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Market Analysis of the Laundry Business in Africa

by Mene Achor
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The world of business can be confusing to new entrepreneurs who are just starting a laundry business in Africa. This is a huge part of why business plans are important, as investing in a new market comes with challenges and hurdles.

A market analysis is a core component of a business plan that involves gathering information on and carrying out a detailed assessment of your market or industry. It is also a technique that investors use in gauging potential opportunities in a region to support their investment activities. It serves as a tool for entrepreneurs to understand the viability of their business ideas. 

A market analysis of the laundry business worldwide looks to answer questions such as – ‘How useful are my services to the market I am targeting?’ or ‘Is this region viable for investments in the laundry business?’. In a series of articles, we will give you insights into the laundry business in various regions, starting with Africa.

Overview of The Laundry Business in Africa

The African economy is vast, consisting of many industries such as trade, agriculture, and human resources. With a population of over 1.3 billion people, the continent is expected to reach a combined GDP of $29 trillion by the year 2050. 

When measured according to Purchasing Power Parity, Egypt has the biggest economy in Africa with a GDP worth $1.898 trillion. Egypt is followed closely by Nigeria ($1.443 trillion) and South Africa ($1.025 trillion). 

Each of these countries also has a large population. Nigeria leads the charge with a population of 223,804,632 people. It is followed closely by Ethiopia and Egypt with populations of 126,527,060 and 112,716,598 people respectively.

A market analysis of the laundry business in Africa shows that a growing number of urban dwellers has increased demand for convenience when it comes to laundry and dry cleaning services. Statista valued Nigeria’s laundry care market at $8.4 million in 2019 and projected a CAGR of 6.4% for ten years. The country also recently formed the Fabricare Professionals and Dry Cleaners Association(FPDA) to protect and advocate for the rights of laundry workers in Nigeria. 

In South Africa, however, data on the laundry business shows mixed realities. Although the industry is growing between 5-10% per annum, dry cleaning services have been in decline for a few years. This is likely caused by a hike in the price of utilities like water, and unstable electricity. Causes of this range from increases in the cost of water to unstable electricity. However, the laundry service industry in South Africa employs more than 50,000 people and services clients across many sectors.

Target Audience and Market

With their large economies and populations, African countries provide a prime ground for laundry businesses to locate and market to potential customers. To identify your target audience within this market, you ask; Who is buying? Why are they buying and how do you ensure they keep buying? 

Global statistics show that a major growth driver of the laundry and dry cleaning market is increased urbanization and the busy lifestyles of the working-class people. This immediately answers ‘Who’ and ‘Why’, a target audience of working-class individuals who don’t have time to do their laundry. Let’s use Nigeria and Egypt as an example.  

About 54.8% of Nigeria’s population makes up its labor force. Out of that number, 75.6% or about 92.72 million people are employed.  In comparison, Egypt’s labor force is made up of 31.39 million people, out of which 29.29 million people are currently employed. 

Identifying Your Target Audience

We can use the data from each country to calculate or assume its potential target market. Let us assume, for instance, that individuals within the above demographic who are too busy to do their laundry, work in the Finance and Insurance, Real Estate, and Manufacturing industries. This is our total addressable market. If we further assume that the Finance and Insurance industry in Nigeria makes up 9.5% of the workforce, then there is a potential 8.81 million customers within that workforce. If Egypt’s Real estate industry makes up 5% of its workforce, that comes to a total of 1.46 million potential customers.

We can break these factors down further into locations within each country. If Lagos state makes up 10% of the Finance and Industry workforce in Nigeria, then potential laundry business owners have a total addressable market of 880,836 potential customers in Lagos. If Cairo, on the other hand, makes up 14% of Egypt’s Real estate workforce, then the state has a total addressable market of 205,030 people (NOTE: These are demo statistics). From this total, we can eliminate people who may already have washing machines at home, or who have in-house help. What is left is the target market.

This is where marketing comes in. To attract customers and ensure that they keep buying, a laundry business needs to market its services to its target audience. 

Competition

Competition is a core part of every industry, and the laundry business is no different. Analyzing competition within a region allows entrepreneurs and investors to identify market prices, well-known products and services, and trends. It also helps you identify their strengths, weak points, and blind spots. In Africa, many laundry businesses offer washing, ironing, dry cleaning, and pickup/delivery services.

One business that stands out is Mr. Jeff Laundry Services, a laundry franchise with locations worldwide. This franchise has over 15 locations in South Africa, 8 in Egypt, and 6 in Kenya. Through an app, this franchise seeks to work with small laundry businesses and entrepreneurs. This allows them create a wide industry network that challenges the traditional laundry model and ensures that customer needs are met with accurate support and information. Mr. Jeff offers weekly subscriptions to its African users, collecting payments with either cash or cards. Their services include washing, ironing, and dry cleaning. 

Similarly, White Rose Dry Cleaners boast of being the biggest laundry service in East Africa. They have over 65 years of experience in the laundry business and over 50 locations in every major city in Uganda and their home country Kenya. White Rose maintains their leadership in the laundry market by investing in equipment, staff training and empowerment, and customer services. They individuals and corporate clients in various sectors such as Hospitality, Entertainment, Health, Governmental institutions, and NGOs.

CleanAce Fabricare Redefined is a Nigerian Laundry and Dry cleaning business that offers a wide range of services. These inlcude laundry and dry cleaning services, tailor repairs, carpet and upholstery cleaning, cobbler services, and specialist services for important pieces such as wedding gowns. As a leader in Africa’s laundry industry and the continent’s only ISO-certified laundry business, CleanAce services enhance the client’s appearance and preserve their wardrobe with professional expertise. Clients can subscribe to the company’s loyalty scheme to get great discounts. CleanAce also creates content containing professional laundry care tips through their Fabricare Redefined service.

Unique Selling Points

There are many laundry businesses around the continent of Africa. However, the above companies have established themselves as leaders in the laundry business throughout Africa by offering quality laundry services and prioritizing customer care.

Each business has a unique selling point that allows them to connect with their customers. Mr. Jeff, for instance, is more digitally focused. Their digital application gives customers more control over their laundry pickup and delivery schedule. They also offer weekly laundry plans. With Mr. Jeff, your laundry is measured according to size and not individual clothing. Laundry pickup and delivery drivers usually arrive with a Mr.Jeff laundry bag, and their sizes range from 4-10kg. 

White Rose Drycleaners, on the other hand, direct their services to a wide range of industries and professional individuals. Their popular customers include lodges and restaurants, hotels, corporate and government guest houses, hospitals and clinics, schools, churches, State departments, regulatory bodies, event management firms, and professionals working in industries such as banking and finance.

CleanAce offers complementary services alongside their main laundry and dry cleaning services. For instance, they repair garments with specialist tailoring services. They also offer carpet and upholstery cleaning, fumigation and pest control, and cleaning for homes, offices, and schools. Their specialist services include hand-finished cleaning and pressing for important, fragile, or nostalgic clothing such as wedding gowns. This helps them ease the laundry pressure of their customers so they have more time to spend with themselves and their families.

These businesses understand and fit their services to specific audiences. This is an important skill in the laundry business.

Barriers to Entry

Like other continents, navigating an African market comes with hurdles and potential barriers to entry. The laundry market is no different. These barriers could be naturally occurring or induced by the market competition to protect their market share.

The most common barriers to entry include high startup costs, regulatory hurdles, and fluctuating equipment costs. 
Cash flow is a huge hurdle for entrepreneurs looking to enter the laundry market. In Nigeria, for instance, large-scale laundry business equipment costs can go as high as three million naira. A 12kg/8kg washer-dryer combo can cost as high as ₦1,579,900. In South Africa, the same equipment can go for R21,499. A similar 9kg/5kg washer/dryer combo in Egypt goes for about 35,499 Egyptian pounds. This is a huge amount of money for entrepreneurs in these states. This is often where they seek investors or outside funding. 

New entrepreneurs and investors should also ensure they undergo all legal registrations and permits i.e. business and tax registration, business permits, and health certificates. These processes can be long and burdensome, creating a market entry barrier. In Nigeria, laundry businesses can register with the Corporate Affairs Commission. South African laundromats register with the Companies Intellectual Property Commission (CIPC). The SANS 10146 document also regulates the South African laundry business. The company registration process is longer in Egypt, but you can register your business with the Registry of Commerce. 

Conclusion

The Laundry and Dry Cleaning industry is extensive, stretching across various continents and cultures. This market analysis serves as a guide to understanding aspects of the laundry business in Africa such market trends, target audience and prominent players. It also helps entrepreneurs and investors make accurate, informed decisions and develop effective business strategies.

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