Dry Store Failures
By Deborah Rechnitz CMA CMC
You can call them dry stores, drop shops, or just a call office without a plant behind it. By whatever name you apply, they are frequently doomed to failure.
A Historical Perspective. The growth rate of retail dry stores has been significant over the last few years. Their growth rate may actually be exceeding new retail plant locations. Some of the reasons for this growth are obvious. In some cases, landlords have refused to allow a plant to be installed for fear of perc contamination. In other cases, plant owners have avoided new plants for the very same reason. Sometimes plants have been removed, or ``dried up" in the industry vernacular, as volume continued to fall in economically changing neighborhoods where drycleaning is less and less of a viable business and the cost of maintaining a plant is no longer justified. Here volume just continues to drop.
Other reasons may be just as obvious, but not necessarily as logical. Frequently the rent factor is considered in deciding whether to install a plant or leave it dry. After all, you can put in a smaller dry store than a plant and cut your rent expense by up to 50%. The shortage of employees also seems to be a part of this decision. Dry cleaners often tell me they can't find enough employees to operate a plant nor do they need as talented an employee to run the counter, as you would have for a plant. Finally, it takes less of a financial investment to install a dry store as compared to a processing plant. Regardless of the specific reason, and I've only touched on a few of the more common ones, the growth of dry stores continues to be strong.
Disappointing Sales. The outcomes of these investments have been less than exciting. The projection for a plant counter may be $10,000 per week. The projection for a dry store, in the identical location, may only be $5,000. In many markets, the dry store sales may only average $2,000 per week. These stores may have rent and labor costs of a combined 45% before ever processing the work. These results are very disappointing even after taking a smaller space and reducing the overall investment.
Locations that have great sales have those sales for a reason. The same is true for locations with lower sales. Frequently the reason provided by owners of disappointing dry store locations is that the location is ``only a dry store". Well, that's one explanation, but is it the only explanation? Are there reasons that a given location has not reached its potential that could be addressed? Are there actions that can be taken to improve the sales?
The Self-Fulfilling Prophesy. The reasons for many stores not achieving their potential sales based on location, demographics, traffic patterns and other success factors, may be a direct result of the owner's mistaken assumptions and cost saving approach. The assumption that a dry store will never do as well as a store comes from the experience of those operators that dried up activated plants and continued to see sales declines. Keep in mind that the sales would have continued to fall regardless of the level of plant activation. This assumption, combined with cost saving tactics continues to drive down sales.
Leasing a small space for a dry store is generally a 20' linear frontage somewhere in the middle of a strip center. A plant would generally have a 40' linear space and instead of 1000 square feet there might be 2,000 square feet. What does a larger space mean? In the eyes of the owner it means more rent expense with not enough sales to support it. In the eyes of the consumer it means more visibility. It probably means a bigger sign to fill more of the linear space available providing more exposure to the consumer. A bigger space frequently looks like a more successful operation to the consumer and generally successful, affluent consumers want to do business with other successful people. This visible sign of success in a large storefront is not available with a small dry store. Sales growth is at a significant disadvantage.
Another cost saving strategy at dry stores is that idea that you need less talented people working in a dry store. After all, they don't need to know how to remove spots, clean, or press. Frequently, they don't need to know how to assemble or bag. In fact, they rarely look very closely at the garments at all. And yet, when a customer comes to the counter at a plant and asks a technical question, the cleaner/spotter/manager may be available to answer the question, adding great credibility to the operation and build a reputation with the customer. Without that talent or even a semblance of it at a counter of a dry store, there is no opportunity to build that reputation. Trained customer service representatives will certainly cost more money in terms of training and retention wages. An investment in building their knowledge base may be returned by higher sales. Otherwise, sales growth is at a significant disadvantage.
Obviously it takes less money to open a dry store. The rent is ? the money. The equipment is nearly non-existent except for possibly a point of sale computer system. The leasehold improvements can be the bare minimum with a few counters, rails, and maybe a carpet. The end result is a bare look and feel. There's no activity because of the lack of a plant. What does the customer see? A plant, again, provides a sense of investment for the future along with a sense of activity, although production is frequently completed by 3 p.m. and they don't see any real activity during some of the busiest hours of the day. Increasing the décor costs of a dry store could do more than just increase the investment required. It may show a commitment by the owners to bring customers in, make them feel comfortable and secure to drop off their garments and know that the garments will be well cared for in the interim. With out this approach, sales growth is at a significant disadvantage.
The Future of Dry Stores. Are dry stores doomed to failure? Absolutely not. If you believe that they can not succeed, then they will not succeed. On the other hand, everything that is different about a dry store has been created by its owners and is not an inherent problem with dry stores themselves.
If you believe that you have a potentially great location for a retail counter, then put one in and make it a success. There is no reason that a dry store needs to be ? the size of a plant. The dry store needs to be as big as possible to make a statement in the market place and provide a place to display and store the inventory. There is no reason that the dry store should have less talented and knowledgeable people than a plant. In plant training can be a prerequisite for customer service representatives. There is no reason it can't be nicely decorated. Properly presented, this investment can return itself many times in increased sales. There is no reason that it should not be open the same hours as the plant or provide the same service level as a plant.
Yes, all of these concepts will increase the original investment. It may also increase the long term volume of the location and that is, after all, the real purpose of opening the doors in the first place.
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