Market Analysis of The Laundry Business In North America

The laundry business in North America can be daunting to new entrepreneurs. To combat this, the market research and analysis section of your business plan is important. A thorough market analysis provides you with industry data and research. The insights gained from a thorough market analysis provide a road map for success, helping to mitigate risks and capitalize on opportunities.

Biztraction’s analysts have already conducted market analysis of the laundry business in Africa and Asia. We also have similar articles on laundry businesses in New Zealand and Australia. In this article, we will be carrying out a market analysis of the laundry business in North America.

Overview of the Laundry Business in North America

Bordered by the Arctic Ocean in the North and the Atlantic Ocean in the East, North America covers approximately 24,709,000 square kilometers. This is roughly 16.5% of the earth’s land area and 4.8% of its surface area. It is the third largest continent by size and has the 4th largest with a population of 592 million people. As of 2023, the continent’s GDP(Purchasing Power Parity) was $30.61 trillion.

North America holds the largest share of the global dry cleaning services market. Home to world powers like the United States of America, Canada, and Mexico, the continent’s laundry and dry cleaning business is a thriving market. The U.S. laundry industry accumulated a revenue of 6.6 billion dollars between 2018 and 2023, at a Compound Annual Growth Rate of 0.5%. The industry employs about 148,000 people. Canada, on the other hand, employs 8,827 people in over 2,600 laundry businesses with a revenue of $1.0 billion. Mexico boasts of 74,000 employees and 40,225 laundry businesses.

Target Audience and Market

As with all businesses, understanding your market and target audience is important.

Recently, the laundry business in North America has been under economic stress for many reasons. The COVID-19 pandemic and its resulting lock down, for instance, led to a huge change in work and clothing practices, which indirectly affected the laundromat business.

In the US, data on the dry cleaning industry can be contradictory. For instance, dry cleaning operations declined by 10% in the last decade. However, the US is concentrated with the 50 biggest companies in the laundry business globally, accounting for about 15% of revenue. The laundry industry in the US began to balance out due to a drop in home ownership rates. Due to the 2022-2023 recession, most people cannot purchase a new washer/dryer. Homeowners also have less disposable income, leading them to find a necessary laundry alternative. 

Canada’s dry cleaning industry, on the other hand, was highly affected by the COVID-19 pandemic. After three years, they have barely recovered. The pandemic led to lasting changes around how people dressed and where they worked, leading to a reduced need for laundromats.

Location is also a huge factor in this. For instance, America’s Southeast is the most populated region. However, it does not have a high percentage of laundromats because most of the high-traffic areas are in suburban areas. Dry cleaners earn more from these densely populated areas with access to large customer pools.

Retail dry cleaning remains a top source of income in the laundry and dry cleaning business. Unlike Europe, dry cleaning services are commonly marketed to working-class individuals and students. In the United States, 30% of consumers use dry cleaning services. An average American family will spend an average of $500 on dry cleaning annually.

Competition

The competition in North America’s laundry market is high. One laundry business that stands out is Pressto,a Spanish dry-cleaning franchise located in over 25 countries. With over 400 shops opened around the world, Pressto offers dry cleaning and laundry services, repairs and alterations for loved clothes, and luggage restoration services. A sustainable brand, they offer speedy, quality service, alongside extra hygiene cleaning services with vacuum cleaners and special detergents. 

Presto ensures that its customers get a quality customer experience, and it is one of the top 100 worldwide franchises, the only one in the industry. This cements them as an industry leader and expert.

Another prominent laundry franchise in North America is Alliance Laundry. With over 4,000 employees, Alliance operates in 170 countries via 650 distributors and 9 offices. The company focuses on commercial laundry. They also produce, design, and market solutions and equipment for commercial laundromats across the globe. 

Alliance operates under five brands: Speed Queen, Unimax, Huebsch, Primus, and IPSO. Through Speed Queen, they serve many audiences, from laundromats and individuals to hospitality and healthcare industries, restaurants, professional care institutions, industrial facilities, etc. 

Alliance prides itself on giving first-class services. Their customers are family-oriented people, multinational hotels, and commercial laundromats. 

Another notable player in this industry is Martinizing Cleaners. Since 1949, Martinizing Cleaners has opened more than 350 stores around North America.

A customer-centrist business, they offer express VIP bags and services to their loyal customers, alongside Refer-a-Friend savings. They are also environmentally friendly and operate by a set of codes. Their services include professional dry cleaning, washing, drying and folding, comforters and household items, alterations and repairs, gown preservation, shoe cleaning and repair, and rug cleaning.

Barriers to Entry

Dry cleaners in North America have proven their ability to succeed locally without overextending their businesses. This localized industry limits any company from controlling the market. Laundry workers are also showing a growing interest in diversified revenue streams. However, the biggest entry barrier to the North American laundry business is the rising costs of inflation and rising operational costs of equipment.

Conclusion

Evaluating how well your services align with market demands? Determining the potential of a specific region for your laundromat? This comprehensive market analysis gives investors and entrepreneurs the knowledge to navigate the complex business landscape confidently.