Competition: What does it mean for Small Store?

 

So a new 3,000 sq ft laundromat is moving into an already crowded area of town and near your small 1,000 sq ft store. What does that mean for you? 

-Less marketshare and less revenue are two outcomes

-Less problems with machines because they aren't being used as much and fewer problem customers because they are trying another location are two others. However if you are following the four rules of laundromat ownership correctly, there is another possible outcome and one that I've seen happen time and again:
You'll get more business!  

I think ultimately new stores will bring MORE customers to the area. A new store will no doubt do their usual grand openings and there will be the usual press and buzz about it. After the first month I think it is interesting but ultimately the affect on your store should be minimal if everything else is the same. My experience has been in most circumstances 80% of a laundromat's customers will try a new mat, however if the four rules of running a laundromat are being obeyed then the original mat will get 80% of those customers back.
4-rules-of-laundromat-ownership-success.html

Here is why:
-the new mat probably doesn't doesn't use small chassis washers and the size of your store probably dictates you have small chassis washers so most of your customers are small chassis customers

-small chassis customers are not going to pay $4-$5 per load when the same size is $3 or less at your mat. This was proven when I had a new mat open 10 blocks from my location. At first they had a few small chassis machines, but they moved to all large chassis machines. Originally I got the extra customers who came to the new store for small washers but couldn't get one because there wasn't enough around. Then I got them all the customers when they got rid of their small machines.
This competitor and I have co-existed for 13 years in a healthy symbiotic relationship 

-the sizzle of a new mat is off set by the higher prices. A competitor might be $9 on 60lb washers. Your side of town might be more price sensitive compared to other parts of town. Your 60lb washers are $7.50. Once again people are not going to pay lots more when they don't have to. When a big new mat opened eight blocks from my second store my customers tried the new place but came back because I kept my prices lower. It was only 50 cents lower but that was enough for most customers

-pretend the new laundromat spent $2M to build with the land. That usually means they have a large monthly payment. If you bought your mat for $300K and financed 100% over a 20 year mortgage it is a much less monthly payment that is needed to be made back before profit each month than a $2M build

-the map in this article represents almost all of the laundromats in a 3 mile radius of my first store, there are lots of them, but there is also a huge population density. Remember, you don’t need to attract everybody to come to the mat. You only need enough to have the machines spin an average of 2 1/2 to 3 times a day. With a small mat that is a lot easier to do than a large mat. Remember it only takes 3-5 customers at one time to completely fill up all the washers and dryers at a small mat. Larger stores will need more than that

-some customers like a smaller store because it is usually quieter. They might not like the music or sounds of video games 

-smaller stores make it easier for people to see who is inside or who is coming in for those worried about being bothered by panhandlers and others not doing wash

-a new competitor will bring in more customers from a different side of town. While most will stay at the new store, all mats in the area will benefit when customers want to try other stores nearby for any of the previously mentioned reasons

-some neighborhood residents don't drive and they walk to their neighborhood mat 

-sometimes in cities people will drive 20-30 minutes and go miles out of their way for stores as long as there is a fast street or expressway to get there but they won't drive a mile on city streets to get somewhere. If you are on a "fast street" people will come to you

-similar to above reason is the street patterns of the neighborhoodsaround your mat. Diagonal streets, multiple corners, highways, parkways, can all be barriers to keep customers of different mats from trying other stores and act like natural barriers like rivers or lakes

-many new stores tend to be card only or mostly cards. People that want to spend coins are going to want to go somewhere

-is the new store open 24 hours? Police or city officials might see an uptick in crime or perceived crime and they are not  going to want that and will be watching that closely because they are not going to want more crime so if there is trouble the new mat might have to cut back hours and or get some bad press

-You can use the excuse to do a facelift of your store or change equipment

-Find something unique to your store. My first store was the only one to offer top load washers. There wasn't many but for those who wanted them the nearest ones were 3 miles away

-your mat might have been there for years. That doesn't mean it still will be if you don't follow the laundromat rules of success, but peoples habits are hard to break and they will come to your mat

-I bet there are still people in your area that don't know you are there. That means there are new audiences to find you. New people move into the apartments and houses all the time so why would  they go a few miles out of their way when they can go a few blocks to you so spend some advertising money!

-build on your stores existing strengths and uniqueness, or find something quick and advertise it. Maybe it is a card payment system, a particular brand or type of machine, some customer amenities, or whatever your customers say make your store a good place for them to go to

To sum up, the new store is always something to keep an eye on, but advertise my last point above, and keep following the four rules of successful laundromat ownership and ultimately I think your laundromat will thrive rather than just survive a new competitor. I've made it happen.

Ev
A Heck of A Nice Guy