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In a headlong spin

Scenario one: Squeezing time between hectic schedules to do laundry, hang the clothes to dry and iron them. Scenario two: Bundle up the laundry and let a professional do the job, just be there to collect the freshly washed or dry-cleaned and ironed clothes.

 

In this day and age, not surprisingly, an increasing number of people are opting for scenario two, as it frees up time to do what people want to do. That explains why, as per a report by Euromonitor International, the laundry sector in India is projected to grow to $76.5 billion in2018. With the current pace of laundry service penetration, it is expected that over three million households may require this service at least once in a week by 2020.

 

It was in 2010 that India was introduced to the concept of western-styled laundromats. The sector has made wide inroads in major cities since then. At present, the country has various small businesses and established laundry setups based on different business models, servingdifferent localities. Some of the players such as Uclean – which is a SME started in 2017 – run organised chain of laundry and home cleaning units across India. A few of these have opted for franchise model and are busy pushing their service in various regions. Lack of time and rising disposable income are the two main factors that are prompting urban India to opt for laundry services. Today, laundromat sector provides dry cleaning services, wash-and-fold services and self-service facilities with more than 33,000 operators across the country.

 

Recently, the laundromat sector saw an influx of funds from angel investors and institutional investors giving small businesses a chance despite the challenges in logistics. As much of the business is unorganised still, solid research is recommended if one is planning on alaundromat enterprise. A clear understanding of business prospects from the locality, expected wash loads per day and customer preference for service and quality is needed.

 

Role of technology

For any business in the service sector, technology – which can spell convenience to both operators and the customers – can change the game. For instance, advanced ordering and payment gateways adopted by the laundry sector keep both demand and service ends at ease, removing any hassle or confusion related to the service. “Technology has made the business more transparent. It is now possible to have constant flow of information regarding pickups, deliveries and payments. Consumer is in the know as long as they are technologysavvy,” says Depender Vohra, the cofounder and CEO of DhobiXpress – a Gurgaon-basedlaundromat.

 

But merely technology will not cut it either. Says Vohra: “We have many customers who are happier with the human touch. Our observation is that clothing has a tremendous emotional quotient therefore customers want to hear a human voice to acknowledge that the garments are going to be taken care of in a delicate manner.” Also, one cannot completely rely on technology support to deal with other issues especially in tier-II cities where customers are notso technology savvy. This may require smart floor and delivery managers, who can satisfy customers through face to face interactions.

 

Customer handling

Manish Saini, who owns and operates Nirmal Laundromat from Raheja Mall in Gurgaon, started his laundromat business in 2014 with just three people and now the count is around 10. Besides this facility, Saini has two more franchises in Gurgaon, which together process about 500 kilogramme of load on an average per day. “Nowadays, customers demand quick service and delivery and we cater to this urgent need by ensuring the delivery of cleaned, washed and ironed laundry same day or very next day,” says Saini. The main business for Saini comes from domestic and resort segments and the business is expected to be profitable by next year or so.

 

Industry insiders say the business is tricky and requires constant innovation and quality serviceto retain existing customers as well as strengthen the consumer base. “Demography changes the way a customer interacts with the service provider. Customers in high profile locations expect more personalised handling and red carpet treatment at all times. As we are servicing Gurgaon only, our frame of reference is limited to that area. The customers from lesser profile areas usually focus on the rates first and services second,” says Ritu Rastogi, COO of DhobiXpress.

 

Dry cleaning is being replaced with specialty cleaning and green cleaning over the past few years and are registering growth. It is also proving to be popular among the customers. Also, according to Vohra, “Professional customers are easier to serve as the types of garments are generally washable and are not accompanied by a long list of instructions. However, the turnaround time for commercial customers is very tight as their garments have to be returned in 24 hours.” Domestic customers, he points out, usually send wedding and evening garments.According to him, these are tricky to dry clean as not all of them are colour-fast.

Operational dynamics

 

Basic investments vary according to locality, floor area, choice of machines and operational size. “To setup a basic (500 square feet), moderate (1,200 square feet) or an advanced (2,000 to 2,500 square feet) laundry facility one needs to invest around Rs 10 lakh, Rs 15 lakh and up to Rs 25 lakh, respectively. The investment may go up further if one opts for imported machines,” says Harshul Agarwal, COO of Washon – a dedicated laundry business operating from Jubilee Hills in Hyderabad.

 

When starting a laundry service, one does not necessarily install brand new machines. One can always upgrade at a later stage. But adequate space to run the facility and skilled staff to manage the operations, delivery and handling of the customers are must. “The cost actually depends on whether a laundry setup acquires new or used machinery such as washers, tumble dryers, hydro extractors, flatbed press and all the other paraphernalia,” says Rastogi of DhobiXpress. The infra costs comprise boilers, gen sets, water and steam piping for machines and at least 500 square yards of operating space plus four delivery vehicles. A basic unit requires two managers (for day and night shifts), eight to 10 workers and at least two drivers, explains Rastogi.

 

Successful entrepreneurs of the laundry sector must address three basic aspects carefully such as manpower retention and management, varying expectations of professional and domestic customers and quality service. “Operation challenges with manpower are moremanageable in tier-I cities compared with tier-II cities. Professional customers have specific expectations that are easy to handle, while domestic customers are more price-oriented and tend to compare with their local dhobhis. They may not at first distinguish the differences thatquality service offers, says Agarwal of Washon. Both sets of customers require a different kind of handling and, according to Agarwal, it may pay to take a year or so to educate the clienteleabout the values and benefits of laundry services.

 

An efficient and well maintained set up helps especially when one targets the delivery-within-a-day segment. Although expensive, new machines consume less water, detergents/ chemicals and electricity despite being heavy duty and can be subjected to prolonged operations for about 15 hours a day. With competition on the rise, the newcomers and the established players in the laundry sector are looking for skilled workforce, advanced machines and theintroduction of some operating norms from the authorities that can guide this growing sectorbetter. “Management hassles begin with uneducated labour force. Factory staff are constantly revolving as the salaries are on the lower side. Quality control is an issue, as the staff are not as dedicated to the parameters as the management wishes,” says Rastogi. Maintenance is a huge task involving both machines and delivery vehicles. Break down time of any machine is critical and causes delays in processing. Contingency for machines is a challenge and is usually ad hoc, adds Rastogi.

 

Its market size and revenue places India among top six countries in the world. According to a report by Zion Market Research, the online laundry service sector is estimated to reach about $96,155 million by 2024, registering a compound annual growth rate of more than 30 per cent. The growth is attributed to the developing economies in Asia Pacific region mainly China and India. But the sector is not without challenges. Over the last few years, several laundry businesses were launched in many cities across India, including Wassup, MyWash, UrbanDhobi, Laundrywala and PickMyLaundry, to name a few. But some have closed down because they failed to scale their business. Lack of skilled workers is a major challenge in this regard and needs to be addressed as soon as possible.

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