Note: The following is an excerpt from an address given by Jim Barry at the International Drycleaners Congress convention in Australia last fall. Barry started Pride Cleaners in 1982 when he consolidated ten plants in the Kansas City area.
In 1987, Pride Cleaners was sold to Johnson Group Cleaners PLC, the largest drycleaning company in the United Kingdom. Barry remained with the Johnson group in various capacities until the U.S. operations were sold in 1999 to Delia's Cleaners. He assumed the role of chairman of the new entity, which encompasses 380 locations. More recently, he has been involved with GreenEarth Cleaning, which is introducing a new silicone-based cleaning solvent to the industry.
I am very pleased and proud to have been asked to speak at IDC Convention 2000 on a subject I truly love and have passionately lived for the last 18 years -- my experience in the drycleaning industry. For some, that may sound like a rather boring career, but for me it has been as totally involving, exciting, fulfilling and rewarding as anything I've ever done.
It has allowed me the opportunity to travel the world, to learn the industry completely, to interact with some of the best minds in the drycleaning industry, and, in the process, to grow immensely as an individual. It has also allowed me to have a profound effect on the many lives that became intertwined with mine as my career in drycleaning unfolded. I took these opportunities and responsibilities very seriously.
Many of you were born into the drycleaning business -- maybe you had a choice; maybe you didn't. For myself, I made a very conscious decision to enter the drycleaning industry. I want to share with you some of the various aspects of my 18 varied years in drycleaning. I will share many unspoken aspects of that careerŠ some will be very personal. I hope you will find this story interesting, intriguing, exciting and, hopefully, motivating. Drycleaning is a great business!
But first, I think it is necessary to take you back to a time before I was a drycleaner so that you can get a glimpse into my motivation and willingness to take risks, to do what was necessary to build a successful drycleaning business.
As I prepared for this presentation, it gave me an opportunity to reminisce, and in so doing, to ask myself what was the difference from one career to another. I found that as I dug deeper, there really isn't a difference. The same dedication, hard work, disciplined approach, detailed planning, well-defined mission, and a little good luck are part of any successful career, whether it is a jet fighter pilot or a drycleaner, Indian chief or candlestick maker.
My earlier career as jet a fighter pilot and Naval Officer prepared me well for the future. It was a foundation that provided guiding principles, leadership opportunities, a chance to learn from my mistakes and those of others, and a real understanding of success through teamwork. No individual is an island. You are only as good as those you surround yourself with. I am starting to sound a little like a Naval recruiting agent, but, in fact, I have outlined the key ingredients of success in any business -- large or small.
Now back to the drycleaning business. In 1982, I sold a paper and chemical distribution business and was looking for another business to buy and build. Drycleaning was one that I was considering. I liked the profit margins I saw, so I looked deeper. I spent over 500 hours preparing a detailed business analysis and plan or pro forma for acquiring and growing a 10-store chain located in Kansas City.
These stores were doing a combined volume of $1.1 million annually. They operated under various names from One Hour Martinizing to Continental to Excel, with no synergy whatsoever. The stores were dirty, and the equipment was old. With a little more market research, I found that the majority of the competition was in the same shape. Thus, I saw an opportunity.
The early 1980s were a time when more and more women were joining the workforce and, thus, had less and less time to do the normal cleaning chores at home. I felt the future looked bright for drycleaning, so I made an offer of $1 million to purchase the 10-store chain.
Now for the financing. Unfortunately, the economy was seeing some very high inflation, and interest rates were in the 17 percent range. With $100,000 down, I convinced a bank to fund the rest with a floating rate and quarterly payments. I knew it was risky, but I figured interest rates couldn't go any higher.
The interest rates got my attention real fast. I could not afford the simplest "hiccup." My business plan had to pay off -- and fast. The basic plan consisted of 10 basic strategies:
1. Consolidate the business under one name, "Pride Cleaners."
2. Clean up the stores: "Take Pride in our Work."
3. Reeducate and motivate employees on the opportunities: "What's in it for me?"
4. Train everyone on attention to detail: Quality, Service, Empower the Employees.
5. Replace cash drawers with computerized registers tracking daily cash and garments in inventory and daily deposits.
6. Comprehensive marketing program.
7. Raise prices.
8. Differentiate ourselves from the competition.
9. Develop economies of scale.
10. Grow the company.
That was the basic plan. After researching the marketplace, it seemed simple. If we could execute, we would be successful.
So, now let me fast forward five years. Was that 10-point basic plan more than just a catchy business plan or was the plan actually followed?
I would like to give you a fairly quick review of the key achievements, as they relate to each of those 10 formative strategies.
1. Consolidate the business under one name. No one company had a dominant position under one name. I felt we needed a company name that was not only catchy, but one that also embodied more than just a company name. I wanted something that could become a rallying point, first for employees, and then for our customers. Pride was born. It was the name on the sign, our logo.
It was also to become an integral part of our culture:
This got everyone focused immediately on "attention to detail." By interviewing employees, I found out most of them did not really like what they were doing. It was a job -- nothing more.
We now had successfully established a dominant name and logo, backed by a passionate group of employees who based their culture around their "pride."
2. Clean up the stores. We had to clean up the stores and "take Pride in our surroundings." It was a big battle at first because we had so much to do. This early battle brought everyone together as a team. If we were going to produce the best quality garments, we needed a "spit and polish" environment for our employees to work in and our customers to experience.
The difference in appearance was dramatic, and it paid immediate benefits. Our employees were happy and proud of where they worked -- and it showed to our customers.
3. Reeducate and motivate employees on the opportunities. If you don't feel good about yourself, and you don't really like your work, I can assure you that your customers will notice. I began by explaining that we would have a few basic principles to operate by. First and foremost, we would "work hard but have fun."
That called for some cultural philosophies to live and work by. Just a few to give you the idea:
I think you get the point. Trite in nature, but powerful when culturized in practice. My personal promise to my employees was that if we were successful in changing the culture, we would have fun at work, and they would end up being the best paid employees in the Kansas City drycleaning business -- because our customers would notice and I would share the rewards.
Five years later, our employees were happy, well-trained and motivated, and well paid. They cared about each other and their customers -- and our customers noticed.
4. Train everyone on attention to detail. This morning you've heard me mention "attention to detail" several times. In naval aviation, it is the difference between life and death. I truly believe it holds the same significance in business.
At Pride, we recognized that we needed to do things differently if we were going to produce quality and service. A name like Pride is a great start, but then you need simple policies, systems and procedures that build upon attention to detail. Let me give you a few examples.
We developed a central laundry second to none. It grew to be a huge facility, producing 65,000 shirts a week. Everything that happened there was based upon minute attention to detail, from delivery routes to production processes to the handling of claims.
It began with a good layout and cleanliness in every area. I wanted our people to feel they could eat off the floors. If you are going to do the best shirts in town, it starts with basic cleanliness. The culture and environment carries over to the shirts produced. Every shirt was computer-tracked from the time it entered the plant to the time it left.
Each lot of shirts was delivered to a specific shirt unit for production. Tail clamps were marked to identify the machine; thus, at inspection it was immediately identifiable where the shirt came from. Then it was quick and easy to determine whether a quality problem was due to the equipment or the operator.
Every shirt was inspected. If a button needed replacement, it didn't get a standard delta button like our competition did. We kept a complete inventory of virtually every button, and we matched them exactly. It's a small thing -- "attention to detail" -- but your employees and customers notice.
Continuing, assembly and delivery had the same details associated with the processes. Shirts were loaded into specially-designed truck boxes that were easy to load. The hangers were held in place and could not fall accidentally on the floor.
Every shirt that left the plant was controlled in numeric order by store. A driver signed out and the manager signed in -- total accountability from start to finish.
You might ask, "Is that level of attention to detail necessary?"
My answer, "Definitely, yes." Example: A customer has a claim or complaint. By merely asking a few questions, we could ultimately know everything about that particular shirt. Tail clamp number, inventory number and customer name allowed us to know what day the shirt was processed, in what lot, on what press, by which operator and at what time of day.
So, first of all, we look pretty professional and organized to the customer in solving a problem. Secondly, because of the "attention to detail," problems didn't occur very often!
5. Replace cash drawers with computerized registers. This area was really a simple "no-brainer." The original stores had neither real cash nor inventory control. We devised a simple system that allowed us to track each invoice the way you would track a check in your checkbook. At the end of each day, we were then able to merely reconcile "work in" versus "work out," and the result was what was left hanging on the line. Very simple, but very effective. Again, it was a system that relied heavily on "attention to detail" and accountability at all levels.
As it turned out, on those original stores, it had a far more powerful impact than I would have thought. Let me read to you a few comments I made about this in my initial Varsity presentation regarding our new company:
"All stores underwent a name change, and most received extensive remodeling during the first quarter of 1983. The new name, image, logo identification, and marketing caught on quickly. The control of cash and inventory through simple computerized cash tills versus the uncontrolled cash drawer resulted in a 62 percent sales increase during the first 12 months."
Obviously, this was a fantastic result. More importantly, with results like that, it meant that my concerns over the financing of this business at a 17 percent interest rate really were no longer a worry. I might also point out that by the end of that first year, interest rates had, in fact, dropped by almost 450 basis points.
6. Comprehensive marketing program. The sixth strategy that I thought was important for our new company was a synergistic, comprehensive marketing program. My initial market research had shown that my competitors were doing virtually no advertising whatsoever. Also, since most of the major competitors were operating under various different names, it was very difficult for them to make use of any synergy or brand name awareness. About the only thing they could do was relegate marketing to direct mail.
Having the advantage of consolidating under one identifiable name, and the cleaning up of our stores so that it affected the first impression of our customers, I felt we were well positioned for the next step.
The guarantee
Thus, we hired a professional marketing company that could help position Pride and take advantage of our strengths and the perceived weaknesses of our competition. With this, plus help from the Jack Brown organization, which was an outreach of our involvement with the Varsity Group, we put together what I believe was an unbeatable program. It revolved around the motto, "It's Right, It's Ready, It's Guaranteed."
This had been used for years at the Jack Brown organization with tremendous results. I particularly liked it because it was not only a definitive guarantee to our customers, but it was another cultural norm for our employees.
When I first announced this to my senior management team, they almost had heart attacks. They said, "Wait a minute. Do you realize what that statement means? That if a customer is unhappy, you're going to give them their money back? We'll have every single customer saying that they're unhappy and demanding their money back."
I responded by saying, "Ladies and gentlemen, it's time we put our confidence in our systems, procedures and new culture. Quite frankly, we are already making this guarantee. What do we do now if a customer is unhappy? We unequivocally take care of them immediately. All we are doing with this is making it known to our customers, and we are actually taking a bow in front of them for what we are already doing."
I believe that day I had a lot of skeptics in the room. But in short order, based upon the marketing campaigns that took place shortly thereafter, I had some real believers. The public announcement of "It's Right, It's Ready, It's Guaranteed" once again focused our people on quality and service. If we don't want to give back money to our customers or do orders for free, then we've got to be sure that we do it right the first time.
All of our people started believing that we could do it right the first time again and again and again. That confidence was portrayed to our customers via radio and TV advertising, and signage within every store. Even on our invoices, "It's Right, It's Ready, It's Guaranteed" was prominently displayed.
The net result was that after six months, our claims had actually gone down. It was directly attributable to believing in our systems and procedures to produce our customers' work right the first time. When you do that, you know you can stand behind it and publicly make the claim that you are standing behind it.
I'm sure you can recognize the significance of this campaign. This was not a price point. This was not reducing our prices. It was merely selling our employees and customers that Pride stood for uncompromising quality.
We did go on to do certain price point marketing, particularly pertinent to developing additional sales for our huge central laundry. Not only did we promote it in our windows, in print and on the radio, our people lived and breathed the 99-cent promotion. All of our employees throughout the company wore shirts promoting the 99-cent shirt special.
I think it's important to point out here that the 99-cent price point was not very far below the retail level at that time.
Pricing was very important to us, and being the market leader, we did not want to do anything that would be perceived to be serious price-cutting that could in some way destroy the current pricing structure within the marketplace.
Now on to our seventh strategy, and that was to:
7. Raise prices. This was a simple one, and pretty easy to do. When you are offering better service, better quality, more convenience and a quality guarantee, raising your prices is easy.
We chose the strategy of having small regular price increases every quarter. Prices had not been raised for quite some time before I bought the stores, and the price increases we initiated met with no resistance whatsoever. Our employees believed in it, and our customers accepted it. This added to our already increasing sales base.
8. Differentiate ourselves from the competition. Our next strategy was to differentiate ourselves from our competition. I already explained that our competition was not doing very much, so I felt this should be relatively easy to do.
Once again, a great idea from the Varsity Group proved to be a cornerstone in our efforts to differentiate ourselves. It was called: "Crusade for Coats." Utilizing our marketing company and my relationship with the Salvation Army, we teamed up with the leading local TV channel and the Salvation Army to collect coats that would then be given to the needy families.
The crusade for coats
I envisioned a high visibility event to give the coats away that would receive a lot of local attention. The TV channel loved the concept and got behind it fully. In fact, they did a lot of their live weather broadcasts and certain portions of the newscasts directly from various stores, showing the growing mountain of coats that our customers had so graciously donated to this wonderful cause.
The first year we collected and cleaned over 25,000 coats. The City donated the use of the Municipal Auditorium, and the Mayor and the Colonel for the Salvation Army cut the ribbon on our huge "giveaway."
The reception within the community was phenomenal. We received TV coverage, newspaper coverage, even coverage by many of the church affiliations. More importantly, our customers genuinely felt a part of this humanitarian effort. Our employees felt that they were donating something of their own because many of them worked extra hours without pay to clean and organize the thousands of coats.
Money alone could not buy this type of reception from the community. We had one-upped our competition in a way that they couldn't fight back. And we did it in a way where everyone felt good about it -- our employees, our customers and our community.
This continued year after year, and the perception was established that Pride Cleaners was a company that truly gave something back to the community from which it drew its living.
The second way we began to differentiate ourselves from our competition was a by-product of simple visibility. To build upon our commitment to service, we began opening new locations on either end-caps or freestanding pad sites utilizing the high visibility and offering convenient, at-your-car service.
Not only did customers not have to leave their cars, we offered all kinds of additional benefits: free coffee and newspapers in the morning, candy and balloons for the kids, dog biscuits for the dogs.
Periodically, we would have "customer appreciation days," and our management team would cook hot dogs and provide soft drinks free-of-charge to our customers as a way of saying, "Thank you for being a Pride customer."
Often, we were able to get companies such as Coca-Cola to pay for this by using the Coke logo and banner. It was a powerful tool, and one that, once again, was very difficult for our competition to counter. We had truly been successful in differentiating ourselves in our customers' minds and our employees' minds.
9. Develop economies of scale. One of the final things we began putting in place as our growth became a factor was trying to get the most out of our size via economies of sale. We began by strategizing about everything we thought we could do to save money or to extend our influence based on our size and perception within the community.
The "Pride" brand
ne of the things we did was develop a private-label aerosol line that was sold through each one of our retail locations. We had such items as glass cleaners, carpet spotters, disinfectants, etc. These were all excellent products, products that I had personally been associated with in one of my former businesses.
The idea here was that not only would we sell our customers a quality product that worked well, but more importantly, we would allow them to take the Pride Cleaners name home. Then when they had a problem -- such as a spot on their carpet, a window that needed to be cleaned, and a toilet that needed disinfecting -- off the shelf came Pride Cleaners to the rescue. It was one more way to reinforce in the customers' minds that Pride Cleaners was more than just a drycleaner.
We also did the normal things that you would expect, and that includes negotiating with our suppliers for better pricing because of the volume we were able to purchase.
We started buying invoices in guaranteed quantities, we purchased hangers in truckload quantities. We didn't require a salesman to call on us, but rather, we had specified inventory limits and the orders were merely faxed to our various vendors. This resulted in us being able to reduce our overall supply costs from what originally was around 10 to 11 percent to slightly below six percent of sales. Obviously, this was a big help to our bottom line. This process was also extended to the purchase of equipment.
One of the other things we did was to guarantee our vendors that they would always be paid on time or before. Once they were able to expect that, it ultimately paid off in our ability to negotiate overall pricing.
Into grocery stores
Finally, we were able to use our size to garner additional market share through what were uncommon channels at that time. A new grocery chain had moved to Kansas City and planned to expand at a rapid rate. They believed in quality and exceptional service. They had thought about offering in-store drycleaning but weren't sure how that service could be delivered.
After a number of meetings, we convinced them that, first of all, if they were going to be involved in the drycleaning business, Pride Cleaners was the company they should be involved with. Based on our ability to deliver service, we assured them that it would enhance their overall service.
Quite frankly, they were almost trying to be "all things" to their customer. Although I perceived that this could have somewhat of a negative effect on our own retail stores, I felt I would rather be Pride Cleaners on the inside than on the outside.
Utilizing all of our great systems and procedures and attention to detail, we built a private-label brand for the Hy-Vee grocery stores. Some of these locations ended up being in the same shopping centers as some of our stores. As it turned out, because Hy-Vee was open 24 hours a day, 7 days a week, drycleaning was available to the customer during all those hours.
Rather than take away from our business, it actually brought additional customers to that corner. Some traded inside the store where they had access to Saturday evening and Sunday availability, and some merely went to our convenient locations outside.
The net result was a tremendous sales increase. Although on a wholesale basis it helped us fully utilize some of our stores that had remaining capacity, some of these grocery stores reached weekly volume of $9,000 to $10,000.
Today, that business represents almost $2.5 million per year in sales. A true success story in its own right, and one more application of using our size and our systems and procedures to achieve unprecedented growth.
10. Grow the company. The next key strategy was, of course, to grow the company. The ultimate purpose of any business is to grow and prosper. With the above nine strategies in one stage of development or another, growth was not really a difficult thing. However, based upon our successes in some of the areas, I thought it was important to do more than just have organic growth.
I was hearing from many of our competitors during those early years. I truly don't know what was going through their minds at the time; I can only imagine. In retrospect, I can see that the job Pride was doing made their job more difficult. A number of them approached me about possibly acquiring their businesses.
One of those acquisitions was a group of stores (my largest competitor) owned by Ron Benjamin. Ron, being a Harvard MBA, probably outsmarted me. You never know in any acquisition if there are any trap doors or hidden problems.
However, the acquisition of Ron's stores turned out to be everything he said it was and more. In fact, from those negotiations, we developed a relationship of trust and friendship that led to numerous successful joint business ventures from a chain of yogurt stores to various real estate partnerships to the business currently in the spotlight, "GreenEarth Cleaning."
The moral of this story is that those negotiations grew into something far more valuable than the worth of a few drycleaning stores. It was the beginning of something that cannot be measured in terms of dollars and cents.
Five-year growth chart
The net result of all this was that during the first five years, Pride Cleaners grew from the initial ten stores to 52 stores. As part of the acquisitions and consolidations, approximately five of those stores were closed, netting Pride Cleaners 47 strong locations.
That fifth year was a year that made all of us proud. It was an opportunity for all of us to experience just how much we had accomplished during those five years.
Our rapid growth had brought a spotlight to Pride Cleaners in the form of achieving the Inc. 500 status. Inc 500 is a magazine that caters to privately-held, entrepreneurial-type companies. Each year they recognize the "500 Fastest Growing Companies in the US." Although we barely made their list as the 494th fastest growing company, we still considered it a great achievement for the drycleaning industry.
Next, the American Manufacturers Ajax Division honored us when they asked us for permission to use our new central laundry and its growth story for their national advertising program. This was followed by two very flattering articles by the American Drycleaner featuring a growth story of Pride Cleaners and one of our central laundry facilities. On the heels of all of this came the American Drycleaner Design Award for two of our newer plants.
With all of this national recognition, it was only natural that local attention followed. If Pride Cleaners was not a well-known cleaner before that year began, it certainly was by year's end. There were numerous local newspaper and magazine articles about the company that culminated in Pride Cleaners' "Crusade for Coats" program being named the Volunteer Project of the Year.
Date created: December 29, 2000 Last modified: December 29, 2000 Copyright © 2001, BPS Communications