P&G Looks to Change Dry Cleaning for Good
It says it right on the home page: the Tide brand has been
in American homes for 60 years. Now it’s looking to get its own place, which
just happens to be a chain of dry cleaning stores.
According to a Bloomberg News
report, Procter & Gamble’s test of
Tide Dry Cleaners has gone well enough that the manufacturer of Tide is now
looking to extend the brand’s equity through franchises located around the
country.
Count Andrew Cherng, founder of Panda Restaurant Group, among those
ready to get on board with the concept. Mr. Cherng plans to open around 150
Tide locations over the next four years.
"I wasn’t around when McDonald’s was taking franchisees," Mr.
Cherng told the news service. "I’m not going to miss this one."
P&G
first began testing the dry cleaner concept in 2008 and has been refining it
ever since.
Michael Stone, co-founder, president and CEO of The Beanstalk Group,
said Tide Dry Cleaners starts out with an advantage over the competition.
"One would think consumers would trust a Tide Dry Cleaners because they
know P&G is behind it," he told Bloomberg.
P&G is looking
to set itself apart from the competition with GreenEarth technology that cleans
clothes without the use of environment-damaging solvent. Aside from getting
consumers’ clothes clean, Tide Dry Cleaners will also offer drive-thrus, a
24-hour drop box, 24-hour lockers, same-day service and alterations. Actual
services will vary depending on location. Consumers can also enroll in the
Tide Dry Cleaners Rewards program to receive special offers.
Tide Dry Cleaners
is not the only franchise concept working for P&G. The
company has achieved success with its Mr. Clean Performance Car Wash franchises,
which offer adults a free coffee and a place to watch programs on flat-screen
TVs while kids run along the 160-foot wash tunnel and shoot soapsuds at
vehicles passing through.
Discussion Question: What will Tide Dry Cleaners mean for the brand and the
rest of the dry cleaning industry?
Tide certainly has name recognition. But I don’t think its going to turn the dry cleaning industry around. I’m guessing they will have to charge higher prices to pay for all the advertising and franchising fees. To me, it will not be a replacement for having a Korean woman give me a hug and kiss when “hansom Mr. Dave” brings in his dirty shirts.
On paper, this looks like a no-brainer, however, like any franchise program, this will only be as good as the franchisees and the locations. In this day and age of corporate casual, wrinkle free and no-iron clothes, the competition will also be an issue with, perhaps, less business to be had. The name will draw people in, as will the Green component. The quality of cleaning and the service will determine the success.
First a disclaimer: P&G is an associated client of mine but not in the dry cleaning or cleaning products industry. I think the idea of Tide dry cleaning services is absolutely fantastic. If the retail side of this business is operated properly, this will be a new trend in consumer dry cleaning that will catch on and change the industry. In terms of how it will affect traditional dry cleaners, well I think two sorts will still do very well: 1) Premium dry cleaning businesses. 2) The conveniently located dry cleaner in the neighborhood that people know and trust for many years.
I’ll state my bias up front, which is that I’ve done some work with P&G and continue to and I have so much admiration for them it probably colors my comments. That being said, I LOVE that they’ve innovated to take on the major issues of the industry: environmental impact, hours, drop off and pick up–and truly innovated the category. That will give them a huge leg up if they can expand the model quickly before the industry catches up.
Having P&G’s scale behind them certainly should help them dominate a more traditionally mom and pop industry. They’re also leading the way in showing how brands can move from product to services and expand their reach, footprint and dollars — all with a business that is essentially an annuity if you do it right.
The challenge for P&G will fall in managing that service. It’s harder to control service quality than it is to ensure that product comes off the manufacturing line the same way every time. P&G will have its hands full managing franchise consistency and quality, and that will challenge its culture to allow the brand to be disbursed and, essentially, controlled by others. The McDonald’s comparison is apt. They really need to study McD’s on how to franchise a brand without losing control over quality.
While I believe the Tide branding on a dry cleaning business — with the elements of greener cleaning and superior service — will impart an element of trust and, therefore, interest from consumers, franchisee management is a core issue. I hope P&G invites chains like McDonald’s and Little Caeser’s Pizza in for collaboration and advice.
Managing quality is a big issue, but not the only one. Managing franchisee marketing communications out to the marketplace is also a very complex element that will weigh heavily on overall success or lack thereof.
This is a classic roll-up strategy, a no brainer that one wonders why it wasn’t done years ago.
They are doing something leading companies rarely do and that is to go out of their comfort zones. As in the past, most of today’s leading companies are insular to their business and ultimately fail and disappear. P&G does not see itself as a manufacturer or even a marketer of goods. It sees itself as builder of brands. They are not discussing where they can get the next share point in the soap business, but where they can take their brands and find value.
They are not stuck on the fact that they have infrastructure and factories that make products that they sell today. They look for future value. And if it means investments outside of today’s business for a radical new business tomorrow, then so be it.
If there is such a thing as a 50-year business plan for P&G, it may well say “We will develop and market our brands as annuities. We will no longer be a manufacturer. We will not be sellers of products. Our assets will be our brands.”
I don’t know if the concept has legs or not, but they do have a huge asset in Andrew Cherng. With Panda, Cherng has shown outstanding skills at building a consistent store network filled with outstanding employees. If he can’t make this work, no one can.
Not sure this has wings. Just because you have the Tide name does not mean it will be applicable to the Dry Cleaning business. I would also posit there may be a huge disconnect with Tide (washing) and a dry cleaning concept.
If Count Cherng sees promise, I am inclined to overlook my doubts. In the few blocks surrounding my office in Manhattan, I’ve watched cleaners reduce their prices over 30% to bring in and retain customers. And there is free pickup and delivery. But that’s New York.
I agree with those who raise questions around the change in wardrobe that allows consumers to put off the need for dry cleaning. I question the ability to find tailors who have the same high quality skills (a different length on each pant leg not withstanding). I can’t help but think of Home Expo and what a disaster that was for the consumer, with all those independent contractors.
This is P&G and they do their homework, so I believe there’s a pot of gold at the end of the Tide franchiser rainbow.
Something has happened to the dry cleaning business, at least here in South Florida. It is difficult to find that person who will “hug you” as you bring in your dirty clothes as mentioned previously. It has also become less frequent that one has a need for the dry cleaner. So many have gone by the wayside. There is still a need, so Mr. P&G, I live in South Florida. Come on down and bring your Tide Dry Cleaner.
The concept of a franchise is generally lucrative for the franchisor and franchisee when operated and run correctly with a precise and specific set of quality control provisions that are mandatory for every franchisee. However, when a large corporation or a brand such as Tide moves to franchise the mark into a product or service outside of the core brand, the customer loyalty it has come to enjoy is potentially at risk.
In this case, I have concerns that, given how fickle consumers are about their local dry cleaners, cobblers, and grocery stores, even the slightest tear, stain, garment loss or poor alteration will be viewed negatively against P&G, not the local proprietor or franchisee, and potentially result in an adverse reaction to the legacy product.
The dry cleaning business, unlike the laundromat business (probably a smarter play for Tide given their core competence), is notorious for weak customer loyalty. People will move their business at the first loss of a shirt button simply because there are so many options and will then promptly forget their previous dry cleaner as fast as they found him.
In the end, Tide dry cleaners will have a chance at penetrating the marketplace if they can compete in pricing and turnaround, but the bar is much higher for an iconic brand like Tide to provide a service with a level of quality and reliability that truly wipes out the mom and pop shop down the block.
Time will tell if this will work, but I have my doubts. This concept looks to leverage the operational strengths of a franchise with the customer recognition of a brand, but will only survive if it can avoid their inherent dangers.
The current market is dominated by mom and pop outfits. As such, costs and innovation are held to a minimum. However, as new environmental laws have forced many to upgrade or go out of business, this may be an opportune time to enter the market.
Franchises bring operational efficiencies and economies of scale. This affords them healthy margins and the ability to invest in Marketing and R&D. Customers reward franchises that are run well. They pay a premium for familiarity and quality for the product or service they offer. The Brand behind the franchise helps define its value proposition. A strong brand can buttress a potent franchise if the two complement each other and the venture is managed well.
But franchises require a heavy upfront spend and a proven track record. The franchiser needs to control the entire process and provide a product that cannot be substituted to keep the franchisee in the fold. That’s why fast food franchises make sense. I’m not sure the same applies here. Wouldn’t it be cheaper for a Dry Cleaner to just set up shop himself with all the same equipment? What happens if the franchisee goes for a cheaper knockoff detergent? The customer can’t “taste” the difference. And how important are brands in a business that has yet to have any? Will I be compelled to switch from my current dry cleaner just because my mom used to use Tide at home?
If I were a P&G investor I would be concerned. Their entire success has come from branching out horizontally to have a Brand (and brand extensions) in nearly every drugstore aisle. But this sounds a lot like vertical integration to me. If P&G wants to get closer to the customer, is it a smart move to rely on franchisees? Doesn’t this require experience and insight? And will this reinforce the Tide brand and lead to a surge in demand of Tide detergent for the home? I can only think of Kiehl’s as a similar CPG offshoot to successfully master the retail marketplace and establish their brand in such a manner as to build their sales across other channels. But Kiehl’s is otherwise a completely different entity, selling products, not services, in all their channels, and not through franchisees.
I figure the proof is in the pudding. Is the market ripe for more convenient, more ecological cleaners? I think so. But how important is a brand like Tide to entice a customer to leave their current solution. And what special advantage does Tide have to offer? Is their formula of detergent important to the customer? Could John Elway, retired Denver Broncos QB, open up his own chain of Dry Cleaners and be just as successful? I don’t see why not.
PS I understand this concept is not limited to Tide. Henkel is doing the same.
Dry cleaners have been a highly fractionalized business. Like many of the commentator’s, I use my local cleaners because they do a great job, know me and I know them. Would I switch to a new Tide dry cleaners? No, but if I moved to a new market, I would likely try a Tide brand cleaners before I tried a single store operator.
I do think this idea has legs. They have a great brand and the market does not have dominant player.
Dry cleaning is a highly fragmented and entrepreneurial industry. Competing in a guerrilla warfare environment is more difficult than against an “evil empire.”
Tide is a great brand. But, parity (or close to parity) may be reached by a supplier in the industry who understands the strength of branding. Tide’s positioning is about clean clothes. But, that is not the core issue for dry cleaners. Clean is a given; dry cleaners are about caring for clothes, sewing-on buttons, ironing the collars properly, etc. Those little things that mean everything are easier to execute when the owner and their spouse are watching every detail.
Green dry cleaning, free pick-up and delivery, 24 hour drop boxes and reward programs are already readily available in the marketplace – hence no “big idea.” No doubt the marketing and merchandising for Tide Dry Cleaning will be second to none; a big advantage. But, at $950,000 it will expensive to open a franchise. Having written that, I assume P&G will be successful selling franchises as they know the metrics. It will, however, be a long and tedious fight to earn a reasonable share of the market.
Local entrepreneurs will compete favorable in a price driven environment when their cost of business is lower, as well with a product where quality is paramount. In the long run and on a micro level, this is a fight that the local entrepreneur can win.