This article should be hitting the market right about the middle of our usual seasonal downturn where cleaners would normally be seeing 50 percent of average weekly sales, or, the summer slump. But, this year, I think the summer slump is going to be much worse than 50 percent of average weekly sales. With so many folks working from home in nothing but PJ’s (or even less), the demand for dry cleaning has dropped to lows where in some markets one might be lucky to see 10 or 20 percent of usual seasonal sales right now. There is no way around it, it’s very tough out there right now making dry cleaning a hyper competitive business with every cleaner chasing every garment they can possibly get into their plants.
Unfortunately, not every dry cleaner is surviving. Every day there are phone calls and emails from a cleaner reporting that one, two, or even four of their competitors have ceased operations, turned in their keys to the landlord and simply walked away. Many of these landlords that have lost a cleaner tenant have had to seize the equipment to satisfy or partially compensate the remaining term of the lease in place. Landlords are not in the business of running a cleaners themselves, they rent space, so many landlords are offering complete plants for little money, if not free. That’s right, FREE. I’ve had calls from multiple dry cleaners being offered completely equipped plants ready to go in exchange for a signature on a lease.
Taking over an entire plant for no money down sounds like a fantastic opportunity in these dangerous times, but there is also much danger in every opportunity. Many of the plants coming onto the market have been operated by poor managers, and even worse mechanics, which means YOU may be walking into a plant that needs serious repairs. YOU might be walking into a plant that has been so badly run with no regard to proper environmental protection practices, which could leave YOU on the hook for extremely expensive environmental remediation bills. YOU should be very cautious of every opportunity that comes your way and exam each VERY closely. Landlords don’t know (or don’t care) about the business they are spinning off, they simply want a paying tenant renting their space, and in the rush to get a replacement paying tenant, they will gloss over a lot of problems to get you to sign on the dotted line. I’ve already heard from a few cleaners who did not look before they leaped, and ended up getting a raft of unexpected bills along with their ‘new to them’ plant.
If a landlord can’t sell a shuttered cleaner as a complete going concern, they may part out the plant to reclaim the space for the next tenant that might not be a cleaner at all. There could be an incredible amount of used equipment coming into the market over the next six months. Now might be a good time to pick up extra cleaning and pressing capacity. If you are fortunate enough to have some extra cash on hand, or some savings you had set aside, now might be an excellent time to invest by ‘buying the dip’ as when things do come back (and I believe they will, I just can’t predict when), you might find your investment paying you back massively.
Being able to see, think and act conversely to the market is not for the faint of heart. It takes a lot of courage (and skill) to invest when everyone else is selling. Baron Rothchild, an 18th century nobleman and member of the Rothchild banking family said: ‘the best time to buy is when blood is in the streets’, and frankly, I think that time, and unfortunately (or fortunately – depending on your view), is here.
Yet, for every cleaner that closes, there is a new pool of customers seeking a new cleaner to replace the one they had, which means there are customers to go after and lock down for your operation. While many cleaners are cutting their advertising budget to save or preserve cash flow, those who are increasing their ad budget are finding less competition in the advertising space, which makes their advertising message stand out even further than usual, and are capturing more prospective customers than usual. A wise cleaner should be out in the marketplace actively seeking customers, but the wisest cleaner is one who is investing in marketing programs that are generating results by attracting customers who are sending orders on a regular basis. Those types of customers are few and far between, but they are out there.
Right now customers are scared. Millions of dollars are being spent advising people to stay home, and stay safe, and people are listening. One is going to have to do a lot of work to get a customer to come out of their house these days. It makes sense to use the shelter in place situation to use contrarian thinking to our advantage. If the customer won’t come to you, now is the perfect time to go to your customer. Pick-up and delivery services are booming. If you do not offer pick-up and delivery, I strongly recommend starting to do so.
Pick-up and delivery, especially contactless pick-up and delivery can add much needed revenue to your business during these dark times. Your best prospect customer for pick-up and delivery services are the customers you already have. I would recommend that you go to your point-of-sale systems and pull up a list of all your customers sorted by year to date sales. Go down the list and look for big spender customers who have not had an order for the past 90 days. Make a sales call to those big spenders who have not been in for a while and tell them you have started a contactless pick-up and delivery service, you are going to send a driver to their house with a couple bags (branded with your logo of course) and a hook to hang on their door. The customer simply puts their clothes in the bag and hangs it on the hook for the driver to pick up. When the clothes are ready, the driver delivers the order back to the customer and hangs finished goods on the hook, and the customer’s credit card on file is charged. No contact, simple, and odds are, there might be a backlog of clothes from that customer as they haven’t been in for a while.
While it seems like you might be cannibalizing your over the counter sales converting store customers to a pick-up and delivery route, a route customer tends to spend two to three times their regular annual over the counter spend, so in effect, you can double a good customer’s annual spend with you simply by getting them to convert to a pick-up and delivery service.
While dry cleaning has always been a hard business, tough times have not managed to kill it off entirely. I’m so proud of the many cleaners who are trying so hard to build stronger, better businesses. So many of you have rose to the challenges of these difficult times responding with remarkable innovative new business strategies and business models. Tough times don’t last, tough people do. And while many yearn for a return to ‘normal’, the new normal, isn’t, and we all are going to have to adapt.