Capturing Apartment Laundry Customers

1. Capturing Apartment Laundry Customers Brian Wallace President/CEO Coin Laundry Association brian@coinlaundry.org www.coinlaundry.org

2. For a free download of this presentation, visit: www.coinlaundry.org/materials

3. Attracting Apartment Laundry Customers • Who is our competition? • Where is the greatest potential for growth? • How do retail laundries compare to rental housing laundries? • What is happening in the rental housing industry? • What is happening in the apartment laundry industry? • How do we market our services to renters? • Today’s opportunities

4. Who is the competition? • Other retail, self-service laundries • Many markets are crowded, if not saturated • Finite number of customers/wash-loads • Average laundry faces 2.1 competitors within a one-mile radius; 32% face 3.0 or more • From a “big picture” perspective, it is favorable to grow the overall business as opposed to fighting over the existing sales volume • Traditional resistance to vend price increases among laundry owners have made it difficult to grow sales volume from existing customers • Lack of advertising and marketing expenditures make it difficult to draw new customers and customers from competing stores

5. Who is the competition? • Apartment, rental, and other multi-family housing: • 70% to 80% of renters are using either common area laundry rooms or in-unit laundry pairs to do their laundry • Huge market of customers in our demographic target range, many of whom are already self-service customers • Have renters received effective marketing messages on the benefits of using our stores? • Don’t we have a better laundry solution?

6. Who is the competition? • Home laundry equipment: • 35 billion wash loads per year in the U.S. • It is difficult to compete with the perceived convenience and privacy of home laundry • Effective marketing and public relations can bring a larger percentage of these loads through retail laundries • Opportunities exist for large load (comforters, etc.) and wash-dry-fold business • What are the trends in sales of larger capacity, frontload washers for home use?

7. Where is the greatest potential for growth? • I would argue apartment/rental housing laundry presents the best opportunity to grow our industry • Identical target demographics • Most are already self-service laundry customers • Only 20% to 30% of renters currently utilize retail, self-service laundries • Retail, self-service laundries can offer more to these key customers • Significant sales volume is available from rental units: • Renters spend more than $44/month on laundry; $11 billion per year? Capturing just an additional 5% of renters would grow retail laundry by 11% or $550 million per year

8. What do renters look for in a Laundromat? • Rank of factors influencing choice of Laundromat by renters: • Cleanliness • Having Enough Machines Available When Needed • Feeling Safe and Secure • Availability of Large Washers • Competitive Vend Prices • Hours of Operation • Proximity to Home • Availability of Parking • Attendant on Duty (Source: CLA’s Laundry Habits Survey)

9. What do all laundry customers want from us? • Laundry customers want time-savings and convenience in a clean, safe environment that is close to home. • Can we provide for a better overall laundry experience for these households?

10. How do retail laundries compare to laundries in rental housing? • Advantages for retail laundries over laundries in rental housing: • Time-savings and convenience • Larger capacity washers • Many machines available • “Get it all done at once” • Other services available (vending, wash-dry-fold, d/c, etc.) • Folding tables, carts, and coin changers • Safety and security • Place of public accommodation • Video surveillance • Attendant on duty • Cleanliness • Cleaner clothes (?) • Best overall laundry experience

11. How do retail laundries compare to laundry in rental housing? • Advantages of laundry in rental housing over retail, self-service laundries: • Convenience: Residents do not have to leave the building to do laundry. Like home washer owners, apartment laundry users can argue that “they can do other things” while doing laundry. • Cost: In most cases, vend prices are lower in apartment laundry rooms and other rental housing laundry compared to retail laundry stores.

12. What’s happening in the rental housing market? • Market conditions continue to be positive for apartment industry • The demographic group with the biggest impact on the apartment industry is the “echo-boomers” – the children of the baby boomers (MultiFamily Executive Magazine) • The total number of apartment renters will rise upwards of 1.8 million – from 15.9 million in 2005 to 17.7 million in 2015. (Harvard University Joint Center for Housing Studies) • Vacancy rates in a recession?

13. What’s happening in the rental housing industry? • Rental housing is in the midst of a strong recovery. (Source: NMHC) • What type of properties do renters live in? • Single-family homes 32% • Structures w/ 2-4 units 19% • Apartments with 5+ units 44% • Mobile homes 04% • What do renters earn? • Annual HH income (mean) $35,308 • Annual HH income (median) $25,500 (Source: NMHC)

14. What’s happening in rental housing laundry? • Common area laundry rooms are improving: • Frontload washers • Card systems • Improved appearance & amenities • Tenants are looking for laundry services as one of most important amenities in choosing a residence • Both segments of the self-service laundry industry face tough competition from in-unit laundry equipment

15. What’s happening in rental housing laundry? • Where do renters do their laundry? • Own living space 29% • Community laundry room 36% • Laundromat 32% • Other location 03% (Source: CLA’s Laundry Habits Survey)

16. What’s happening in rental housing laundry? • 67% of renters live within one-mile of nearest retail laundry; nearly 50% have a store within 6 blocks • Renters are slightly more likely to try wash-dry-fold services according to CLA survey • 86% of regular coin laundry customers are renters (Source: CLA’s Laundry Habits Survey)

17. What’s happening in rental housing laundry? • What do the laundry route operators have to say: • In the past, “the common perception of community area laundry rooms used to be that they’re stuffy, cramped, noisy, and generally unfriendly places where residents don’t want to spend their time or money doing laundry…” • The case made for common area laundry rooms for residents: • Less expensive than purchasing/maintaining in-unit equipment and paying increased utilities • In-unit machines take up valuable apartment space • There is time-savings in laundry rooms with multiple machines compared to one small load at a time with in-unit equipment. (source: Multi-Housing Laundry Association – MLA)

18. What’s happening in rental housing laundry? • According to MLA, here’s how to design an appealing common area laundry room: • Convenience is the key • Make it safe • Keep a clean area • Make sure equipment works • Keep costs down • Supply enough machines • Add technology • Enhance the social element • Brighten up (Source: www.mla-online.com)

19. What are the “crossover” demographics? • We are focused on renters, but what other groups “cross-over” within the renter population? • Low income households • Regular self-service laundry customers have average household incomes of $28,400 (CLA’s Laundry Customer Profile) • Young people • More than 80% of HHs aged 25 or under are renters; 67% of HHs aged 25 to 29 are renters • Predominately female patrons • More renter-occupied family households are headed by women (6.5 million) than men (2 million) • Ethnic customer segments; especially Latino families • During the decade 1994-2004, the number of minority renters rose by nearly 3 million households. By 2015, minorities are expected to make up the majority of renters. (The Joint Center for Housing Studies of Harvard University) • Hispanics outspend non-Hispanics on laundry by a margin of 27% (Uno Hispanic Research) • 40 million Hispanics live in the U.S. with $863 billion in spending power

20. How do we market our services to renters? • Strategy • Focus on what we do better than the competition • Focus on “solution marketing” • We can handle large loads • No waiting for machines • “Get it all done at once” • Promote benefits over features. • Set a budget as a percentage of sales and commit long-term • Consistency is a must in the face of high turnover ratios among renters • Be selective: our budgets won’t support “mass marketing” efforts • Renters will not know the benefits of using our stores unless we tell them! • Count customers one at a time; each new customer is likely worth $500 to $1000 per year

21. Who Else is Marketing to Renters? • Self-storage facilities • Apartment owners • Restaurant delivery • Rental furniture/appliances • Renters insurance • Video rental • Mobile phones/service • Internet providers • Movers/truck rental • Debt consolidation • Mattress stores • Used cars • Minimum car insurance • “Payday” loans • U.S. government

22. How to reach renters? • Look at how these other products and services try to reach renters in your market and “borrow” those ideas: • Website • Google Ads • Flyers • Door hangers • Targeted direct mail • “welcome wagon” • Cross-promotion with other local businesses

23. How to reach renters? • Many of these other products and services needed by renters are heavily promoted via the internet • For households with access to the internet, those with incomes under $25k spend the most time on-line. (Information Economics & Policy, 2008) • Can we learn some lessons from this?

24. How to reach renters? • rent.com • move.com • forrent.com • pararentar.com • whitefence.com • apartments.com • apartmentguide.com • apartmentfinder.com • apartmentratings.com • rentalsonline.com • apartmentsearch.com • mynewplace.moving.com • selfstorage.org

25. Today’s Opportunities • The overwhelming majority of self-service laundry customers reside in rental housing; most have not been invited to try the local retail laundry • Only 7% of total U.S. households have used a retail laundry in the past 12 months • We have built a $5 billion per year industry without advertising our services to our key demographic; “the sky is the limit” • CLA’s public relations efforts aim to improve the image and perception of the laundry business • The laundry business is becoming more competitive: • Home laundry is improving • Rental housing laundry is improving • Your retail competitors are improving • We must advertise to compete, survive, and thrive!

26. For a free download of this presentation, visit: www.coinlaundry.org/materials