course, a major, long-term trend in apartment, condominium and retirement housing has been for builders to include washer/dryer hookups inside each unit. While this may be convenient for the tenant, it has potentially adverse effects for coin laundries.
Recently, some laundry owners have seen their markets diminish a bit because of apartment complexes converting to condominiums. When that occurs, it’s always unclear as far as what’s going to happen with the laundry situation. Are the owners going to want to own the equipment themselves? Or are they going to want to put in in-unit hookups? And the latter definitely has been the trend.
In-unit hookups are very popular in the multi-housing business, partly because apartment vacancies have been somewhat high. With lower interest rates, more and more people have been able to afford their own houses.
And in-unit hookups are what the tenants are saying they want, so the landlords are providing them because it’s a convenience for the tenant.
This trend is going to continue, and it’s going to increase, according to many laundry industry experts. For the prospective renter, having a washer and dryer self-contained within his or her unit is more ideal than going down into the basement laundry room to wash clothes.
Most of the in-unit hookups are in high-end apartment complexes and newer condos. That’s a selling tool the landlords try to capitalize on.
Unfortunately, many building owners are installing equipment into these units that’s too small. The tenants can’t get a good wash. And in some cases, they have energy issues, where they can’t get enough hot water.
A couple of additional negatives to the in-unit hookup trend are insurance and maintenance costs.
One leaky washer can cost an apartment building owner thousands and thousands of dollars. That’s hard to control when you have in-unit hookups. Once they start thinking about that, common laundry rooms begin to make a lot more sense.
Also, over the years, the Multi-Housing Laundry Association has fought against this trend toward in-unit washers and dryers. The organization conducted a study a few years ago that proved how multi-housing residents with in-unit laundry facilities used approximately 3.3 times more water than their counterparts with a common area laundry room.
After all, when locations give washers and dryers to tenants in their units, the residents have no reason whatsoever to conserve utilities. They have no real incentive not to run just a T-shirt and pair of gym shorts through a complete wash cycle all by themselves – really wasting water.
Attracting Renters to Your Laundry
At first glance, apartment laundries appear to have two big advantages – cost and convenience. In most cases, vend prices are lower in apartment laundry rooms and other rental housing laundry facilities, when compared to retail, self-service laundries. In addition, residents do not have to leave the apartment complex to do laundry. And, like home washer owners, apartment laundry users will argue that they “can do other things” while doing laundry where they live.
But, at the end of the day, most laundry owners can still provide for a better overall laundry experience for these households. Despite all of the vast improvements in multi-housing laundry facilities and the prevalence of in-unit equipment, the self-service laundry still has the competitive edge in many areas.
The comfortable atmosphere of today’s self-service laundries and array of amenities – such as attendants, televisions and children’s areas – all play a role in getting apartment residents out of the basement and across the street to the local laundromat.
However, the biggest draw to a coin laundry for many apartment dwellers is the access to larger machines, as well as the large number of these high-capacity machines most stores have available.
Most apartment building laundries are vulnerable to coin laundries that have larger equipment. In addition, drying time is a key. The real advantage of a coin laundry with larger dryers is that it can get most people in and out in half the time, if not less, than it would take in an apartment laundry. Although it hasn’t been widely advertised, when it comes to drying clothes, it can take an hour and a half in a typical laundry room, versus 30 minutes or so in a laundromat.
Also, while the good thing about apartment laundries is that they are typically quite convenient for the tenants, the bad thing is there are never enough machines on the weekends for the laundry customer to use. And the most important thing to customers is that they have machines available when they need them. People want to get in and get their work done. They don’t want to be going up and down stairs or down the hall for every load.
As a laundry owner, you need to let apartment tenants know that you exist and that you have the machines available they need to get all of their laundry done at once. Their time is the key factor, and you have a variety of machines. That’s the magic wand.
And, typically, once you get them to try your coin laundry, you can keep them, or at least a large percentage of them, because they see how nice today’s laundromats are. Many people’s perception of a coin laundry is still a row of washers, a row of dryers and couple of dim light bulbs.
Although apartment laundry room are definitely improving, a main reason why you still don’t see a lot (or any) large equipment in these facilities is because the route operators who service many of them are almost never responsible for paying any part of the utility bills.
Some building owners will request one or two frontloading machines just to be sure that the room is ADA-compliant. But many apartments still don’t have frontloading washers.
As a result, convenience and value are the main aspects coin laundry owners need to advertise. A self-service laundry has larger machines to get the laundry done faster. And with larger machines, the user also gets a better value. Owners have to convey that message to those potential customers.
Getting the Word Out
It has been proven time and again that every five to six years, the equivalent of your entire marketplace will turn over. Those business owners who claim that they have been at the same location for 20 years and, therefore, don’t need to advertise because everyone knows about them are either naïve, lazy or both.
Some laundry owners utilize only in-store advertising. Unfortunately, to attract any business from apartment tenants, you have to let the people outside of your store know what you have on the inside. After all, many of those living in nearby apartment buildings may not even be considering your store as an alternative.
Consistency and repetition are the keys to successfully advertising to the apartment market, as well as backing up your grandiose, advertised claims. Walk the walk. Word-of-mouth advertising will be positive only if you deliver what you have promised. For example, if you advertise “The Biggest Washers in Town!” make sure you have plenty of your biggest frontloaders in service and available for when those apartment-dweller customers show up with a week’s worth of wash.
When you ask potential customers to try your coin laundry, you are asking them to change the way they’ve always handled their laundering – be it at home by themselves or through another store’s wash-dry-fold service. To break such an ingrained habit, you have to give them a good reason to do so.
Coupons are always effective, as well as advertising a special feature of your store or a particular service. Direct-mail pieces, flyers and local newspaper inserts are all relatively cost-effective vehicles to get the word out about your coin laundry.
Of course, don’t forget your store’s exterior signage when evaluating your advertising strategy, especially when trying to lure apartment residents through your doors.
Focus on what you can do better than the competition. Zero in on “solution marketing” – such as handling large loads, no waiting for machines and “getting it all done at once.” Promote your store’s benefits, rather than its features.
Also, perhaps research how other products and services try to reach renters in your market and “borrow” those ideas you think might work for your situation:
• Door hangers
• Local publications
• Local billboards
• Targeted direct mail
• “Welcome Wagon”
• Cross-promotions with other local businesses
And don’t neglect the internet. Many of the services aimed at renters are heavily promoted via the internet. Surprisingly, for households with access to the internet, studies have shown that those with lower incomes tend to spend the most time online. For more ideas on reaching out to renters, visit such sites as rent.com, move.com, forrent.com, apartments.com, apartmentguide.com, apartmentfinder.com and selfstorage.org.
Above all, be sure to set an advertising budget as a percentage of sales and commit long-term; consistency is a must in the face of high turnover ratios among renters.
Renters will never know the benefits of using your store unless you tell them. And don’t forget that each new customer is likely worth $500 to $1,000 per year to your revenue stream.
A Bigger Slice of a Bigger Pie
So, what’s keeping renters from patronizing their local laundromats in droves – getting that pesky laundry chore knocked out in just hours, saving big money and having more time for their families?
Perhaps the biggest obstacle is the fact that apartment laundries are generally under-priced, because the owner of the complex is providing the utilities for those washers and dryers. And they don’t have a feel for how much utilities on those machines are costing them. Their utility bills are combined with the cost of running parking lot lights and other things around the complex.
Plus, some of them have the attitude that they’re just offering laundry facilities as a convenience for their customers; it helps them to rent out their apartments quicker so that they have a lower vacancy rate. Many of them don’t even care if they break even on their laundry business. They just want to reduce their vacancy rates. Laundry is not their livelihood.
Of course, some of the obstacles to reaching this market are of the laundry owners’ own making. It’s about making the decision to have attendants, to have a clean modern store, to have larger equipment and to advertise – all of the things that some laundry owners – especially in the past – typically haven’t done.
But these renters are definitely reachable. Isn’t it time to redirect the focus toward making the “pie” bigger for everyone? As an industry, it’s essential to begin growing the market for coin laundries, rather than obsessing over the cannibalization of existing business from one another.
Each year, billions of dollars go through apartment laundry rooms, which provide basically the same service your laundromat offers. All of these individuals, despite access to washers and dryers elsewhere, remain potential targets for your laundry business.
If the industry could capture just a small percentage of those households currently doing their wash in apartment laundry rooms, the increase in sales volume would be in the hundreds of millions of dollars annually.
The business is there for the taking… if you’re willing to go get it.