EDITORIAL: When the government does it right

We are quick to complain and criticize when an agency of the government takes an action that seems unjust and unfair to the industry, so it is only right that we should make some noise when an agency does the right thing.

The FTC faced some serious pressure, not the least of which came from EPA, to alter the care label rule to require a "wash" label for any garment that could conceivably be washed. Even if the garment maker knew that drycleaning would give a better result, the "wash" label would have been required if home washing was at all feasible. A garment could still add a drycleaning instruction, but that would not be required and would have added an extra expense not likely to be borne in the pricing competitive environment that makers and sellers of clothes face. The result, we believe, would have been far fewer "dryclean" care labels, fewer garments brought in for professional care and, ultimately, confusion and dissatisfaction among consumers when washing made their clothes wear out faster and never look as good as new.

The FTC listened to all sides -- EPA, environmentalists, consumer groups and makers of some laundry products on one side and garment makers and drycleaning industry representatives on the other -- in public hearings, workshops and written testimony. It took over four years to reach a conclusion, but the right decision was made by FTC in turning down this proposal.

Over that same period, the FTC listened to many of the same interests on the issue of establishing a "professionally wetclean" care label. While such a label would surely help the development of wetcleaning, FTC correctly determined that, "at this time," the processes and definition of wetcleaning are not sufficiently developed and standardized to make such a label practical. Maybe someday, but not now.

If only all government agencies followed the careful, fair and rational process that FTC used, we would be governed by far better and more sensible regulations in all areas.

EDITORIAL: A chance for "mom and pop" to speak

Here in the height of the political season, it's easy to get tired of hearing the speeches, promises, charges and counter charges. Voter turnouts in recent elections indicate that many Americans are suffering from voter tune-out. But this November's election will be pivotal. Not only will the resident of the White House for the next four years be determined, but control of Congress is up for grabs, too.

Just as individual voters often feel their vote doesn't matter, so, too, do owners of small business feel they don't have much influence compared to the big-money corporate contributors. But small can be beautiful. It is, after all, the individual voters who will get the last word in this election when the polls are open on Election Day, November 7. And the small, mom and pop cleaners will have an opportunity to be a player and make their presence known if they participate in an industry-wide effort to get out the vote.

Bill Bogus of Textile Restoration Services in Maryland is launching this effort which he says will be a non-partisan campaign to get cleaners to remind their customers that voting is not only a precious right but also a citizen's responsibility. With the theme "Be A Good Citizen and Vote," the campaign will use polybags with a patriotic theme that encourage people to exercises their rights. Mom and pop, he says, are in the best position to encourage people to vote. And if they can help swell the turnout, it will remind politicians of the influence even the smallest cleaner has at the grass-roots level.

Most cleaners can't afford to make big financial contributions to political candidates, Bogus says, so this is a way for them to be active participants in the political process and show their direct connections to the voting public. He plans to publicize drycleaners' efforts by sending press releases to media outlets and to the headquarters of the national political parties, so all will know what cleaners are doing for their country. The key to success will be for cleaners to join in and do themselves, and their industry, a service.

Can you keep half of the revenues?

In the spring I wrote about a highly successful plant that returned a survey where the owner was able to keep 50 percent of gross sales in profits and earned wages.

Some of you expressed an interest in learning more about how someone might be able to keep up to 50 percent of gross sales for themselves.

While this model is different from the survey returned, it reflects the productivity and other factors that allowed this owner to become one of the industry's "Top Guns."

Please remember that this is a nearly ideal situation where all the right customer demographics and costs need to fall in line to allow for this level of success.

While very few cleaners are in ideal situations that will allow them to achieve this level of profitability, we can all benefit by studying how it is done and seek new ways to maximize profitability and still maintain quality standards.

Many cleaners are satisfied with profits below 10 percent. These cleaners could find themselves in serious trouble with deep discounters and dot.com companies looking to invest heavily in the industry.

Other cleaners have done a poor job of managing costs, but remain reasonably profitable by raising prices to cover for the inefficiencies.

Some highly respected industry experts have predicted that great changes will take place in that industry over the next few years. In some areas of the country, many plants are for sale with no takers in sight.

The last time the industry was in a similar situation, the operators with marginal locations, poor profits and old equipment were hit hardest.

If the experts are right, we would be wise to take steps to improve our operations before disaster strikes -- if it hasn't yet already.

Revenue
Drycleaning. The plant had a base price of $8 per suit which allowed the owner to average $4.42 per drycleaning piece. These prices would need to reflect net prices after any discounting. The plant generated an average of 1,152 pieces per week in drycleaning.

Shirts. Charging $1.75 per laundered shirt allowed this operation to have a favorable ratio of three pieces of drycleaning per laundered shirt produced.

The plant processed an average of 384 shirts per week. Plants with the same prices that produce one piece of drycleaning for each laundered shirt will have dramatically lower profit margins due to much lower revenue per piece and only slightly lower costs.

Expenses
Labor. Labor costs were based on an average of $8.50 per hour for productive labor and $7.50 per hour for customer service labor. The owner served as manager and spent 50 percent of his time in production and 50 percent of his time performing administrative duties.

Production standards were based on 75 pieces per operator hour for cleaning and spotting and 27 pieces per hour for drycleaning finishing. Shirt finishing was based on 48 pieces per operator hour.

Rent. Rent costs were based on a 1,500-square-foot plant paying $18 per square foot per year. Other surveys indicated that rent costs per square foot vary greatly from region to region with some plants paying as little as $7 per square foot while others were paying in excess of $30 per square foot.

Supplies. Supply costs were based on an average of 17 cents per piece produced. Plants with older cleaning machines that consume greater levels of solvent and utilize more expensive filtration methods will likely have higher supply costs.

Depreciation. Depreciation was based on an equipment value of $150,000 devalued over an average life span of 15 years.

Utilities. Utility cost were based on an average of 8.5 cents per piece produced.

Lessons from the dot.com companies

BY JOHN R. GRAHAM

Although every business should be taking full advantage of e-commerce opportunities, not all businesses are e-commerce companies.

Yet even those that don't currently fit an e-commerce model can take advantage of Internet strategies and techniques. It may be just as important to learn the lessons of the Internet as it is to use it.

Here are a series of e-commerce-inspired concepts that can benefit any company.

Become a multi-niche marketer. At one time, it was location, location, location. Now, thanks to the Internet, it's niche, niche, niche. Customers using the Internet gravitate to those Web sites that provide products and services that most closely meet their needs.

From a marketing perspective, the task is to take this insight and apply it to a company's overall marketing strategy. For example, most businesses sell to a variety of market niches, but they fail to market to them as niches.

A good example is a material handling equipment distributor. The management team reviewed the company's customer base and identified five industries where they were doing substantial business.

Over the years, the company had developed expertise in each of these fields and had both sales and support staff who were highly competent to deal with the industry-specific issues in each one

The distributor changed its marketing to focus on the needs of each niche. Instead of seeing itself as monolithic material handling distributor, it came to view itself as a company with five business units.

Save customers time. Don't just say it; do it.

A drycleaning company tells customers its home pick up and delivery service saves time. Yet to check on an order, the customer must go online. If the customer wants to pick up an order at a store location after hours, arrangements must be made in advance for a "locker," and, of course, pre-pay the bill.

Is this convenience?

Does this save time?

Isn't it more complicated and time-consuming than stopping by the drycleaner on the way home from work?

This is a case in which saying it doesn't make it so. And the demise of more than one highly touted e-commerce "home delivery" company seems to verify the need to deliver on promises as well as the groceries and drycleaning.

While competitive pricing is, of course, critical, there's indication that time may be equally important, or even more, to many time-sensitive customers.

When time is the valued commodity, price is far less a deciding factor. Those who place a high value on time are willing to spend less of it finding the lowest price. To have their needs satisfied quickly, they are willing to pay a price.

Give the buyer permission to take control. The Internet is all about surrendering control to customers -- taking it out of the hands of the seller and placing it in the hands of the buyer.

This is a revolution of unequalled proportions and it's difficult -- and in some cases impossible -- for companies to grasp.

For the last 100 years, the funeral business understood that control of the casket meant control of the funeral, and the funeral home was the only place to buy a casket.

What seemed like an immutable law is gone now, thanks to the intervention of the Internet. One dot-com casket maker advertises "their price" and "our price" for the same casket. One is $595 and the other is $1,995. Now, funeral homes must accept caskets purchased by customers elsewhere.

Priceline.com is built on giving the customer control. How many shoppers want to spend time telling a seller what they are willing to pay for a box of cereal? More than we might imagine. For a hotel room? Many more. Round trip air fare to London? Lots of customers.

These sites are virtual "classrooms," teaching the customer how to take charge.

What's happening on priceline.com and in the nation's funeral homes is anything but idiosyncratic. It's pervasive. The customer is in charge. Progressive businesses will recreate themselves to meet the challenge.

Give customers what they want -- information. The venerable Encyclopedia Britannica is a classic case history of both the instant decline in a traditional business and the rise of a new one on the Internet.

The Britannica people thought they could charge customers for accessing the encyclopedia via their Web site. Few subscribed, apparently shocking the company

EB failed to take one fact into consideration: information is free in an e-commerce environment. What makes the Internet different? The answer is simple: The Internet knocks down all walls of access.

The key, whether you are an e-commerce company or not, is to be an information resource for the customer.

Never stop re-creating the company. The post-World War II business model continues to linger. Essentially, the concept was to get the company up and running smoothly and then it would, in effect, run itself. By implication, of course, this meant that the owner or owners could move into a virtual retirement mode about age 45. To follow such a model today is to take a bankruptcy path.

A primary e-commerce lesson suggests that re-creation must be constant. Companies are downsizing and hiring at the same time because required skill sets are continually changing.

Get serious about change. As the haze clears, it's almost 100 percent certain that many businesses are in trouble as a result of the e-economy. Even with lots of fast footwork, the survival hurdles are too high for those who fail to respond properly.

Banks, as we know them today, will all but disappear from our street corners. Few, if any, of today's teenagers will ever step inside a bricks-and-mortar bank. If this trend is even remotely accurate, why are some banks continuing to build "branches"?

Bankers aren't alone, however. Real estate will become an online industry. When this happens, the real estate agent's tight grip on properties will be broken and the ranks will thin. Fueling this demise is customer resentment over having to pay a commission for minimal services.

Insurance agents aren't exempt, either. PricewaterhouseCoopers predicts 50 percent shrinkage over the next 10 years as the business moves online.

Car dealerships will undoubtedly undergo change as fast as any industry. A combination of product inventory inefficiency (Why keep so many cars in so many places?), high-valued and under-utilized real estate, and salespeople who are distrusted by the public spells a quick demise for many dealers. All sales will be made on the Net and cars will be picked up or delivered. Dealerships will become service centers.

Only those who are savvy enough to see new opportunities and seize them will stay in business.

All of life is lifestyle. With longer working hours and more stress both before and after we get to the job, it's not surprising that the Internet thrives as entertainment... it's fun to surf the Net, particularly in the middle of the afternoon.

A drycleaning company notes that it gets many hits for its contest page at 2 p.m. (also, 2 a.m.). Isn't Starbucks' success at least partially due to treating ourselves to a bit of low-cost luxury? Having a little fun. The rich aroma is the Starbuck's experience.

To be sure, the customer is looking for a satisfying experience that includes a simple, quick, fun-type transaction. But it is the appeal of feeling understood that attracts. Whether it is an e-commerce business or not, the issue is the same. Give the customers the right experience and they will reciprocate with giving their endorsement (making purchases).

The business world is not divided into two distinct groups: "bricks" and "clicks." That's an artificial distinction. The "clicks" are discovering that virtual businesses require "bricks." This is why many retailing e-commerce companies are building their own distribution networks. At the same time, the "bricks" can learn from the "clicks," particularly when it comes to understanding and serving customers.

A customer asks some tough questions

Editor's Note: An internet surfer with a some tough questions about drycleaning and drycleaners located Stan Golomb on the Web and pleaded for help in an e-mail. The ensuing exchange shed light on how a consumer views cleaners and suggests that we, both as an industry and individuals, ought to improve our "customer interface." With his e-mail correspondent's permission, Stan forwarded the exchange of letters to National Clothesline in hopes the publication in the trade press will bring about improvements or, at the very least, lets us see ourselves as others see us.

DEAR STAN,

Hi! I have searched the web for an hour now, trying to find information or tips about drycleaners.

I encountered your article from a past convention of drycleaners, read it, and felt that you know more than a little about the business. To that extent, I have some questions for you:

My question is, how do I prevent my shirts from being lost?

Secondarily, if my shirts are lost, how can I recover them or have them replaced?

I'd like to know what other people do in order to keep their shirts from getting lost.

Do they count the shirts?

Do they record the specific shirts dropped off?

Do they limit the number they send in at one time?

All this sounds like a tremendous amount of energy to expend, especially on those late, stressful mornings to work.

In the event that the clothes do become lost, how is the best way to recover them? What leverage do I have?

This question can also be extended to cover, say, lost or broken buttons, broken zippers, stained clothes and all the various problems that folks have with cleaners.

I have had the cleaners ask me for a receipt. What a stupid question! I mean, do you hang on to receipts any longer than it takes to get home? Suddenly, it becomes a matter of my word versus theirs.

What if the issue is resolved poorly or not at all? Any hints on what to look for in a new cleaners? What do you, yourself, do?

I would greatly appreciate the advice or the name of any other resources.

Thanks, Kyle R. Ward

Are you an attorney, an accountant or just an interested consumer?

Most cleaners will always accept their customer's word and many today have computer records to verify every order. They also have receipts and these have to be maintained for IRS purposes.

And many cleaners state that your order will be ready, right or free.

For the most part, cleaners consider their customers their most valuable asset. Sincere operators will go all out to see that broken and missing buttons are replaced and rarely will a cleaner question the customer's statement that shirts are lost. There are times when the shirts were taken to another cleaner, maybe by the spouse, and the person looking for the missing shirts is looking in the wrong place.

About 50 years ago, I had to pay for an expensive sport coat that the customer claimed we lost. About a year later he was visiting friends and he saw his jacket hanging in their closet. This honest citizen came in and apologized and paid the money back he had received for the "lost" jacket.

Tell me more about who you are and why you contacted me. I'm now a marketing consultant to this industry and have been for the past 20 years with a vast knowledge of the industry based on my years of experience in all phases of the business. I own a very successful marketing company where we do demographic studies for our clients and target direct mail sending out hundreds of thousands of pieces of mail monthly on behalf of cleaners.

Stan Golomb

Stan,

I hate to disappoint you, but I'm simply an interested consumer.

I read your article from the drycleaners conference that had been posted to the web and realized that you have a very comprehensive knowledge of the business.

As I said, the search for reading material was born out of frustration with my cleaners, and ironically enough, the search for advice on the web was equally fruitless, with two exceptions. The first being the website for California Cleaners Association, and the second being the transcript (including e-mail addresses) from that conference.

For a service that is so commonly used, a surprisingly minute amount of information exists concerning it. For instance, over the 15 years that I have used drycleaners, I only recently discovered that these guys can return the clothes folded. They fix buttons. They fix zippers. They do alterations. But nobody lets you know that. This seems to be an area of information dissemination that could be improved.

Another service that is uncommonly referenced is customer service, and relatively few of these companies pursue this. I've been to unfriendly, grouchy cleaners and to cleaners who speak no English. How are we supposed to receive proper service if the proprietors cannot communicate with their customers?

Here is how I lost my shirts. They had been on the carousel for an entire month! But the employee couldn't understand what I was trying to communicate, and consequently couldn't find my clothes.

Only after a visit during the day hours, when a different employee was present, did I receive my clothes.

It seems strange to me that a business would have as its customer interface during the peak "pick-up time" a person who could not communicate with the clientele.

Long story short, I'm changing cleaners.

But how should a customer prevent these losses? I don't know. And I don't know how to contest the losses, either.

I am looking for advice from the other side, from the side that runs the business

I ask you, what do feel that the proprietors need in order to accept the responsibility of a lost item of clothing?

I am now informally surveying the folks that I work with as to the precautions they take in order to cover themselves. I suppose that the best precaution is to record the number of items to be cleaned onto the receipt.

I'm sure that I have written more than you bargained for, and probably more than I intended, as well, but I do appreciate your considered response, and if you have any other ideas or sources concerning my initial question, I would enjoy hearing about them.

Sincerely,
Kyle R. Ward

For the past 35 years I have been a featured columnist in trade publications, including a Korean publication that goes out to some 14,000 cleaners.

In this regard, Koreans now represent about 35 percent of all cleaning plants in the U S., located mostly in metropolitan areas, but now spreading all over the country.

I also wrote a hard-cover book about six years ago titled, "How to Find, Capture and Keep Customers," and the emphasis is on keeping customers. This book sold out and went to distributors and trade associations who bought from a few hundred copies to thousands.

I appreciate your correspondence and if you tell my your hometown I'll recommend a cleaner to you if I have a member in that region. I can give you the names of several top-notch operators who advertise, "It's ready, It's right or it's free."

I was in a plant where the manager and the sales attendant could not find an order for about 15 minutes.

When they found this $35 order, the manager gave it to the customer and said there would be no charge.

I asked the owner of this plant if he OK'd this policy. He said that he welcomed it and he instructed all of his employees to always honor his commitment. This is the owner of a well over $12 million-a-year business.

I have always preached honesty and fair play without devious methods to avoid claims. But some small operators who bought a cleaning business for a job, not as an investment, are not inclined to part with any of their personal income.

I appreciate you giving me the reasons for your request and can honestly tell you that respectable cleaners and good business people do keep track of all orders and now, with computers, can tell customers how many shirts or drycleaning they have brought in going back for a year or more.

And for the record, it was yours truly who came up with the expression, "Big Tuna" as I'm from Chicago and that was the nickname they gave the head of the Mafia in this area. His real name was Tony Accardo.

My definition of a Big Tuna is one of those customers who, in the aggregate, account for 80 percent of a drycleaner's sales.

And, conversely, 80 percent of the customer base accounts for only 20 percent of dollar sales.

I hope my sending your comments along to the trade press will result in better performance.

Stan Golomb

Hi, Stan,

I'm not sure if your certification of cleaners is present here in Dallas, TX, however the point was not lost on me. I did scour the neighborhood for a new cleaners, and used as the criteria a certification from an industry group out of Washington, I believe.

This cleaner has been very professional, from product to staff. And thanks to the transcript of your presentation to an industry convention, I am satisfied with the asking price of $1.40 per shirt. This gives them a working profit margin -- and me a working product!

Thanks for all your insights,

Kyle R. Ward

Survival tools for small businesses

Wal-Mart, the world's biggest retailer is clobbering small business out of existence. Even manufacturers get clobbered when they can't meet Wal-Mart's requirements. Without doubt Wal-Mart is the big boss in the retail industry. They are clobbering with low price. Anyone wielding a club should not be considered friendly.

Big money investors are using Wal-Mart strategy to get into the drycleaning industry. What these investors don't realize is that Wal-Mart's strength is in its buying power with manufacturers. They are big-volume buyers of popular and name brand products that other retailers cannot match. They also return products that are slow-selling to the manufacturers.

This type of retailing is not applicable in selling drycleaning. Drycleaning is not a mass production business like newsprint coming off presses. Drycleaning is a hands-on intensive business that needs much attention.

Drycleaning is unquestionably a personalized service enterprise. Drycleaning by mass production causes neglect and destructive cleaning: Too many mistakes are made and too many customers become dissatisfied.

Personalized service begins when the drycleaner fulfills the customer's needs. By communicating with the customer the drycleaner knows exactly what the "wants" are.

Furthermore, drycleaners should not cave in to price cutting and give away profits. The best solution is to provide a better service that customers may recognize so that price shopping doesn't become the main issue.

Quality service can be accomplished when we take drycleaning more seriously and stop wanting the cleaning machine to do our thinking and make decisions. This is computer-oriented thinking.

Customers don't blame the cleaning machine for shoddy work. They blame the operator.

The true value of our services can be measure by comments from customers, when our expertise becomes praiseworthy with compliments. That is the kind of assurance that gives us confidence to do better and provide drycleaning services as claimed.

Do customers really care to know about the functions of the drycleaning process or do they want to know what drycleaning does?

Putting this in another perspective, what do consumers know about the process on how Campbell's makes chicken noodle soup? Do consumers care more about health benefits or taste? According to the National Clothesline, a recent survey was made by researchers from Carnegie Mellon University in Pittsburgh, PA.

Drycleaners and customers were questioned in the interviews on their perceptions of drycleaning. They were asked for their views on exposure to chemicals from drycleaning. They were not asked questions about home spot removal products that are not rinsed from garments. This research was nothing but a ploy to discredit drycleaners. Nothing was mentioned on benefits.

However, a common reaction from the participants in the interview, when asked about drycleaning, was "I don't know how drycleaning works."

Why should they? They were not planning on going into the drycleaning business. All they wanted to know is how to get their clothes cleaned the best way possible.

Looking for the perfect solvent? There is no such thing. Water, the most abundant solvent on earth, is not perfect. It will solubilize more substances, and people have been know to drown in it.

Then why can't we find a substitute for water? We can't because there is no substitute.

The search for the perfect cleaning solvent is nothing more than a paradoxical statement.

When compared with other solvents, perchloroethylene (perc) has proven to be the best. Perc, as it is being used today, is a safe solvent. During the cleaning and drying process, the liquid and vapor is contained. Those who use perc as a spray for cold spot removal cause it to be in vapor form that becomes a health hazard. Those who label perc as a substance that can cause cancer explain it with uncertainty. When they use words such as "likely," there is not strong evidence.

There is evidence that some vegetables are carcinogenic. Should we quit eating vegetables? There are many old-time drycleaners who have been cleaning with perc for many years who will eventually die from old age and other natural causes.

Doesn't that tell us something?

There was this old-time drycleaner who suffered a heart attack on a cold winter night. On his way to the hospital he was covered with blankets. The paramedic asked, "Are you comfortable?"

The old timer replied, "I make a good living."

The saying "I just want to make a good living" is still true today with small business. Once there were more than 20 million small businesses here in the United States. Not any more. That number is depleting, usurped and swallowed by the big retailers, drycleaners included.

However, manufacturers and other big businesses are being helped by the government. According to Time magazine (February 7, 2000), millions in campaign contributions are given to help politicians get elected. For instance, scrap metal dealers gave politicians $300,000 in contributions in order to get off the hook for Superfund liabilities at toxic waste sites. This brought favorable treatment for the junk dealers.

In politics, it is not how good one does. It is how good one gives.

Drycleaners cannot win favors by making big contributions to political candidates. They don't have that kind of money. However there are other ways in winning political and community favor.

Getting involved in community activities helps build a good reputation. This coming presidential Election Day,. November 7, is a good opportunity to get involved that political candidates will appreciate. A message on poly bags such as, "Be A Good Citizen and Vote" will attract attention.

The popular saying is that all business is local. Not any more. Direct mail and the internet have changed that. However, drycleaning is best provided on the local level.

Customers want their cleaning done on the local level. It is not unusual for the customer to ask. "Do you send garments out to be drycleaned or do you clean them here?" The customer feels comfortable when you tell them that you dryclean on the premises.

Drycleaning messages on the national level are open-ended. Drycleaners are asked to participate. We are waiting to hear from the Korean drycleaners. Stadham Supply Co. in Baltimore, MD, has come up with its latest message: "Support your Local Drycleaners. They Are Your Clothes Best Friend." Jerry Weinstein, Stadham's owner, and his employees believe that customers come first.

Now the drycleaners who are standing on the sidelines, wringing their hands, waiting for the good times, are reminded: There is room for another trailer down by the creek.

Date created:  May 30 2000
Copyright © 2000, National Clothesline
Maintained by: Hal Horning
Hal Horning