Dry Cleaning Industry
Let’s face it – most twenty and thirty something year old’s cannot afford expensive clothing, let alone dry cleaning services that revolve around cleaning those expensive articles of clothing. Factor this in with the Great Recession and clothing improvements that have led to clothing being easily washed at home? It is pretty obvious why the dry cleaning industry today has hit some rough patches with overwhelmingly stagnant growth. Since the recession, even with improving economic conditions, consumers across the United States have been wary about spending limited income on unnecessary products and services. These two factors have been the major contributors to the declining dry cleaning industry today.
They dry cleaning industry has experienced decreased revenue that is expected to continue through 2021, with a marginal annual growth rate of less than two percent in 2016. The economic forecast for the dry cleaning industry is already leading to declining employment opportunities and dry cleaning business closures. The future of the dry cleaning industry is quickly declining, however many of the dry cleaning businesses today that are still reporting increased profits are focusing on changing the dry cleaning industry. There are so many different trends revolutionizing this industry, and the top dry cleaning businesses are already taking advantage of it.
Dry Cleaning Industry Trends
Even though the dry cleaning industry has seen stagnant growth over the past few years, rebounding economic conditions and the implementation of innovative products and services can be optimized to increase revenues throughout the dry cleaning industry. Consumers today are demanding better customer service, improved technological and sustainable practices, and a variety of specialty services from their dry cleaners. If a dry cleaning business wants to make it in this highly competitive and fragmented industry, here are the major trends to be aware of in the upcoming year:
- Technology: Equipment is essential in every single dry cleaning business, however technology today is leading to major advancements for the dry cleaning industry. Through the collaborative process of innovation and technology, many dry cleaning business owners have the ability to implement new and more effective dry cleaning processes – especially when it comes to providing toxic chemical free and sustainable dry cleaning options. Another major aspect of the technological innovation affecting every retail industry is the ability to utilize a variety of products to increase customer satisfaction and back of the house business operations. Some of the most important products and services being used throughout every retail industry today consist of: advanced, updated point of sale systems to speed up consumer check out times; cloud based systems to improve front and back of the house operations; the Internet of Things in a variety of different products; mobile apps to increase brand awareness and retain customer loyalty; inventory management systems to limit revenue loss and confusion. Avoiding these technological advancements will greatly hurt any dry cleaning business, especially in a time where dry cleaning businesses everywhere are fighting to not become obsolete.
- Green Products and Government Regulations: Going green and sustainability movements are dominating the United States today. Consumers everywhere, and employees, are refusing to bring their needs to any business that is unwilling to promote clean, sustainable, and chemical free options. According to The Worldwide Cleaning Industry Association (ISSA), green cleaning is the number one trend in the dry cleaning industry today, and is often being referred to as a marketplace phenomenon. They also provide a variety of resources for all dry cleaning businesses to stay up to date on current government regulations that are completely changing the way operations are done in the dry cleaning industry. By taking advantage of this rapidly growing trend, many dry cleaning businesses can see improved revenue and customer retention.
- Customer Service: Unfortunately, many customers today do not enjoy going to their local dry cleaner. Time and time again, dry cleaning establishments have proven to have a track record of sub-par customer service. In order to stay afloat in a customer oriented industry, making the consumer the top priority is essential. Many successful dry cleaning businesses today are implementing loyalty cards, top notch technological systems to improve the customer experience, and a variety of specialty services. The top specialty services that are improving customer satisfaction for the dry cleaning industry include:
- Pick Up and Delivery Services: Consumers today, especially younger generations, want personalized customer service. Many local dry cleaning businesses today are actively advertising for their specialized pick up and delivery services; some innovative businesses are even implementing top notch technological programs that allow the business owner (or employees) to see which regular customers have not been in for awhile. This allows business owners to effectively reach out to loyal customers while offering free pick up and delivery services for their needs.
- Alterations: This is not a vital service that every dry cleaning business offers, but it is definitely a great niche area for growing dry cleaning businesses to consider. Offering more quality services, especially with bundling prices, can lead to better customer satisfaction and increased customer retention. Plus, if a customer is pleased with the above and beyond customer service and specialty services, they may even start referring friends and family to that dry cleaning business.
- Off Season Storage: Not everyone needs this service today, especially with younger generations having tight budgets and cheap clothing that they are not too concerned with storing. However, this is a quality niche area that can be catered and marketed towards wealthy clients.
- Marketing and Social Media: Advertising is unavoidable in any consumer oriented industry, however many industries today have been slow to adopt the new ways of marketing. Through a strong online presence, many dry cleaning businesses can see increased profits and more foot traffic – especially if that online presence is filled with great customer reviews. Creating an online presence that reaches key demographics include a strong social media marketing standing, an easy to use and informative website, an mobile website and possibly a mobile application, and strong and effective content marketing campaigns. Utilizing the internet for social media and overall marketing is unavoidable today, and this may be the top way to grow a dry cleaning business.
Types of Dry Cleaning Loans
| Types | Rates | Terms | Funding |
|---|---|---|---|
| Bank | 6-10% | 3-7 years | 14-30 days |
| SBA | 6-10% | 3-7 years | 10-30 days |
| Line of Credit | 5-15% | 1 – 3 years | 7-30 days |
| Alternative | 6-25% | 1-5 years | 5-7 days |
| Cash Advance | 1.16-1.55 | 3-24 months | 1-3 days |
Dry Cleaning Bank Loans
Banks offer about the best rates that begin in the mid single digits, and terms starting at three years for working capital, up to ten years for equipment financing, and terms up to 30 years for the purchase or refinancing of commercial real estate.
Dry Cleaning Business SBA Loans
SBA loan rates start around 6% for term loans, and can go up to 8% if using the SBA Express line of credit. Terms can range anywhere from 3-25 years depending upon use. While you will need good credit to get approved, the SBA loan program’s purpose is to provide financing to company’s that are unable to obtain conventional bank financing without the SBA enhancement.
Alternative Dry Cleaning Business Loans
This is the perfect financing option for dry cleaning businesses that have tried but were unable to get approved for traditional financing. While the rates aren’t as good as a bank business loan, alternative loans are still affordable and can provide nearly immediate financing for any small business with decent credit and cash flow.
Dry Cleaning Business Cash Advance
A way for a dry cleaning business to obtain short term operating capital without having to go through a long loan process is to sell a portion of their future bank deposit cash-flow or to sell some of their future credit card processing transactions. A merchant cash advance company can provide a dry cleaning business with an advance and then collect repayment through automated clearing house or by having a percentage of their credit card transactions remitted to the lender.
