There are three major ways in which learning about your laundry customers can help you to improve your business:
1. By helping you to reduce customer turnover.
2. By aiding you in increasing sales to existing customers.
3. By enabling you to attract new customers.
After all, those customers are the lifeblood of your laundry business.
Given that…
What is the percentage of homeowners and apartment dwellers in your area? What is the average income? What is the ethnic makeup? How many children live in the surrounding households?
And I don’t mean “pre-recession” – I mean today, right this minute! Because, guess what? It’s very likely to have changed in the last few years.
All of this information, if accurate and used correctly, can prove beneficial to you – not only in choosing a coin laundry location, but ultimately helping you offer the surrounding population the services they need, and will use.
If you know who your customers are then you know how to tailor your services to meet their needs.
If you had to identify the current stereotypical “coin laundry user,” that person would probably be female; African American, Hispanic or white; reside in a 50-plus multi-unit dwelling; earn a low-to-medium income; and likely would be caring for a child.
However, this is not the only type of customer that the coin laundry industry serves. Many stores have achieved amazing profit levels in middle-income areas. And many coin laundries, by not properly servicing their patrons, have gone out of business in neighborhoods heavily populated with stereotypical customers.
The determination of who your particular customers are – and what they need – is basic to achieving long-term success in this (or any) business. Understanding that your segment of the market may have more money than time, or more time than money, will assist your decisions in everything from the quantity and types of washer and dryer equipment needed, to the additional products you may decide to vend or ancillary services you may choose to offer.
It’s important to know where your customers live and what kind of lifestyle they have. There are a lot of different kinds of customers. Some come to the laundromat when they get behind in their laundry. Some don’t have washers or dryers at all. Some apartment dwellers have access to washers and dryers, but they would rather do their wash at a coin laundry.
Before you opened your self-service laundry, you no doubt obtained a demographic study from one of the many companies that specialize in such things. Or perhaps you collected such information from your local chamber of commerce. However, now that you're open for business, you need to stay in touch with your clientele – and perform your own demographics survey.
Drive through the neighborhood that your coin laundry serves. Look for bicycles, tricycles, baby carriages and other signs that would indicate a young population with children. Kids create a lot of dirty clothes.
Also, observe the population density and the traffic patterns. Is your store located near a supermarket or some other retail establishment that gets repetitive, weekly business? It's also helpful to locate all of the schools in the area, from the elementary school up through high school. Try to determine the student population per school. What's more, through the customers who frequent your store, attempt to create a picture of your market's income bracket and ethnic mix. All of these factors will help tell you what size and capacity laundry equipment you should have in your store.
Making these determinations also will help you to decide what other income-producing services you want to offer. For instance, dual-earner families are more likely to have more money and less free time; as a result, these customers might be perfect for a wash-dry-fold service. On the other hand, if your core clientele are seniors, perhaps wash-dry-fold wouldn't be the way to go. Would drop-off drycleaning be a profitable convenience to offer in your area? More toploaders? Different soap? A wider selection of soda in your vending machines? Would tanning beds be an enticement for your customer base?
In addition, keep in mind that neighborhoods change over time. They get older. They get younger. Income levels and ethnic composition change. As a result, the perfect equipment mix 20 years ago may not be right in the same location today. If you are retooling, consider the character of the area again before you blindly replace machine for machine.
Recession Shakes Up the American Household
The number of households and persons per household are key statistics for laundry owners – and those stats have been skewed more than a little by the economic downturn. More than one in 10 U.S. parents with grown children say at least one of their adult sons or daughters has moved back home in the past year after living away, according to research by the Pew Research Center, which found that the recent recession has created a bumper crop of “boomerangers,” particularly between ages 18 and 34.
To measure changes in household arrangements, the survey asked U.S. adults if they lived in their own home or with one or both parents in the parents’ home. The survey further asked all adults if they had moved back in with their parents as a result of the recession. Overall, about 11 percent of all adults ages 18+ live with their parents in their home and 4 percent of all adults say they were forced to move back with their parents because of the recession, a proportion that rises to 10 percent among those ages 18 - 34.
While the recession has touched Americans of all ages, Pew said it has been particularly hard on young adults. According to the U.S Bureau of Labor Statistics, a smaller share of 16- to 24-year-olds are currently employed – 46.1 percent – than at any time since the government began collecting such data in 1948.
At the same time, college enrollment has soared to an all-time high. “Taken together, record unemployment and growing college enrollments help explain why proportionately fewer young people today are living by themselves,” Pew said.
Census Bureau data also confirm that proportionately fewer young adults are living solo now than before the recession. Overall, the proportion of adults ages 18-29 that live alone declined from 7.9 percent in 2007 to 7.3 percent in 2009. Similar drops in the proportion of young people who live by themselves occurred during or immediately after the recessions of 1982 and 2001.
The current decline has been particularly steep among young women; the proportion who live by themselves fell by a full percentage point to 6.1 percent. Among young men, the share living on their own fell 0.2 percentage points to 8.4 percent, a statistically insignificant change.
While the survey found that one-in-ten adults ages 18- 34 (10 percent) say the poor economy has forced them to move back in with Mom and Dad, an additional 12 percent say they acquired a roommate, 15 percent say they have postponed getting married because of the recession, and 14 percent say they delayed having a baby, Pew reported.
In further proof that the recession has hit young adults the hardest, the study found that about seven-in-10 grown children who live with their parents are younger than age 30. About half work full- or part-time, while a quarter are unemployed and two-in-10 are full-time students. Of all adults who report they currently live in their parents’ home, about a third (35 percent) say they had lived independently at some point in their lives before returning home. While the sample is small, roughly equal proportions of adult men and women live with their parents, while a somewhat larger proportion of Hispanics and African Americans than whites live with their parents.
When the focus shifts to parents, a similar story emerges. According to the survey, nearly half of all adults (46 percent) have children ages 18+. Among these parents of adult children, some 13 percent say at least one of their grown sons or daughters had returned home in the past year for any reason.
The proportion of “boomeranged parents” increases to 19 percent among those ages 45- 54 and declines sharply in later age groups.
The survey also found that young adults – though they have been hit hard – are not the only ones negatively affected by difficult times. About one-in-eight (12 percent) of all single adults between the ages of 35-54 have delayed marriage because of the recession.
At the same time, however, few Americans of any age have been forced by hard times to take in a boarder (2 percent) or postpone a divorce (1 percent among married respondents).
Pew analysis of data from the U.S. Census Bureau supports the findings from the survey. In a departure from an upward trend over many decades, the share of adults in the United States who live by themselves was largely unchanged between March 2007 and March 2009. However, the story is quite different for adults ages 18-29:
• About 7.3 percent of young adults lived by themselves in March 2009, a 0.6 percentage point decline from 2007. Similar declines occurred during or after the recessions of 1982 and 2001; in both periods the proportion of adults 18-29 who lived alone fell by 0.5 points.
• In particular, young women are less likely to be living alone in 2009 than in 2007. The share of young women living alone has declined from 7.1 percent in 2007 to 6.1 percent this year. The drop in the share of young men who live by themselves was a statistically insignificant 0.2 percentage points.
• Among adults of all ages, the percentage living alone fell during this period by 0.1 points to 13.9 percent. If the calculation is based on households rather than individuals, individuals living alone currently make up slightly more than a quarter of all American households (27 percent).
The Recession and Race
Race and ethnicity play out differently among different age groups. African Americans and Hispanics ages 65 and older are significantly more likely than similarly aged whites to say that in the past year they have cut back on household spending or have had problems obtaining or paying for medical care, according to recent studies.
Yet these racial and ethnic disparities largely vanish among younger generations of blacks, whites and Hispanics on many key questions. For example, 34 percent of all older whites but 42 percent of older African Americans report they cut back on household spending the past year because money was tight – an eight-point gap. For Hispanics, the gap is larger: 11 points. But among those younger than 65, these differences disappear: about two-thirds of all whites (65 percent), blacks (65 percent) and Hispanics (64 percent) say they have trimmed spending in the past year. For younger adults, these data suggest that the recession may be colorblind.
Not surprisingly, income plays a major role in how hard people have been hit during the recession – and this holds true across all age groups. Three-quarters of all adults with family incomes below $30,000 say they have cut back household spending in the past year, compared with 58 percent of those earning $75,000 or more. The median annual income of older adults is smaller than that of other age groups, but the pattern is the same: Older adults whose family income is less than $20,000 a year are more than twice as likely as older adults whose income is $50,000 or more to have cut spending (57 percent vs. 22 percent).
Immigrant Population Drops
Hispanic immigrants have long been strong users of coin laundries. Unfortunately, the weak economy has hit this segment of the industry’s customer base hard.
The share of the U.S. population composed of immigrants has been dropping in the last few years. In 2008, immigration was down 10 percent, while last year it decreased another 7 percent, according to U.S. Census data. This led to approximately 1 billion few Hispanics in the U.S. in the last two years, to go along with more than $1 billion less in remittances back to Mexico, the Pew Hispanic Center reported.
What’s more, foreign-born U.S. residents declined in 2009 for the first time in more than 40 years.
The dip is more pronounced in areas that have taken a big economic hit in the recession, such as Los Angeles and Phoenix. Areas doing better such as Houston and Dallas did not experience as large a drop – an indication that immigrant numbers could rise again as soon as the economy rebounds.
"It's short-term, but it's a real marker in terms of immigration slowdown," said William Frey, demographer at the Brookings Institution.
Mexican immigrants, who held a significant share of jobs in the hard-hit construction industry, showed the largest overall decline among the foreign-born: down about 300,000 to 11.4 million.
Arrivals of undocumented workers "are way down," said Jeffrey Passel, demographer at the Pew Hispanic Center.
Research based on other Census surveys indicates that the foreign-born who are leaving tend to be less-educated Hispanics ages 18 to 40, says Steven Camarota, research director for the Center for Immigration Studies, a group that wants to limit immigration.
"What that implies very strongly is that it's a significant decline in the illegal population," he said, attributing the drop to stricter border enforcement and a poor job market.
To that end, arrests of illegal immigrants along the California-Mexico border declined 25 percent last year as a weak economy and bolstered enforcement efforts appear to be discouraging treks north, U.S. Customs and Border Protection officials said.
The downward trend is evident across the Southwest border as apprehensions fell to levels not seen since the early 1970s. The U.S. Border Patrol arrested 556,000 people last year, 152,200 of them in California, according to statistics released for the federal fiscal year ending September 30, 2009.
Apprehension levels, considered the best available indicator of illegal crossing activity, have fluctuated for decades, but have steadily declined since 2000, when there were 1.6 million arrests.
The primary factor driving down illegal crossings is the economy, most experts say. With the disappearance of once-plentiful jobs in the construction and service industries, immigrants have fewer reasons to leave their towns.
The unemployment rate hit 12.6 percent for Hispanics in 2009, according to the U.S. Bureau of Labor Statistics.
Apartment Industry Outlook
Clearly, renters are a priority for most laundry owners. However, just as clearly, the apartment industry and rental housing markets were dramatically impacted by the economic recession in 2009 with rapidly rising unemployment, consumer de-leveraging, lack of credit and the near meltdown of the financial services sector, according to the National Apartment Association. The actions of the federal government likely prevented a depression; while the massive deficit spending will have a negative impact on future economic growth, it likely will have a positive impact on the multi-family industry, the NAA’s annual report stated. Declining homeownership, a protracted jobless recovery and lower household income and net worth will likely steer a higher percentage of the U.S. population to renting, once the economy stabilizes.
While the economy has yet to reach bottom, the apartment industry in 2009 is finally nearing its bottom, the NAA said. Beginning in 2010 and accelerating in 2011 and beyond, the outlook amid the challenging economic climate is positive. When combined with shifting demographic trends, the future has now arrived for the apartment industry.
Overall vacancy levels in 2009 climbed to more than 12 percent, the highest level in years. While there will be some improvement in 2010, apartment owners were faced with a perfect storm of a rapidly declining economy, recession, massive job losses, a looming single-family housing rental market and a decline in the rental participation rates of what traditionally are “very likely” renter segments.
Of all the occupied housing units in the United States, 33.4 percent are filled by renters. Homeownership in the country has declined to 67.4 percent and in what is projected to be a long jobless recovery, the number of renters is expected to increase beginning in 2010, according to the NAA.
In addition, single-family housing starts are down 21.7 percent on a seasonally adjusted basis. Some analysts were projecting approximately 42 percent or more of single-family home mortgages would be worth more than the value of the underlying asset by year-end 2009 and that about 69 percent of sub-prime loans would be underwater by 2011.
In fact, apartment vacancies in the U.S. are predicted to fall this year as job losses stabilize and fewer new rental homes enter the market, according to CB Richard Ellis Group, Inc.
The vacancy rate will decline to 6.8 percent in 2010, the property broker said.
Apartments could fill up quickly as employers start hiring again and Americans in their 20s and early 30s give up sharing housing with roommates and parents, Bryce Blair, chief executive officer of apartment developer AvalonBay Communities, Inc., said.
“We’re seeing some stabilization in fundamentals for apartments as we do in the broader economy,” said CB Richard Ellis Senior Economist Gleb Nechayev, who expects job growth in the third quarter. “This gives us reason to be cautiously optimistic.”
Recession Impacts Domestic Migration
Data released by the U.S. Census Bureau documents the continuing reduced levels of domestic migration (movement from one state to another) in the United States as a result of the economic recession.
For states that gained the most from domestic migration during the mid-decade boom years, the impact of the migration slowdown has been substantial. Florida, long a major recipient of migrants from other states, saw its domestic migration drop from a gain of 263,000 in 2005 to a loss of 31,000 in 2008. This is the second straight year for domestic out-migration from Florida, and the loss in 2008 is considerably larger than the loss of 9,000 in 2008. Nevada also suffered a domestic migration loss of 4,000 in 2008 after gaining as many as 56,000 domestic migrants as recently as 2005. Arizona’s inflow dropped from 124,000 to only 15,000 in 2008. Even Georgia and North Carolina, which appeared to be weathering the domestic migration downturn, now show sharply reduced levels of domestic migration gain.
Among states that suffered large domestic migration losses during the boom years, the situation is quite different. With the exception of Michigan, each of the five states with the great migration losses in 2005 either lost fewer domestic migrants in 2008 or actually gained some. In New York, the domestic migration loss in 2008 was 98,000 compared to a loss of nearly 233,000 in 2005. Massachusetts enjoyed a modest domestic migration gain of 4,000 in 2008 after losing more than 60,000 domestic migrants as recently as 2005. Ohio and Illinois also experienced less migration loss than they had in 2005.
With domestic migration at record post-war lows and with immigration also reduced, population growth in the United States depends increasingly on the excess of births over deaths. At the national level, natural increase (the excess of births over deaths) accounted for 67 percent of the total population gain in 2008. But there are distinct regional- and state-level differences in how much influence natural increase has on population growth. In the Midwest, natural increase accounted for all the population gains in 2008 – offsetting migration losses. In the Northeast, natural increase accounted for most (88 percent) of the population gain, but it only accounted for 51 percent of the growth in the South and 68 percent of the growth in the West.
Hispanics Online: Narrowing the Digital Divide
For those who market their self-service laundries online, here’s some good demographic news from the Pew Hispanic Center. From 2006 to 2008, Internet use among Hispanic adults rose by 10 percentage points, from 54 percent to 64 percent. In comparison, the rates for whites rose four percentage points, while the rates for blacks rose only two percentage points during that time period. Though Latinos continue to lag behind whites, the gap in Internet use has shrunk considerably.
For Hispanics, the increase in Internet use has been fueled in large part by increases in Internet use among groups that have typically had very low rates of Internet use. In particular, foreign-born Latinos, Latinos with less than a high school education and Latinos with household incomes of less than $30,000 experienced particularly large increases in Internet use.
Whereas Hispanics gained markedly in overall Internet use, the pattern of home Internet access changed very little. In 2006, 79 percent of Latinos who were online had Internet access at home, while in 2008, this number was 81 percent. White and African American Internet users show a similar leveling off.
While there was little increase in the likelihood of having a home connection among Internet users from 2006 to 2008, rates of broadband connection increased dramatically for Hispanics, as well as for whites and blacks. In 2006, 63 percent of Hispanics with home Internet access had a broadband connection; in 2008 this number was 76 percent.
Never Stop Learning About Your Customers
Typically, much of the discussion of demographics centers on site selection for a new self-service laundry. However, owners of existing stores, especially given the events of the last few years, certainly can benefit from a demographics study of their market to determine to what extent their customers have changed since they’ve opened. After all, statistics tell us that approximately 16 percent to 20 percent of the rental population moves every year. Therefore, over the course of five to seven years, your entire customer base can change. You can use a demographic study to determine how your market has changed since you opened your doors and, more importantly, how your market share has shifted, if at all — thus, determining the current potential for your store.
Demographics can serve as a benchmark for everyone. Certainly, if you are thinking about renegotiating your lease for another 20 years, it would be wise to back up this decision with some solid stats. Has the neighborhood gone up and down? Is the population base leaving?
All in all, the more you know about your business, your competitors’ businesses and the industry, the more you can take the guesswork out of decision-making. In fact, it’s probably wise to order a demographic study every five years or so, despite what your “gut feeling” may be telling you.
Demographics are a barometer. Today's business is different from years ago. It's not just quarters anymore. And demographics are just another tool to help the laundromat owner understand more about his business. And it helps him make decisions on equipment, on store hours and on a host of other things.
Knowledge is Power… Information is Money
Customer information, again, should not only be considered for new store site evaluation and determination. The keys to successful marketing, and the ultimate costs of doing business, also lie within that knowledge.
How will you approach and attract the residents surrounding your store? Some of the answers are obvious. If you will be servicing a heavily ethnic population, market in the language of the area. If you are catering to an elderly segment, you will want to tailor your services and marketing techniques to fit their particular needs.
Young adults are best approached through targeted newspapers and radio ads. Take advantage of the paths that have already been paved. Review the ads in local newspapers, bus stop advertising, window signage in the area - see what others have done and take advantage of the time they've used to become successful at marketing their services to the local customers.
A higher income area, for example, may increase your lease costs, but also may save you money on security needs and improve your bottom line through additional services. Consider the costs of keeping your location attended. Today you may envision a non-attended store, but later you may find a need for wash-dry-fold or drop-off drycleaning services.
Will the average wage rate of the area allow for an attendant in the future? How will you meet this need of your market if it arises?
Knowing your customers (and, ultimately, your marketplace) will help you answer these questions and remain proactive – and profitable – in your self-service laundry business… despite what the economy may throw at you.