Many industries are in a state of change right now. But, truthfully, change is constant. In the thirty-five years I’ve been involved in the drycleaning industry, I can’t remember a time when change wasn’t a topic of concern. From coin-op drycleaning, to leisure suits, to wash-and-wear, to environmental concerns, to perc reduction, to the alternative solvents of today. Change has always been with us. And will continue to be with us; so, it really doesn’t matter. The only thing that really matters is how your business adapts to these changes. Cleaners who can accept change, and use it to their advantage, will be the survivors and those who cannot will, in time, fade away.
Sometimes it’s easier to understand what’s happening to ourselves, and our industry, by looking at the changes that have taken place in other industries. In the early seventies “cheap” Japanese cars began appearing in the American marketplace. They were small, fuel efficient, and “ugly.” The only problem was that they were extremely dependable. This was a problem to the U.S. automakers.
At first, the Big Four (General Motors, Ford, Chrysler and American Motors) dismissed these new entries into the auto market, believing that Americans would never give up their love for large, high-powered cars and that the cost of fuel would never be a major factor in the customer’s choice of vehicles. And they were right: to an extent: to a small extent. Many people, many more than the Big Four ever dreamed, were lured by these smaller, less expensive, more efficient cars. So many, that today, American Motors no longer exists and Chrysler has been bought out by Mercedes Benz. General Motors and Ford, fortunately, had the assets to continue operations while they developed smaller models. Meanwhile, the Japanese, and other foreign automakers, have stolen a share of U.S. auto market, which may never be fully recaptured. All because they turned a blind-eye to what was happening and refused to accept change.
Currently in the news is the plight of six of the largest airline carriers in the U.S. – Delta, United, American, Northwest, Continental and US Airways. They are having considerable difficulty making themselves more efficient. Efficient enough to compete with the low-fare airlines.
Some industry observers say, even that may not be enough to save these carriers because of their size, the low ticket prices people want to pay and the government’s refusal to bail out carriers like United.
These large, full-priced airlines have been building on the same business model for over fifty years. Southwest airlines introduced their newer, more nimble, discount model over twenty years ago. Did these big carriers take the Southwest threat seriously enough to alter their business models? No! They would meet Southwest’s lower prices on a city-by-city basis. But they refused to adapt to the changes that were obviously coming. Why? Because they were “fat and happy.” It wasn’t until they woke up one day and saw red ink all over their bottom-lines that they realized changes had to made. In fact, while they dawdled, numerous other discounters like, Spirit, ATA, and JetBlue established themselves in the marketplace.
While the big carriers struggle to lower their costs, in the no too distant future, there will be fewer full-priced, full-service airlines.
As a full-priced drycleaner, for over thirty years, no one had more contempt for the “discounters” than myself. Especially after one opened up directly across the street from my main plant some 15 years ago.
I tried to figure out what they were doing, and how they could afford to process clothes for 99 cents, while I had to work hard to make a profit charging $4.50 for the same garments. I soon found out that this chain, like most of the others, was a scam. They were shell businesses designed, not to make a profit drycleaning clothes, but to earn big money for the owners by tricking young men and women, desperate to own their own businesses, into working 60 to 80 hours per week for little or no pay. When one manager (pawn) would burnout, they would simply find another and continue their scheme. That’s the way it was back then and, in some cases, may be true today.
As the head of the Golomb Group, I have the privilege of talking to dozens of drycleaners, from around the country, every week. Most of these are very astute business owners, who have a keen sense of how to make money in any situation. Some of these business owners have been forced into becoming one-priced or low-priced drycleaners, either because of competitive conditions or the condition of their local economies. Many have turned their businesses away from the brink of destruction, to again being the major players in their markets. I have, indeed, been impressed at how these men and women have taken the bull by the horns and, not only saved their businesses, but are amassing tremendous profits, while charging unbelievable low prices. These are legitimate business owners that pay fair wages and produce a level of quality, which is acceptable to a large number of people.
As participants in this industry we need to look at the operational innovations being employed by these “new kids on the block.” To see which of these techniques can be use to make our own businesses more efficient and better able to compete in today’s economy.
As is happening in other industries, gradually a small number of “full-priced” drycleaners and a large number of “discounters” will dominate the drycleaning industry. There is still time to position, or re-position, your own business. However, it is becoming increasingly imperative to select which direction you want to grow your business. And it is even more imperative that you market yourself to your customer and prospects, as the type of cleaner you wish to be known as. Your business survival depends on beginning this process, immediately.
Ultimately, the consumer will decide what businesses will survive and which will perish. They’ll vote for the ones that fill their current needs. And they’ll vote with a mighty big weapon: their pocketbooks.