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Smaller towns are growing too

As laundry chains and dry-cleaning franchises proliferate across India metropolitan cities, perhaps investors have forgotten that the rise in disposable incomes and the demand for professional cleaning is not restricted to megalopolises alone. Residents of Tier II and Tier III cities also live aspirational lives, earn well and want big-city services like laundries at their doorstep, not to mention hotels and hospitals in such areas, which cannot compromise on quality. Clean India Journal spoke to four laundry entrepreneurs in smaller centres to figure out their business potential, the unique challenges they face and how they battle traditional mindsets:

Chitradurga is a small town in Karnataka, 200 kilometres from Bengaluru. It has a population of about 175,000 people and is famous for its caves and historic forts. It doesn’t sound like the kind of place where someone should invest in a laundry business, does it? But Suhas Kakulam of Maa Reva Dry Cleaners did just that, and is successfully running his venture in what most of us would refer to as ‘small-town India’.

In B2B, we are getting a very good response. Frankly, we are doing a very small percentage in B2C. As compared to traditional laundries, we are doing far better in every kind of service. But the major complaint we face is in price issues.
– Suhas Kakulam

 

By no means is Lucknow a small town, yet those who flock to metropolitan cities to set up laundry franchises may be surprised to learn that Girish Manocha’s Garment Care Dry Cleaners has enough business to justify five collection centres across prime locations of the city. Clearly, mofussil India has a hunger for professional laundry and dry-cleaning services. But has its entire potential been tapped?

Business characteristics

Kakulam shared that 80% of his business comes from B2B, while the remainder comes from B2C. Most of Kakulam’s jobs come from hotels in Chitradurga, which, despite being three-star budget facilities, still need high standards of dry-cleaning service. He provides door to door collection service in every hotel, and pick-up and drop service at homes too. The demand is enough for him to require a 30kg washer-extractor, 15kg washerextractor, tumble dryer and three steam tables and bedsheet roll press machine.

Our competitors don’t charge GST, so the final price to their customers is a little less, which is why some of our customers do complain about it.
– Vikash Das

In Manocha’s case, the tables are reversed; 80% of his business comes from B2C and 20% from B2B. They also do job-works for a few other dry-cleaners, and have the capacity to process 2,000 retail garments a day.

Kakulam said, “In B2B, we are getting a very good response. Frankly, we are doing a very small percentage in B2C. As compared to traditional laundries, we are doing far better in every kind of service. But the major complaint we face is in price issues.”

Water issues

Availability of the appropriate quality and required quantity of water can make or break a laundry business. Kakulam’s daily water requirement is 7000-8000 litres, with which he washes 700-800 kg of linen. However, Chitradurga is a drought-prone place; hence, Kakulam has to pay a little extra for water with lower TDS. “I am constantly looking for sources from which I can regularly source the right type of water,” he said. “But sourcing this, along with chemicals, skilled labour and logistics can become difficult to manage.”

We have been getting good response from customers, but the difficulty is more because unskilled people have been doing this job for the past many decades
– Harpeet Singh  

Manocha, on the other hand, purchases a softener for use in the boilers.

Turnaround time

In a service-oriented industry, customer expectations need to be fulfilled, every single time. Since much of Kakulam’s linen comes from hotels, which need to keep changing sheets and towels in every room, he adheres to a strict turnaround time of 24 hours. However, guests may not be able to wait that long to have their clothes laundered; he has to deliver according to the guest’s needs.

Manocha’s setup has the same parameter for linen, and delivers a guest’s laundry within 5-8 hours. He said, “Being in the service industry, we need to be precise on both timing and quality.”

Pricing

The buck stops here. Kakulam faces complaints about pricing from both B2B and B2C segments. He explained: “Traditional cleaners who depend only on manual, unskilled labour don’t need electricity. In our case, this difference is a little difficult to handle and for customers to understand. However, since we provide quality service within the designated time period, our customers are also willing to pay a little more”.

The impact of GST

Vikash Das, whose facility is in Jamshedpur, says that the imposition of GST was a good measure, since he gets input credit for every spend. Since it is also his business policy to have transparent, allwhite transactions, it has been of great help.

Unfortunately, he also revealed: “Our competitors don’t charge GST, so the final price to their customers is a little less, which is why some of our customers do complain about it.”

Manocha concurred, adding: “Explaining to customers why we charge GST while many others don’t is a major challenge.”

Location too, plays a role in how one can run one’s business. Chitradurga’s small-budget hotels deal only in cash; few accept GST.

Harpeet Singh Ahuja of Novex Laundry Services, Patiala, had the last word: “We have been getting good response from customers, but the difficulty is more because unskilled people have been doing this job for the past many decade s”. Getting people to choose a professional service provider over a traditional one is the biggest obstacle; as this is slowly conquered, there will be no end to the number of professional laundries that can, will and should sprout up in small-town India.

As laundry chains and dry-cleaning franchises proliferate across India metropolitan cities, perhaps investors have forgotten that the rise in disposable incomes and the demand for professional cleaning is not restricted to megalopolises alone. Residents of Tier II and Tier III cities also live aspirational lives, earn well and want big-city services like laundries at their doorstep, not to mention hotels and hospitals in such areas, which cannot compromise on quality. Clean India Journal spoke to four laundry entrepreneurs in smaller centres to figure out their business potential, the unique challenges they face and how they battle traditional mindsets: Chitradurga is…

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