American Drycleaner - January 2021

© Copyright 2021 American Trade Magazines All rights reserved.

JANUARY 2021

®

Surviving the Unavoidable Event

The Coronavirus Pandemic INSURANCE: ARE YOU SURE YOU’RE COVERED? CLEAN SHOW POSTPONED UNTIL SUMMER 2022

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drycleaner drycleaner A M E R I C A N

®

January 2021

Vol. 87, No. 9

FEATURES

DEPARTMENTS

((Photo: © IgorVetushko/Depositphotos)

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Publisher’s Impact Award

“Impact” can be a loaded word. While many deserving individuals are eligible for this award every year, there was only one choice for 2020. The global pandemic had a devastating impact on the drycleaning industry, and cleaners will feel those effects for years to come.

We’ve spoken with industry leaders to get their views on the events of 2020 and what lessons cleaners can take to build stronger, more successful businesses in a post-pandemic world.

Dave Davis, Editor

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Insurance: Are You Sure You’re Covered?

When it comes to insurance, many dry cleaners feel that they need business degrees to make sense of the options — and requirements — in front of them. Get the information straight from three industry experts about why dry cleaners’ needs differ from other business owners, what’s the most critical coverage to get in place, and how to balance costs vs. coverage so you don’t pay for what you don’t need.

Dave Davis, Editor 2

American Drycleaner, January 2021

Pre-Inspection The Breath Between

4

Talk of the Trade A New (Brighter?) Year

6

Industry News Pandemic Prompts Clean Show Postponement to 2022

17

Around the Industry

20

Classifieds

22

Ad Index

23

Wrinkle in Time The Modern Work-Flow

24

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P RE - I N SP E CT I O N

The Breath Between There’s no magic “reset” button that gets pressed at the moment between 11:59:59 p.m. and 12:00:01 a.m., but for me, the moment between New Year’s Eve and New Year’s Day feels like a still point in time. It’s a moment to pause and take a breath. The old year is firmly in the rearview mirror, and the year ahead is like a field of new-fallen snow.

Unbroken. Unmarred. Full of potential.

It’s a clean break from the past, and if there ever was a year that we’d like to break from, it was 2020. Last year tested us all in ways we never expected. When 2020 started, no one was anticipating that society would come to such a jarring stop. While things won’t snap back to “normal” just because the year has changed on Dave Davis the calendar, there has been far more hope on the horizon in recent weeks than we saw in the depths of 2020.

This issue marks the second year for our Publisher’s Impact Award, and this year we took the word “impact” to heart. The very nature of the drycleaning business was challenged in 2020, and those who recognized that the “old ways” were no longer enough are poised to make 2021 a much brighter year. For this article, we spoke with industry experts to assess how the pandemic changed the business landscape and how cleaners can best position themselves for what comes next.

Our other feature for this issue, “Insurance: Are You Sure You’re Covered?” takes a look at what can be a confusing subject for any small-business owner, and is for dry cleaners in particular. Dry cleaners’ needs are different from most businesses in that they take responsibility for other people’s personal items, and that comes with a notinsignificant liability risk. Is it time to reassess your coverage for the new year?

We also have news of the industry for you in this issue, as well as the results of a survey that asked about how hopeful cleaners are as they look out into a new year. Their answers might surprise you!

It’s a new year. Let’s take a deep breath and then roll up our sleeves for the challenges it will present. It’s time to take on 2021!

ADC American Drycleaner (ISSN 0002-8258) is published monthly except Nov/Dec combined. Subscription prices, payment in advance: U.S., 1 year $46.00; 2 years $92.00. Foreign, 1 year $109.00; 2 years $218.00. Single copies $9.00 for U.S., $18.00 for all other countries. Published

by American Trade Magazines LLC, 650 West Lake Street, Suite 320, Chicago, IL 60661. Periodicals postage paid at Chicago, IL and at additional mailing offices.

POSTMASTER, Send changes of address and form 3579 to American Drycleaner, Subscription Dept., 440 Quadrangle Drive, Suite E, Bolingbrook, IL 60440. Volume 87, number 9. Editorial, executive and advertising offices are at 650 West Lake Street, Suite 320, Chicago, IL 60661.

Charles Thompson, President and Publisher. American Drycleaner is distributed selectively to: qualified dry cleaning plants and distributors in the United States. The publisher reserves the right to reject any advertising for any reason. © Copyright AMERICAN TRADE MAGAZINES LLC, 2021. Printed in U.S.A. No part of this publication may be transmitted or reproduced in any form, electronic or mechanical, without written permission from the publisher or his representative. American Drycleaner does not endorse, recommend or guarantee any article, product, service or information found within. Opinions expressed are those of the writers and do not necessarily reflect the views of American Drycleaner or its staff. While precautions have been taken to ensure the accuracy of the magazine’s contents at time of publication, neither the editors, publishers nor its agents can accept responsibility for damages or injury which may arise therefrom.

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American Drycleaner, January 2021

Publisher Charles Thompson 312-361-1680 cthompson@ATMags.com

Associate Publisher/ National Sales Director Donald Feinstein 312-361-1682 dfeinstein@ATMags.com

Editorial Director Bruce Beggs 312-361-1683 bbeggs@ATMags.com

Editor Dave Davis 312-361-1685 ddavis@ATMags.com

Digital Media Director Nathan Frerichs 312-361-1681 nfrerichs@ATMags.com

Production Manager Mathew Pawlak Advisory Board Jan Barlow Mike Bleier John-Claude Hallak Wesley Nelson Kyle Nesbit Mike Nesbit Fred Schwarzmann Vic Williams Contributing Editors Dan Miller Diana Vollmer Martin Young Office Information Main: 312-361-1700

Subscriptions 847-504-8175 ADC@Omeda.com

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TA L K OF T HE T RA D E

A New (Brighter?) Year F

or the first American Drycleaner Your Views survey of the year, we asked owners and operators of drycleaning businesses, “What is your outlook for your business in 2021?” and the answers were surprisingly optimistic. Here are the results: Our survey revealed that 21.7% of respondents were “Expecting much better results in 2021,” while 33.3% thought “Things will be slightly better than 2020, but we have higher hopes for 2022.” Another 20.3% were staying the course, saying, “We’re hoping for the best, but 2020 taught us to prepare for the worst.” Not everyone was so hopeful, though, with 17.4% saying, “There’s no reason to believe 2021 will be any better than 2020,” and 7.3% believing that “2021 will continue 2020’s downward spiral.”

When the pandemic hit, customer demand changed almost overnight. Our survey asked, “What steps has your business taken to adapt to changing consumer behavior?”

The answers included the following: • “We really pushed our home delivery routes. We closed stores where leases ran out and shortened our hours.”

• “We have closed our physical locations and have gone to a pickup and delivery service using someone else’s facility.”

• “Streamlined routes, pushing more residential.”

• “Pivoted to other revenue streams (such as wash/dry/ fold) and healthcare needs (such as PPE and gowns).

Offered contactless home delivery and cut expenses as much as possible.”

• “Increased our marketing efforts to support our route.”

We also asked, “What is the most important thing that needs to happen before your business can start to return to normal?” The two most popular answers by far were “People start to return to their offices (42.7%) and “Broad distribution of an effective vaccine” (33.8%).

Many experts suggest that, to maintain or to grow their market share, dry cleaners should market more aggressively to remind customers about their services and advertise new offerings. In our survey, 27.5% say they’re going to increase their marketing efforts, while 42% will keep their marketing budget where they are. Only 4.4% said they would decrease their budget, while 26.1% stated that they had no resources to pursue marketing at all.

Finally, we asked what one piece of advice our respon-

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American Drycleaner, January 2021

What is your outlook for your business in 2021?

Expecting much better results in 2021

21.7%

SlightlyWhat better than 2020 but is your outlook for your business in 2021?

33.3% What your outlook for your business in 2021? have higher hopes for is 2022 Hoping for the best but 2020 taught us to prepare for better worst Expecting much results in 2021 No reason to believe 2021 willbetter be better Slightly thanthan 20202020 but have higher hopes for 2022 2021 will continue 2020’s downward Hoping for the best but spiral 2020 taught us to prepare for worst

20.3% 21.7% 17.4% 7.3%

No reason to believe 2021 will be better than 2020 2021 will continue 2020’s downward spiral

33.3%

20.3% 17.4%

7.3%

What is your marketing plan for 2021?

What is your marketing plan for 2021?

Going to increase marketing to bring in new customers Keeping our marketing What budget where it is

27.5%

is your marketing plan for 2021?

Decreasing our marketing budget 4.4% Going to increase marketing to bring in new customers We have no resources to pursue marketing Keeping our marketing budget where it is

42.0%

27.5% 26.1%

42.0%

Decreasing our marketing budget 4.4% We have no resources to pursue marketing

26.1%

dents wish they could have given themselves at this time last year before the pandemic hit. The responses will be sound guidance for the future: • “I was financially prepared for four months of a disaster; I should have prepared for a year plus.”

• “Always make sure you have enough reserves in the bank for a rainy day.”

• “Close underproducing drop stores.”

• “Don’t count on growth every year.”

• “More customer interactions/more marketing.”

• “Always look for the little wins — there are more silver linings today than ever!”

Your Views surveys offer a current snapshot of the trade audience’s views. We invite qualified subscribers to American Drycleaner emails to participate anonymously in this unscientific poll.

ADC www.americandrycleaner.com

Insurance:

Tips for navigating the ever-confusing path to building proper protection

By Dave Davis, Editor

I

t’s a product that no one wants to use, but putting together the proper insurance coverage can save a business when disaster strikes. While some types of insurance are necessary to have in place to acquire a business license, many of the products fall into a gray area where dry cleaners aren’t sure what to get — or how much of it to have.

Add state and local requirements and it can become a mass of confusion that no dry cleaner wants to tackle.

American Drycleaner reached out to three insurance professionals who deal with the drycleaning industry to ask them some common questions business owners face — and get answers to questions often not asked.

Q: What are the basic components of a small-business insurance policy?

Tina Brazier, business development manager, Irving Weber Associates: The basic components of such a policy would be: • General liability, which covers your business against claims as a result of injuries or property damage connected with your business, or even non-physical acts like slander or libel.

• Property insurance, which covers your business’ property and physical assets, including buildings, equipment, inventory, furnishings and computers from loss or damage in the event of man-made disasters like theft and fire, and natural ones like tornadoes, hurricanes and other weather events.

• Workers’ compensation is required in most states and replaces wages and pays for medical care for employees injured while on the job.

• Commercial auto provides coverage for you, your www.americandrycleaner.com

employees and the vehicles you own, lease, rent or borrow — both on the road and off.

• Umbrella insurance gives your business added financial protection from potentially ruinous lawsuits and accidents. It serves as a backstop to other policies, including general liability, filling potential gaps when other coverages have reached their limits. It may also protect against additional liabilities not covered by your other commercial policies.

Harry Carranza, president, Select Risk Insurance Services Inc.: The first concept before addressing a policy per se is to start with an honest assessment of your goal. Too many dry cleaners — and most small-business owners in general — focus strictly on policy cost or what they can get by with to suffice for regulatory, landlord or contractual requirements. Our argument is that proper protection of the business and its assets through a welldesigned risk management program will most typically lead to proper compliance in all such situations but also protect the business owners from exposure to catastrophic loss, which could force them to lose most, if not all, of their time and financial investments in the business, as well as their ongoing livelihoods.

A business owner’s policy (BOP) is the typical property and liability insurance contract for small to medium businesses. It generally provides a nice complement of typical coverages needed in general, and often includes industryspecific endorsements to mirror the business exposures faced by the policyholder. The basic coverage parts included in a BOP are property, business interruption and general liability. Most add options for machinery breakdown (historically referred to as “boiler and machinery” in the fabricare industry) and occasionally add coverage parts for employee benefits liability; non-owned and hired (Continued on page 10)

American Drycleaner, January 2021

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(Photo: © Olivier26/Depostiphotos)

Are You Sure You’re Covered?

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vehicle liability; umbrella liability; and bailee (customers’ goods under your care, custody and control).

The most important aspects of a “small-business policy,” which a policyholder should review, include the declarations pages, insuring clauses (contract), endorsements and exclusions. It is of equal or greater importance to know what you aren’t covered for than it is to know where you are protected. Too many believe they are covered for anything that happens and then are disappointed in event of claim — a la COVID. Business interruption is a great example.

Ann Hawkins, vice president, NIE Insurance: The basic components of a small-business insurance policy will differ for each business. For dry cleaners, I would focus on: • Building coverage if the building is owned by the occupant • Business personal property coverage • Loss of business income coverage • Bailee coverage for customers’ clothing (this is where dry cleaners differ from other small businesses) • Equipment breakdown coverage • Liability coverage for possible third-party incidents There are many more things to consider but these are the basics.

Q: What do you see as the function of insurance when it comes to the post-pandemic world? How has it changed? Will it change going forward?

Carranza: Unfortunately, COVID will have — and already has had — a material impact on cleaning operations. There were some fundamental mistakes in business categorizations as essential and the way PPP (Paycheck Protection Program) funds were used that created problems and I see many struggling just to survive. Postpandemic, I think many believe the at-home or remote worker trends will continue and perhaps expand, which I suspect will lead to a reduction in available pieces of cleaning and, therefore, more attrition. Business owners will have to be much more astute in making future plans.

Hawkins: COVID has put many dry cleaners out of business due to people working from home. The ones who were able to hang on are struggling but determined to make it. They are offering more pickup and delivery, more laundry services, more contract work with apartments, clinics, and so on. Dry cleaners have had challenges before and have survived for many years. I don’t think they will go away. They are ingenious enough to make it work and, someday, people will be going back to offices to work. As for dry cleaners’ insurance, we will never be able to cover a pandemic like this in the property casualty 10

American Drycleaner, January 2021

sector without charging for it. Maybe someday there will be an endorsement to add that coverage, but it would be very expensive and I don’t see it coming soon.

Brazier: The need for alternatives to traditional services in the industry is more important than ever. Mobile apps, delivery or curbside pickup, and on-demand laundry service providers picking up and dropping off clothes are all becoming the norm in the post-pandemic world.

Insurance carriers need to follow suit, offering coverage for these types of services, taking into consideration the decline in business this industry has seen due to COVID. Q: What special coverages might the average drycleaner owner want to explore? Are there any riders that should be discussed?

Hawkins: The additional coverage that should be discussed are: • Utility services time element, which is an extension of loss of business income. It covers the situation where there is no physical damage at your property but there is physical damage to services around you, such as electric transformers, wires, etc., that keep you out of business.

• Utility services direct damage, which would cover repairs to equipment if the above situation did occur and your equipment was damaged when you tried to turn it back on.

There is a myriad of other components, such as attached and detached signs, fences, retaining walls, money coverage, employee dishonesty, computer coverage, cyber liability, employment practices liability and many others.

Brazier: Probably the most important coverage to a dry cleaner is bailee coverage. Bailee covers customer property while it’s in your care, custody and control. That includes while it’s in your locked vehicle — even when your vehicle is away from your store. Bailee covers customer property for all the perils that your property has coverage.

Carranza: A true total-cost-of-risk analysis is important to meet the insured’s primary objectives — and possibly educate them as to why they might want to consider alternative perspectives from their current risk-appetite position. Too many dry cleaners think premium first. It’s understandable — insurance is an intangible business expense and a service you hope to never use! They want the cheapest policy possible and when you start discussing the likelihood of certain scenarios, most typically believe it will never happen to them and end up uninsured or substantially underinsured. Some examples on a lineby-line basis of things we look at include: • Workers’ compensation — Is the payroll allocated in the proper class code categories? Has a rate study (Continued on page 18)

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Surviving the Unavoidable Event The coronavirus pandemic receives the 2020 American Drycleaner Publisher’s Impact Award

By Dave Davis, Editor

L

et’s begin by stating that this is not the award we wanted to give. In the strictest definition of the word “impact,” however, there was only one choice for 2020. When an occurrence establishes a demarcation — where times are described as “before” and “after” the event — its impact is undeniable.

So, it is from this perspective that American Drycleaner recognizes the coronavirus pandemic with its 2020 Publisher’s Impact Award.

The drycleaning industry has seen economic downturns before, to be sure, but there is one significant difference between those past challenges and this one: The global pandemic was brutally fast. As communities went into lockdown in spring and then again in late fall, business for dry cleaners simply vanished.

To explore the effects that the pandemic has had on the drycleaning industry, we asked a group of industry experts to discuss its impact. We wanted to know what specific steps owners can take, both immediately and in the future, to not only survive the pandemic but to come out of it stronger than they were when it began. While their in-depth answers follow, their advice boils down to three simple words: Survive. Reinvent. Evolve.

downturn caused unemployment, which hurt our industry, but now that people can’t go out, go to bars and restaurants, have big weddings or other reasons why they might get dressed up, it’s been devastating for dry cleaners. It’s been much worse than the Great Recession, but hopefully it will also be over quicker.”

Much like the effect the virus has on the human body, exposing underlying health issues that might have been

THE IMPACT FELT AROUND THE WORLD

“Unlike other downturns the industry has experienced in the past, this one was quick,” says Mary Scalco, CEO of the Drycleaning & Laundry Institute (DLI). “It felt like falling off a cliff. Things were fine one day, and the very next day, cleaners were down 70% to 80% or more. It was that dramatic. Unfortunately, we thought this would last a couple of weeks, or maybe a couple of months. At the time, no one realized it was going to last the entire year.”

“We didn’t have widespread ‘stay at home’ orders in 2008,” says John Silverman, president of Tschopp Supply Co., speaking of the last major recession. “The housing 12

American Drycleaner, January 2021

(Photo: iStock.com/ BCFC)

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(Photo: © erryan/Depositphotos)

ATTRACTING A MOVING TARGET

Consumer behavior has always evolved as demographics shift, population centers move and customers’ day-to-day needs change. However, in the past few years, this evolution shifted into high gear as online interactions and expectations began to change the game. Then, as some cleaners were still trying to learn the new rules, the pandemic came, flipped the board over and scattered the pieces.

Working from home, online transactions, touchless www.americandrycleaner.com

payments and a host of other developments left many cleaners scrambling to find their place in this strange new world. Those who become — or remain — adaptable to the changing needs and desires of a newly tech-savvy customer base have a much better chance of surviving this pandemic and thriving in its aftermath.

“Tech-resistant customers have adapted to the convenience of remote transactions and self-service,” says Diana Vollmer, managing director of Ascend Consulting Group and a longtime American Drycleaner columnist.

“They like the ability to use apps 24/7 to get their needs met. They are no longer eager to make a trip or a phone call to get information. Cleaners who have made an aggressive effort to expand their options to their existing and potential customers are going to keep clients wanting the new services, such as RV and boat fabricare cleaning.”

Scalco believes convenience is the keyword for the modern consumer.

“This pandemic put a focus on family, friends and lifestyle,” she says, “especially at the upper end of the economic scale. People say, ‘We can farm this out and let somebody else do it for us so we can have more time to spend on the things that we want to enjoy in life.’”

Blake agrees with this sentiment: “You can mow your own lawn,” he says, “but how many people have a company that comes out and does it for them? They don’t want to take the two hours it takes to do it. This desire is what the cleaning industry has to seize upon.”

Adding new options to make up for declining services is also a way to maintain a relationship with existing clients.

“You will see more and more people working from home and not dressing up for work,” says Kelly Kelleher, vice president of Kelleher Equipment Supply Inc. “We will see a decline in dry cleaning because there will be less need for it. I think it best if the dry cleaner adds services such as fluff and fold to their business. After all, the casual clothes that people are working in from home still need to be laundered.”

However, Fred Schwarzmann, CEO of A.L. Wilson Chemical Company, isn’t sure work-from-home availability will be as big a factor as we move past 2020.

“My own thinking is that more people will return to the office than will not because there are cultural advantages to working collectively, and the technology that supports remote work isn’t going to replace that ▼

ignored or undiscovered in healthier times, the economic effect of the pandemic brought to light the vulnerabilities in many businesses. The effects of inefficiencies, poor business practices and actions that should have been taken long ago suddenly surfaced and were impossible to overlook.

This new reality has caused many dry cleaners to reassess their business model and strategies, evaluate their existing storefronts’ viability, and offer new (for them) choices for their customers, such as wash-dry-fold and route services.

“It comes down to two words: diversification and consolidation,” says Wesley Nelson, president of equipment manufacturer Sankosha USA. “The current crisis has made it necessary for dry cleaners to diversify to maintain and improve their income stream, and it has also accelerated an industrywide consolidation that had already begun before the pandemic.”

“This has really pushed some cleaners to step outside their comfort zone,” says Nora Nealis, CEO of the National Cleaners Association (NCA). “I recently spoke with a cleaner who offers an on-site disinfection service. He’s generating about $1,000 per week from that service. Prepandemic, he might have turned his nose up at that. Postpandemic, it became an important source of revenue.”

Marketing — something that the industry is often accused of avoiding — is another avenue dry cleaners are exploring to connect with their customers.

“Many cleaners were hesitant to do email, Facebook, social media...,” says Peter Blake, executive director of the North East Fabricare Association (NEFA), the South Eastern Fabricare Association (SEFA) and the Mid-Atlantic Association of Cleaners (MAC). “For example, we’ve been telling them for five years to collect email addresses.

This pandemic accentuated the fact that you need to have as many communications vehicles as possible.”

American Drycleaner, January 2021

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face-to-face experience,” he says.

Schwarzmann also points out that many of the people able to work from home weren’t all big drycleaning customers in the first place.

“Many of the people working at big tech companies, for example, were more ‘wash and fold’ customers to begin with,” he says. “They like the convenience of that, but they were never going to do a lot of dry cleaning.”

When restrictions are finally lifted, and people are able to mingle again, some of the stresses dry cleaners have faced will also start to lift. In fact, Nelson believes, the needle may swing in a much more positive direction.

“I expect — I hope — that there will be a boom in travel and events, as there is and will be a tremendous amount of pent-up energy when this is all over,” he says. “The Roaring ’20s followed the last pandemic in the early 20th century, and I expect this to be no different. There will be an influx of dry cleaning as a result, with fewer dry cleaners to benefit.”

Schwarzmann agrees with Nelson’s assessment: “People are going to be hungry for experiences that will drive volume,” he says. “You’re going to want to go out to eat in a restaurant. You’re going to want to get on a plane and go on a trip. You’re going to want to go to a big wedding.

You’re going to want to go see your family. All of these activities drive demand for dry cleaning.”

WHO (AND HOW MANY) TO HIRE?

The pandemic has caused cleaners to rethink how they staff their stores and plants. When business picks up again and starts to approach its “new normal,” these lessons should still be taken to heart.

“I think the pandemic has actually helped the dry cleaner operator in this area,” Kelleher says. “It’s been very difficult to find pressing operators at a rate that the dry cleaner could afford pre-pandemic. This has forced dry cleaners to realize that they could operate differently — and more efficiently. In the past, for instance, a person forced to operate on both the legger and utility press was thought to be ‘improvising’; this could now be viewed as the norm.”

This “work smarter” mindset can also extend to hiring.

“The person behind the counter or answering the phone is the face of your business,” Scalco says. “You may see their pay scale have to go up a little because you’re going 14

American Drycleaner, January 2021

to want a person who can be trained to say, ‘By the way, we’re having a special…,’ or, ‘Did you know we also offer this service?’ Because, many times, customers don’t know you offer that service, and they would love to have that information.”

When staffing — or restaffing — a store, cleaners should also be aware of the benefits hiring from certain groups can bring.

“Take advantage of whatever tax breaks are out there for who you can hire,” Blake says. “There are tax programs where, if you hire veterans or disabled individuals, you can get a tax incentive, which can be pretty sizable.”

GAINING A LARGER SLICE OF THE PIE

Most of the group believes that there will be about 30% fewer drycleaning storefronts once things settle, but no one is certain how the attrition rate will ultimately shake out in the industry. There is no doubt, however, that there will be fewer operators at the end of 2021 than there were in 2019. And, while there may be lower piece counts, as well, thanks to the work-from-home movement and other societal factors, there will still be a need for the classic and new services a dry cleaner provides. So, how can a cleaner gain an increased piece of the market share left by those who are no longer in the business?

Sometimes, the answer can be as simple as asking for it.

“Buy the client list, contact information and sales data from the exiting cleaner,” Vollmer says. “A small investment in the list can allow the seller a small stipend and jump-start your customer expansion, especially if the seller wholeheartedly recommends you.”

For a cleaner getting out of the business because of economic difficulties or just taking this opportunity to retire, Blake believes this type of request can be a blessing.

“It can ease that person’s burden when someone asks, ‘Is there a way that I can take your inventory? You can send your customers here, and I’d be glad to disperse their clothes for you,” he says. “That is a huge service. So, it’s good for the customer, and it’s good for the person who’s closing the doors and trying to get out as quickly as possible.”

“The first thing a customer will do when they see their cleaner has closed is open Google and search ‘dry cleaners around me,’” says Christopher White, executive director (Continued on page 16)

www.americandrycleaner.com

Health benefits plan

(Continued from page 14)

of America’s Best Cleaners (ABC). “Those cleaners in the top three ranked spots by positive reviews will more than likely get that new business. Learn to understand the value of your online reputation and find the right partner to make sure you are getting frequent reviews.”

The basics, of course, should never be neglected.

Schwarzmann believes that there is no substitute for a job well done.

“At the end of the day, word of mouth is still a critical component,” he says, “and if you are known as the dry cleaner in town who puts out an excellent garment, you should get it. Once that happens, you can prove yourself to new prospects.”

For Kelleher, gaining new clients comes down to a 1-23 approach: “First, contact the previous owner and try to work with them in some way to obtain the customer list,” she says. “Second, implement a first-time customer special, and third, advertise all the new laundry and pickup services you’ve developed.”

SEARCHING FOR SILVER LININGS

It’s a fact that the coronavirus has had a devastating impact on the cleaning industry — and society as a whole.

That said, there is much that can be learned from this time in our history. Just as the Great Depression left a mark on those who lived through the experience, hard times teach valuable lessons.

“The cleaners who pay attention, invest and educate themselves and their staff will see the benefits,” Blake says. “I think we’ve hit rock bottom, and now we can start to climb up again, and I believe we will climb.”

Nelson feels that surviving such an event also builds stronger communities within the industry.

“I’ve found the cooperation and collaboration of the industry as a whole to be refreshing,” he says. “The virtual events taking place have shown the backbone of our industry and our willingness to work with each other towards a common goal.”

Doing business in the post-pandemic world has also enabled cleaners to benefit from re-examining some of their business practices they might otherwise have left as is.

“A lot of cleaners I’ve talked to have raised their prices, which is a good thing,” Nealis says. “Many of them were reluctant to raise their prices before, but now the circumstances forced them into doing it. And they realized that it 16

American Drycleaner, January 2021

wasn’t the catastrophic effect that they thought it might be.

It’s been a plus for them.”

Many cleaners have learned that the time to be passive and rest on the “way we’ve always done it” mindset is well in the past. Those who are not moving forward will be overtaken by those who are.

“I go out there and try and do something positive to move my business forward every day,” Silverman says, and offers the same advice to cleaners. “Small things can make a big difference, whether it’s spending time repainting and carpeting my call offices or training employees or offering a new service. I would be very proactive and aggressive as far as making sure that I was doing something every day to improve my business.”

THE YEAR THAT WAS, THE YEAR THAT WILL BE

For almost every dry cleaner, 2020 left scars that will take a long time to heal. Understanding certain truths — that everyone is in uncharted waters, the longed-for return to the “old days” isn’t coming, and change is the only constant in the universe — is the first step toward building a better future.

“We’ve been through rocky times before,” Nealis says.

“Maybe not this rocky as this, but dry cleaning has been a roller coaster since I started watching it in 1975. Cleaners need to stay positive and ask themselves, ‘What can I do now?’ and not, ‘When is it going to go back to the way it was?’ Things are going to be different.”

“Stop thinking of yourself as a dry cleaner, and start thinking of yourself as a service industry,” Scalco says.

“You are providing a service where you can clean anything — any fabric, any textile, in your customer’s home.

Rugs, drapes, blankets … all of that. Become that go-to resource for that person for their cleaning needs.”

Sitting back and waiting to see what the future brings, Vollmer warns, is not an option: “Take this opportunity to be aggressive, innovate, expand and up your game in preparation for your future prosperity.”

Above all, keeping your head and making intelligent, rational decisions can lead to a brighter 2021 and beyond.

“Step back, take some deep breaths and allow yourself the time and space to assess what we know to be true,” White says. “Remove the phrase ‘before COVID’ from all of your thinking, conversations and planning. Start from here and now, and build from there. This is the normal.”

ADC www.americandrycleaner.com

I N D U ST RY N E W S

Pandemic Prompts Clean Show Postponement to 2022 M

esse Frankfurt, the organizer of The Clean Show, has decided that the next event scheduled for July 2021 in Atlanta will be postponed to 2022 because of health concerns surrounding the coronavirus pandemic.

The largest exposition for the laundry and dry cleaning industry in North America, The Clean Show will now take place July 30 through Aug. 2, 2022. This decision also moves the following edition to Aug. 15-18, 2024.

While the decision didn’t come as a complete surprise to the industry, the postponement underlined the global pandemic’s effect on the cleaning industry.

“I expected it,” says Christopher White, executive director of America’s Best Cleaners (ABC). “Messe is a large organization [based in Germany] that has a global sense of the convention industry. I also believe that the Germans naturally move toward prudent decisionmaking with the long game in mind.”

A MASSIVE UNDERTAKING

Even with the hope that the vaccines now coming on the market will help push back the pandemic before the summer, an event the size of The Clean Show requires a considerable amount of planning ahead of time.

“I think they made the right decision,” says Mary Scalco, CEO of the Drycleaning & Laundry Institute (DLI).

“July sounds like it’s a long way off, but you have to start planning for a show like that now. And right now, the companies and the exhibitors are still in the middle of this pandemic.

“An international event requires a lot of moving parts, and it’s an enormous expense for exhibitors,” says Peter Blake, executive director of the North East Fabricare Association (NEFA), South Eastern Fabricare Association (SEFA) and the Mid-Atlantic Association of Cleaners (MAC). “If you try to rush it through, it can be very problematic.”

ECONOMIC REALITIES

As much as vendors and cleaners would like to get back to “business as usual” conditions, the realities of the pandemic will dictate otherwise for at least the first few www.americandrycleaner.com

months of 2021.

“I think postponing it also allows the industry to regroup and get back on their feet,” Scalco says, “because it doesn’t do any good to have exhibitors there and nobody with any money to buy anything.”

“I think it’s a smart move, as the safety of all who would have attended is critical to protect,” White says.

“The cost associated to participate, from the vendor to the participant side, would have been very hard to validate.”

THE IMPACT OF WAITING

The postponement announcement seemed to be one more hit during a time when bad news was plentiful.

However, the effect might not be as pronounced as many had feared when the show’s status was still uncertain.

“It will be more impactful psychologically than economically,” White says. “This event has morphed into more of a community relations and educational opportunity. Specifically, in the retail drycleaning side, some money exchanges at the show. But, from my experience, it is more of a demonstration platform and an industry unity event. The deals are made in one-on-one engagement.”

“In a void, (delaying The Clean Show) would have had a big impact,” Blake says, “but, with the world the way it is today, I don’t think the postponement will have that much of an effect.”

THE FUTURE OF SHOWS?

As many dry cleaners have learned to pivot from the way things were to the way things will be, White believes that the future of industry trade shows will evolve because of what we’ve experienced from the pandemic.

“I think and hope that this triggers a shift away from so many traditional regional conventions,” he says. “I believe that, with the consolidation, we will more than likely see that the industry will only be able to viably support The Clean Show, the Fabricare Show in California and the Pennsylvania and Delaware Cleaners Association (PDCA) show in New Jersey. I hope that more educational events to rebuild our industry’s technical knowledge base fill in the financial void for the regional associations.”

ADC American Drycleaner, January 2021

17

(Continued from page 10)

of the marketplace been completed? Has the labor been physically separated to make sure workers’ comp dollars are being efficiently used?

• Commercial auto — Has permanently installed equipment, like racks or carpet cleaning equipment, been taken into account? Does the insurance properly cover often-expensive vinyl wraps? Is “Symbol 1” coverage for auto liability in place, allowing named insured individuals to drive any company vehicle? Are the vehicles in the proper rating category (service, commercial or retail)? Is lease gap coverage in place so that, if the vehicle is totaled soon after delivery, the insured is not saddled with the depreciation?

• Bailee — This is probably one of the most poorly understood coverage parts in drycleaning insurance.

A true bailee policy is “inland marine” insurance — property moving on land from place to place. It is non-standard and has both liability and property aspects to it. It can, in some circumstances, provide legal defense in the event of claim. True bailee also deals with hundreds or even thousands of claimants as individual claims in the event of fire or total loss, whereas “property of others” insurance usually provides for a single settlement check to the owner, who is then left to pay claims. As you might imagine, this is a nightmare.

Again, each one of these coverage parts is almost never perfect out of the box, and subtle differences in structure strategy can mean a huge difference in up-front cost and proper indemnification in the event of loss.

Q: Where are the greatest areas of risk in and around the average drycleaning business?

Brazier: As mentioned, bailee coverage is vital to the fabricare business owner, but another important concern for the drycleaning business owner is boiler and machinery coverage/equipment breakdown, which, in turn, can lead to business interruption. Unfortunately, many business owners wrongly assume that their property insurance will cover any damages or breakdowns that occur with their equipment. However, typical property/casualty policies will only cover damage to equipment from “external” causes — that is, natural disasters, fire, or even a tree falling on the roof of the establishment.

A dry cleaner needs to be sure that equipment breakdown insurance includes coverage for equipment damaged from an accident or electronic circuitry impairment as well. This can include data restoration for computer equipment and expenses to make temporary repairs or expedite permanent repairs as well.

18

American Drycleaner, January 2021

Carranza: Fire loss, loss to property and customers goods, historical environmental loss, vehicle accident liability, wrongful termination and labor issues and business income losses (including utility time element-type losses).

Hawkins: The greatest areas of risk in and around a drycleaning business are liability and fire. Whether it be a customer or the general public, people are prone to have accidents. When they do, and if it happens on your property, they often get an attorney. They may sue you whether you own the building or not, even if the accident occurs in the parking lot and the upkeep is supposed to be taken care of by the landlord. Of course, people can also fall in your store and that’s almost always on you.

It’s best to leave bags and stacks of clothing behind the counter, and always be vigilant about what could potentially cause someone injury.

Fires in dry cleaners have many causes. Spontaneous combustion is a big one. If you are doing laundry, you may take the laundry out of a hot dryer and place it in a cart and leave. The contents of the cart can begin to smolder and, hours after you have gone, a fire starts. Dry cleaners don’t always know what is in the laundry they have just washed. There could be various types of oil and other substances that will become ignition sources for the basket of hot laundry. Oils don’t always wash completely away, and a small amount can be hazardous. Some other causes of fire are lack of equipment maintenance, faulty wiring, and lint and dust accumulation, just to name a few.

Q: Taking everything — deductibles, insurance premiums and coverage — into consideration, how can cleaners find the balance so that their small business is adequately covered while choosing a plan that’s affordable?

Carranza: Be willing to invest some time to learn how to evaluate your appetite for risk and how to make the right choices, as proper insurance is one of the most overlooked decisions of small-business owners.

Make sure you interview and select an adviser with experience in your business. Be willing to take the time to thoroughly gather proper underwriting information for your business (most of our new clients complain we ask too many questions, but this is important to avoid misrepresentation traps, proper asset protection, and establishing adequate budgets for insurance expenses). Focus more on having a broad range of coverages with higher retentions (deductibles) than less coverage with low deductibles, which is the route many dry cleaners go. My philosophy is a large deductible may be painful but a large uncovered loss could destroy the business.

Establish periodic, annual times to get on a Zoom- or Skype-type call to review changes or updates to the business. Also, don’t challenge your broker to save a few www.americandrycleaner.com

bucks every year, it’s a colossal waste of time. Focus on building a relationship of trust and transparency and then thoroughly market every three to five years to level-set your program and account for changes in the marketplace.

Lastly, if you can’t afford to insure and exposure or the proper coverage isn’t available — not every exposure is insurable — then be sure you understand it and you employ any and all reasonable risk-management techniques to limit your exposure to uninsured losses.

Hawkins: I believe dry cleaners must decide what is important to them when choosing coverage. To be honest, higher deductibles don’t make that much of a difference in the premium for a dry cleaner. I think dry cleaners should focus on whether or not they are getting the coverage they really need. It is not advisable to shop the price. Shop the coverage first and if it’s too high, then decide what you can do without. One company may be very inexpensive but have no bailee. Another company may have a lot of coverage you don’t need and be very expensive. Buy what you need for the price you can afford.

Brazier: I would certainly suggest working with an insurance professional who is familiar with the drycleaning industry. Unlike the usual business that offers services or goods to a consumer, a dry cleaner takes in other people’s property for processing, which adds a very different

component to a business’ liability — i.e., bailee coverage. The insurance professional needs to understand this very unique coverage requirement.

Q: What would you consider to be the minimum insurance coverage a dry cleaner should have, and why? What is the most vital, can’t-be-without-it type of coverage?

Hawkins: The minimum coverage dry cleaners should have is property, liability and bailee. If they don’t have these, they are skating on thin ice. If something happens to their property, they are out of business with no insurance. Without liability, can they afford to be sued? Without bailee, they could lose customers and their reputation could be ruined.

Carranza: All of them are so important but worker’s comp is often compulsory, auto is often a state requirement, and property and liability is often a lease requirement. Those are the absolute bare minimums, but an insured faces significant exposures not accounting for bailee, machinery breakdown, employment practices and environmental liability. Unfortunately, dry cleaners face a significant number of “real” exposures to loss. ... There is heavy equipment, solvents, other people’s items at risk, significant vehicle and delivery exposure. It’s a broad ADC spectrum of risk.

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19

A R O U N D T H E I N D U S T RY

Leadership Forum: Change is Not Good — It’s Vital

and we run our own companies, but we split the share of the costs.”

By working together, pooling resources and making other changes, Stephens says that, while actual sales are down $2.2 million, revenue has stayed level with what his company was making pre-pandemic.

The ability to change, to adapt to the conditions on the Sharing information is vital for surviving downturns, ground, is one of the most vital attributes a business says James Peuster, owner of The Route Pros, a company owner can possess — and can make or break a company. that coaches cleaners on how to profitably set up, operate This was the theme of and market route services. the fourth installment of “One of the things we talk about the Leadership Forum, prewith our staff is to ask, ‘What’s our sented via Zoom Dec. 9 by lesson learned? What did we learn America’s Best Cleaners this week?’” he says. “We then (ABC). The monthly forum, share that with our members, and scheduled to run through our members share their incoming March, brings leaders from data and the lessons they’ve learned various areas of the cleanfrom the previous week.” ing profession together.

It’s also important to recognize They share their experiences how conditions are, rather than and talk about some of the what you’d like them to be, says lessons they have learned Catherine McCann, CEO of Best leading their teams through Cleaners NY and partner in ABC. the global pandemic and its “Planning has always been Participating in the fourth installment of America’s Best economic challenges. important to me, and nothing’s Mary Scalco, CEO of the Cleaners’ Leadership Forum were (clockwise from top changed; you still have to plan,” Drycleaning & Laundry Insti- left) Christopher White, executive director of America’s she says. “We’ve got our 2021 plan together and we have no data tute (DLI), says she and her Best Cleaners; James Peuster, owner of The RoutePros; Tom Stites, sales manager of Unipress; Tony Stephen, from 2019 in it because that world organization feel a duty to CEO of Tower Cleaners; Catherine McCann, CEO of Best doesn’t exist anymore. It’s not go to the next level of serCleaners NY and partner in America’s Best Cleaners; and reality.” vice for their members.

Tom Stites, sales manager for “This is when you shine,” Mary Scalco, CEO of the Drycleaning & Laundry Institute.

(Photo: Dave Davis) Unipress, believes the ability to she says. “This is when you change plans is vital to success. step up to the plate because “I think the biggest thing is you have to be flexible and you know that sometimes your members just want fluid in this situation,” he says. “Instead of trying to solicit to hear that they’re not alone through all this. We’ve business, we’re working with our customers and retraining learned as much from the outreach to our members, I the employees they are bringing back in. As far as developthink, as our members learn from one another.” ment is concerned, we’re making and enhancing products Tony Stephens, CEO of Calgary, Alberta-based Tower to make them labor-saving. By reducing the burden on laCleaners, says that cleaners are far stronger working bor, cleaners can better control their cost on the back end.” together than competing against each other — and he’s To register for the next installment of the free webifollowed his own advice. nar, or to watch videos of this or previous forums, visit “We’re the largest cleaner in the area, and we got with americasbestcleaners.com/leadershipforum. You can also the second-largest cleaner and amalgamated our producvisit the “News” section of americandrycleaner.com for tion,” he says. “All the cleaning for our two companies is recaps of past Leadership Forums. done at our facility. He has his brand, I have my brand, 20

American Drycleaner, January 2021

www.americandrycleaner.com

In Memoriam: Ed Goldstein, American Drycleaner Publisher (Ret.)

Led magazine’s operations from 1974 to 1997 Edwin J. (Ed) Goldstein, retired publisher of American Drycleaner magazine, died Nov. 11 in Scottsdale, Ariz., at the age of 90. His funeral service and interment took place at Mt. Sinai Cemetery, Phoenix.

A U.S. Navy veteran, Goldstein held undergraduate and graduate degrees from Northwestern University, Evanston, Ill., where he was a letterman and a member of the Praetorians fraternity. Among many leadership roles, he was president of the District 69 School Board, president of Temple Judea Mizpah in Skokie, and president of the Temple Brotherhood.

The Chicago-born Goldstein spent nearly 25 years as publisher of American Trade Magazines, including American Coin-Op, American Drycleaner and American Laundry News.

He joined the American Drycleaner staff as director of marketing in 1959. When Publisher Don Martin retired in 1974, Goldstein was promoted to that role. He ran the magazine group until retiring in 1997, selecting current

Publisher Charlie Thompson as his successor.

“Ed was a friend and mentor, and I learned a lot from him,” Thompson says. “He was as smart as he was kind.”

Goldstein’s mathematical mind solved spreadsheet calculations faster than his protege could key a calculator, plus he was knowledgeable in sports, arts, music and cuisine.

Thompson says Goldstein knew “absolutely everyone” in the industry: Ed Goldstein “We could walk the aisles of the Clean Show together, and there was no one that he did not know.”

“In addition to having a great sense of humor, Ed was a fountain of information about laundry and drycleaning companies, both past and present, as well as the back stories behind those companies and personalities who were the cornerstones of our industry,” says Bruce Johnson, president of flatwork finishing equipment manufacturer Chicago Dryer Co. ” Surviving Goldstein are his wife of 67 years, Carole; children Beverly, Brad and Rhonda; four grandchildren; and one great-grandson. He was preceded in death by his parents, Lena and Reuben; his brother, Milton; and a ADC grandson, Jonathan.

Every FREE episode offers:

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Doing Great Works for the Community

Tom Zengeler, president of Zengeler Cleaners, discusses the value of charity drives — how to start them, how to operate them and what they can mean for both your community and your cleaning business.

Marketing: How to Stand Out In a Crowded Field

Diana Vollmer, managing director and senior consultant for Ascend Consulting Group, joins us to discuss the importance of marketing for dry cleaners in any type of economic condition, what goes into a successful campaign and more.

Offering Wash-Dry-Fold: Expanding Services in the Casual Era Joel Jorgensen, VP of sales for Girbau North America, discusses the advantages that offering or expanding your company’s wash-dry-fold services can bring during these uncertain times.

Listen in at: americandrycleaner.com/podcasts www.americandrycleaner.com

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W RI N K L E I N T I M E

The Modern Work-Flow 10 YEARS AGO. It’s a Renter’s Market, Dry Cleaners Say — Almost half of dry cleaners responding to the “Talk of the Trade” survey (46.4%) believed it was time to sign or renegotiate a lease because of ongoing softness in the commercial real estate market. Indeed, more than a quarter (27.6%) had plans to do just that. “Some landlords are starting to see the light and lower their rents just to fill the spaces,” one operator reported. “But too many are holding out for enough to cover their mortgage payments, and they’re just not going to get it because of all the empty commercial space available.”

35 YEARS AGO. Simple Device Facilitates Ordering of Supplies — OBOS Inc. announced a device for distributors of repeatedly used supplies to make ordering easier on both the dry cleaner and the distributor. The 7”x 6” device produced by OBOS — an acronym for “One Button Ordering System” — came preprogrammed with the distributor’s telephone number and was tied into the existing telephone line and electrical supply.

The setup allowed cleaners to order supplies day or night, and the distributor didn’t have to have an employee on hand to take the order.

50 YEARS AGO. The Tenth Annual Plant Design Awards — The Grand Prize award winners for 1971 for plant design were Lester and Willard Kotthaus, who owned 24

and operated Cinderella Cleaners in Lake Park, Fla. The Honor Award for cleaners doing more than $3,000 weekly volume went to Winkler Cleaners in Bay Shore, N.Y., and the award for cleaners doing less than $1,000 of weekly volume went to Johnson Cleaners in Statesville, N.C. Scollard’s Cleaners in Spokane, Wash., got the nod in the Remodeled Plant category.

75 YEARS AGO. Two-Story Plant Gets Modern Work-Flow — As the United States turned from a war footing to going back to business, it

American Drycleaner, January 2021

was time to make some modernizations and improvements to existing drycleaning facilities. In the January 1946 issue of American Drycleaner, an engineer took a look at an existing two-story plant and found it to be “very badly arranged.” There was a great deal of backtracking in all departments, and the amount of carrying and handling was twice to three times what it should have been. Before-and-after diagrams demonstrated ways to streamline the workplace for more efficiency. ADC —Compiled by Dave Davis, Editor www.americandrycleaner.com

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