Can Tide Dry Cleaners clean up in St. Louis?
Feb 10, 2013 (Menafn - St. Louis Post-Dispatch - McClatchy-Tribune Information Services via COMTEX) --Procter & Gamble is making a push into the dry cleaning business in St. Louis, sparking worry among scores of mom-and-pop operators who might be muscled by the marketing giant.
P&G opened its "Tide Dry Cleaners" franchise in Ballwin last month, and plans seven more here.
It is a new strategy for the 83 billion purveyor or soaps, cosmetics and toothpaste. The manufacturing company hopes to leverage the fame of its Tide laundry detergent into a foothold in the service economy.
"Consumers have generally been dissatisfied with dry cleaning," says Jeff Wampler, the man in charge of P&G's national dry cleaning foray. "There has been poor customer service, missing buttons, an unpleasant smell."
The company, based in Cincinnati, dealt with the latter problem by infusing the stores with the aroma of Tide detergent. The orange and yellow decor also is straight from the Tide design.
The company is appealing to customers with curbside service by a Tide "valet" who will pick up and deliver clothes to cars. Late-night customers can pick up their clean clothes from keypad lockers, open 24 hours, and leave dirty clothes in a drop box.
Tide also is touting the stores' use of environmentally friendly cleansers, trumpeting its "Green Earth" cleaning method in its marketing.
The added services and green message are part of P&G's strategy to push into an extremely competitive business populated by dozens of family operators in St. Louis. There are 26 dry cleaners within six miles of the new Tide location on Clayton Road, about half a mile west of Woods Mill Road.
The dry cleaning business in St. Louis already is facing some headwinds -- from the rising cost of hangers, to environmental regulations, to a casual-wear culture that lessens the need for dry cleaning.
Small players here are surprised that P&G wants to barge in.
"I do not think they'll make it," said Jayme Sadl, owner with his wife of four Star Crest cleaners locations, one of them near the Tide shop. "They don't know anything about dry cleaning. They make laundry detergent. The St. Louis market is flooded, forever, with dry cleaners."
P&G begs to differ. Wampler is CEO of Agile Pursuits, P&G's franchising subsidiary. It was set up four years ago as part of the company's effort to expand its well-known consumer brands into related businesses.
Besides the dry cleaners, Wampler's division also runs a "Mr. Clean" carwash business.
Lots of market research led P&G to conclude that dry cleaning was ripe for a new approach. The company tried out its concept in Kansas City, beginning in 2009. "It went exceptionally well," says Wampler, and Tide now has four Kansas City stores. There are only 15 Tide stores nationwide.
Now, P&G is looking for entrepreneurs to franchise the concept across the country.
In St. Louis, it found Brian Bruce and Garrett Lott. Lott, 41, is a Republican party activist who was formerly involved in the management of state license fee offices and in a home building business. He now he owns a chain of ATMs around St. Louis.
Bruce, 44, is a commercial real estate developer involved in projects such as the Railway Exchange Building and the Council Tower.
Neither knew anything about dry cleaning, but Bruce figured that teaming with Tide was a winner. "You're starting with a credible brand," says Bruce.
He says P&G spent many millions of dollars developing the concept and the first stores.
"They have a lot to lose. Their brand could be damaged if this doesn't work," Bruce said.
Bruce and Lott have much to lose, too. It takes 652,000 to 897,000 in investment to open a Tide Dry Cleaners, the company said in a 2009 disclosure to potential franchisees. Lott says their investment is on the "high end" of that.
The new business is advertising in the Ladue News and Town & Style, and on Y98 and KEZK radio.
The size of that investment puzzles their competitors, who say it's tough to get rich cleaning clothes in St. Louis.
Jeff Rehr got into dry cleaning in 2009, when he tired of life as a traveling salesman of medical devices. "I thought there must be something better than traveling five nights a week," he says.
Now he owns seven VIP Cleaners stores and two cleaning plants.
"I have no 401(k). I have not funded my children's education funds," Rehr says.
That's typical for new entrants to dry cleaning. The upfront investment is heavy, and it takes years to pay off.
Operating the business is getting more expensive. "Margins are narrower. Supply costs are up," says Rehr.
The cost of wire hangers is up 15 to 20 percent because of new duties imposed on imports from Vietnam, the world's leading hanger maker. The U.S. accused Vietnam of dumping hangers here at an unfairly low price.
The long, slow shift to casual dress is still hurting cleaners. It damaged one of Rehr's shops near Anheuser-Busch InBev headquarters in south St. Louis. "InBev made every day casual -- jeans, polo shirts. My business went down 50 to 60 percent in a week."
Meanwhile, cleaners are slowly bidding adieu to their main cleansing agent, perchloroethylene, due to tougher and more expensive environmental regulations. Called perc, it's been the mainstay of dry cleaning for half a century.
"Perc is on the way out, but 55 percent of the cleaners here probably still use perc," says Rehr.
The National Institute for Occupational Safety and Health calls it a "potential" carcinogen. Long-term exposure among dry cleaning workers can cause mild memory loss, vision problems, slowed reaction times and other problems.
The EPA considers it hazardous waste. That's making landlords reluctant to rent to dry cleaners for fear that the chemical could contaminate the property.
The problem is that new, "green" cleansers don't work as well. "That means more time on the spotting board," getting stains out by hand, says Rehr.
It also means expensive new machines, which can run 30,000 to 90,000.
Those pressures take a toll. "We've seen many going out of business, or on the verge," said Rehr.
Bruce and Lott said they covered their own lack of dry cleaning background by hiring a manager with 25 years in the business.
They are betting that they'll succeed by providing a better customer experience as well as clean clothes. Customers can look beyond the brightly-lit counters in the stores to see the washing and pressing machines in back.
Cleaning stores tend to be hot, and that can turn employees "crabby," says Lott, so they've trained air conditioning ducts on employee workstations. Employees are expected to smile, and greet customers within seconds.
Pleasing customers is the key to staying in business, as Tide's competitors readily agree.
About half a mile from the Tide store, Korean immigrant Kim Chae was tending the counter at her Gateway Cleaners one day recently. Her husband was pressing clothes in the back.
"We put in 10, 12 hours a day," she said. "There's not a lot of money here."
Is she worried about Procter & Gamble? "There's nothing I can do," she says. "Just keep good quality for the customer."
She points to the little tag in the collar of a shirt left by a customer that morning.
"He wants it this way," she says, smoothing it down flat. "He can't stand it when it's up the other way.
"The cleaning business is personal touch. Most customers, I remember their name."
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