What Would You Do?

[Adamski]

Guys,

I'm doing some research to find out how existing laundromat owners might react to the opening of a new (never before existing) competitor. What would you do if you discovered that a brand new laundromat is being built nearby and will be opening before too long?

Please assume that this new laundromat will be at least 2500 sf with brand new equipment and priced equal to most existing laundromats but a little lower than the High Price/Low Turn laundromats in the market. This laundromat will be fully attended and has Hours similiar to your Hours.

Given this scenerio, would you react right away or would you take a wait and see approach? How would you react? How would you definitely NOT react? What would you do to evaluate the new competitor? Perhaps you would choose to simply ignore the new laundromat regardless of what happens. Maybe you would have a very strong and decisive reaction. What would you do?

Your feedback is greatly appreciated.

[couvsuds]

Larry ... Haven't you successfully run other newbies out of the market? I could be wrong, but I can't imagine you'll lose many customers strictly based on price, because it sounds like your place is everything a mat should be. How can they do it better, unless they're offering an additional payment option, like Spyderwash?

[Adamski]

Originally Posted by couvsuds

Larry ... Haven't you successfully run other newbies out of the market? I could be wrong, but I can't imagine you'll lose many customers strictly based on price, because it sounds like your place is everything a mat should be. How can they do it better, unless they're offering an additional payment option, like Spyderwash?

Nick,

If you want to assume the new laundromat is card operated or has a Spyderwash system or whatever, that's fine with me. The point is not that I have recently played a direct role in the demise of a new laundromat using certain methods. Now I'm looking for other ideas about how one might go about giving a newbie a real hard time succeeding. This thread is not about me ... it's about what you guys would do when faced with a profit-threatening situation like that. My intent is to get you guys thinking and start a discussion on this very important topic.

[Howard]

Well I once told one that if he undercut my prices when he opened that I would drop all my washers to 25 cents - and keep them there for a year.

[couvsuds]

Originally Posted by Adamski

Nick,

If you want to assume the new laundromat is card operated or has a Spyderwash system or whatever, that's fine with me.

I wasn't suggesting the new laundromat would have cards and/or credit cards ... I was merely trying to come up with something...anything...that customers would perceive as better for them other price when compared to your mat.

Last thing I want on this board is another coin v. card debate.

I wasn't sure if you were looking for suggestions as to how you could combat a new opponent in Michigan, or coming up with a hypothetical case. Now I understand.

I guess for one, I'd make sure I had the biggest, best equipment within reason. The trend sure isn't to go with more small washers and dryers. And I'd probably go on the offensive with a direct mail campaign, to make sure people understood we're the best, and here's why.

[CanCanCase]

There are some significant barriers to entry in my market... SDCs as high as $20K per washer, lack of cheap real-estate, honest distributors who will tell a newbie the market is already fully served and doesn't have room for them, etc.

That being said, from my point of view, I'll be watching this thread closely to get a feel for how existing mat owners may perceive my operations... Yeah, I'm "that guy" in my market. I've often wondered what the competition is thinking when I put up my "Coming Soon" banners.

Larry, I did have an opportunity to talk to the former owner of the traditional laundromat that closed last summer near our #1 store. I was trying to buy his 12-column vender after he announced that the laundromat would be closing permanently.

He mentioned that his reaction to me at first was indifference, but that he did sit across the street and eat lunch the day we unloaded equipment for installation. He told me once he realized what equipment we were putting in, he and his wife decided they didn't want to compete and immediately began putting their books in "selling order"... It took about 14 months to find a buyer willing to pay their price for their building, and the buyer was specifically NOT interested in running a mat "so close to that nice new place."

I've got my "spies" in their campers and R/Vs trying to act like customers and be a "fly on the wall" in the 2 places in the town where we're planning #4. For now, it's just a dumpy (clean, but dumpy) old coin-op, and I don't want to turn away the summer tourist business like I (almost) did last year to renovate.

-Case

[ldm]

I would continue to provide a decent service for a decent price in the unattended market. If need be, I have the ability to be more competitive, so if it became necessary, I would do what it takes to the point where it would be more profitable to lease the space to someone else and collect a base rent and some CAM fees. Les

[jh]

i would try to start a conversion with the owner. I would point out that as a brand new store, I could not kill the two smaller laundromats one block away from mine. It is nearly impossible for the new laundromat to kill mine. So why not work together to both make profit? The last thing I would want to see is a noobie competitor with ambition to eliminate nearby mats.

The new mat is the enemy of my mat but the owner is not necessarily the enemy of mine. I would try not to take it personally. It is highly possible that there will be a new mat built around mine within this decade or the next. While trying to work on not to compete by vend prices, I would expand my pickup/delivery service to further areas to maintain the optimal profit with the employees I have hired.

[Adamski]

Originally Posted by jh

i would try to start a conversion with the owner. I would point out that as a brand new store, I could not kill the two smaller laundromats one block away from mine. It is nearly impossible for the new laundromat to kill mine. So why not work together to both make profit? The last thing I would want to see is a noobie competitor with ambition to eliminate nearby mats.

The new mat is the enemy of my mat but the owner is not necessarily the enemy of mine. I would try not to take it personally...

John,

In my experience, the few owners I know who had stated that their intent was to "run everybody else out of business" with their 5,000 - 7,000 sf mega-mats, never succeeded. The laundromat most vulnerable to being run out of business is the newest laundromat because it is most likely to have the biggest debt load.

You bring up a good point. The new laundromat is the enemy ... not the laundromat's owner. Neither we nor the new competitor should take it personally. He might go after my customers and I might go after his customers but it's all just business.

So that brings up a new issue. When the new laundromat first opens, he has no customers for me to go after. So I guess I should wait until he gets some customers before I begin my heavy promotion program or whatever plan I have. Does that make sense to everyone?

[silver56]

Larry - what have you done in the past related to new competition? Sounds like you've done well to fend them off so do you really need to do more?

Robert