And now, the Russian Evolution
Attendees from around the world had an
opportunity to hear guest speaker Vadim Samokhvalov discuss the
“Russian Evolution” of drycleaning during the
International Drycleaners Congress’ summer convention in
London, England.
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He believes a “normal evolutionary
process is underway” in Russia, ensuring that drycleaning
plants will improve and become stronger to avoid being
overtaken by the competition.
Samokhvalov noted that this process of
“natural selection” has long been a part of the
Russian drycleaning industry, which traces its beginnings back
to the late 1950s and early 1960s.
At that time, the Central Committee of the
Communist Party sought to make drycleaning accessible to
everyone as part of the “socialistic dream,”
proposing an overall annual target average of 4 kg (8.8 pounds)
of drycleaned garments and 72 kg (158 pounds) of washed
textiles for every household in the country.
By the mid-1990s, nearly 30 years later,
Russia contained about 3,500 plants, most of which were
equipped with East German, Czech or domestically-made
machinery. However, despite such growth, the ideal expectations
of the country’s planned economic development were never
achieved. Instead, the typical citizen only drycleaned 1 kg and
washed 5.2 kg of textiles annually. Although, Samokhvalov
noted, one bright spot was Moscow, which differentiated
dramatically from the rest of Russia, coming very close to
achieving the desired numbers.
Great political and economic reforms in
the 1990s soon ushered in a new age for the Russian drycleaning
industry, resulting in a “free market with normal
competition and all preconditions for natural evolution,”
Samokhvalov explained.
At that time, Russian business conditions
were far from ideal. According to Samokhvalov, most drycleaning
equipment operating in plants was obsolete and required
replacement.
Other problems affected the industry, as
well. The economic reforms lead to a dramatic rising of costs
for electricity, water, spare parts and chemicals. Many company
owners also had no interest in learning how to manage in a
free-market economy and were resistant to investing in new
technology.
Yet, such difficult conditions actually
helped pave the way for a rapid evolution in the industry
because companies that did not adapt did not survive the
hostile, competitive business environment. By 1995, intense
competition dwindled the number of drycleaning plants offering
service from about 3,500 to only 1,000, noted Samokhvalov. As a
result, the prices for drycleaning quickly jumped up by a
factor of 25, even while the average household income dropped
ten times or more.
Drycleaning businesses in Russia then
proceeded to grow in number quickly once again, thanks to many
factors, including a growing consumer demand and clearer
defined business rules. As companies became successful, many
eventually invested in modern Italian or German equipment and
increased their production rate.
However, Samokhvalov pointed out, the
increasing prosperity also lead to a demand for European
quality services, so textiles were often taken to Germany or
other European countries for drycleaning, which caused an
imbalance once again in the national economy.
The few short “golden years”
were succeeded by a financial collapse in August of 1998.
Following the subsequent devaluation of Russia’s
currency, there was a 400 percent price increase for all
imported goods, including textiles, drycleaning equipment,
spare parts and chemicals, Samokhvalov pointed out.
Since then, Russia has recovered again and
Samokhvalov believes the industry has gained back more than it
lost in the 1998 economic collapse. Nowadays, the country
offers a diverse market mix that includes shops that cater to
all economic classes of people.
Though the free market is still in its
infancy, Samokhvalov noted, drycleaners have many fortunes in
their corner. They can expect better loan rates and more
reasonable rent prices than in the past. Also, the opening of a
drycleaning plant is considered newsworthy in the media, often
attended by local government officials.
Other changes in the industry are notable,
as well. The government now requires all drycleaning
establishments to demonstrate compliance of its equipment with
local safety standards within one year of opening.
Drycleaners must also be licensed and
obtain safety certificates for any chemical that they handle,
which, according to Samokhvalov, is usually perc. He estimates
that more than 95 percent of all Russian cleaners use it
because it is highly abundant and affordable in the country and
there is no public backlash against the use of it.
Certainly, the present looks bright for
Russian drycleaners, but Samokhvalov thinks the future will be
just as strong, if not stronger.
While recent market surveys cite that
approximately 25 percent of Russia’s population use
drycleaning services on a more or less permanent basis, that
figure could continue to grow as evolution further refines
industry business practices.
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