Demographics

[Kitty]

Where can I learn how to calculate the percentage of potential customers per a demographic study? Also, once you know of a location, how can you accuratly compute this figure? Where on line can you access a demographic study.

[BWJR]

Kitty,

Check with your laundry Distributor, he or she has demographics for his or her entire market area. If he or she doesn't, he or she can get them very inexpensively. If you have a good relationship with him or her, maybe he or she would give you a copy. I am guessing it won't be the Maytag Guy, based on your Neptune Problems. Sometimes it tough being polictically correct with all these he's and she's and him and her's.

BWJR

[Kitty]

I don't trust distributors......

[BWJR]

Who do you buy your equipment from??

[Kitty]

Dave is the one who buys the equip, I just talk and listen to them, he makes the deals.

We have dealt with a few distributors since the rep we used for years opened a store a few blocks away, none of which I there is any "bond" with. I need a demographic study for school, I am doing a business plan

[Fred50]

I would start out with the US Census:

http://www.census.gov/main/www/cen2000.html

I think that the "potential customers" question is somewhat loaded. It's a crapshoot at best, and a disaster at the worst.

Some chains just look for busy mats and build nearby.

A few rules of thumb that I wouldn't count on:

1- Household income-based - Laundry customers will be a combination of 50% of households with income <$15K and 20% between $15K & $25K -OR-

2- 30% of all renters -OR-

3- 15% of all households.

I saw a presentation where these 3 numbers were the same. I have yet to see a real world example where they were even close.

[JAG]

Kitty,

Go to your local chamber of commerce. They told me everything I wanted to know about my local market. They even sent me a map with every single laundromt marked in a 5 square mile grid. They gave me traffic flow information on my street. They also included some census information on # of households, median income of households, renters vs. owners, etc. The best part is they send me updated information every year (for some reason it is always right after I pay my dues).

Also, you wouldn't believe how many other members of the chamber of commerce have contacted me to do their commercial accounts (probably because I am one of the few laundromats belonging to the chamber). You should give them a call. I am sure they will be willing to assist you. Good Luck.

[BWJR]

Kitty

I can relate to a Distributor opening a Laundromat near mine. It happened 14 years ago. He has since sold it, but the fact remains, its still there for me to deal with. He has since stopped this policy of opening Laundries and has stuck to just selling equipment and Laundry rooms.

BWJR

[pete f]

The CLA has a deal with a census company, I think it is $75 per report. The goverment site is hard to use at best, but if you taek time you can figure the tracts and blocks and get the info, sort of. the census companies will let you draw lines all over and give info on the area you want. Don't expect that for free though..

The best census is a drive around, looking for rental property or trailer parks. Most towns/cities have these type of property in certain areas zoned for them. Maybe a trip to city hall for a zoning map?

[CharlieS]

Kitty - Bryan Wallace (exec dir of CLA) spent the better part of half an hour one time with me, on the phones, explaining how demographics are typically used. CLA has a deal with Claritas which will get you all the data you need. Of course, you have to be a CLA member (heh heh heh) :)


Mark's numbers below are essentially the starting point for a demographic analysis. The first thing to do is to order demographic data for your existing mats. Create a spreadsheet that has the data in it and calculates the numbers below. Remember, these numbers represent the typical potential laundromat customer market. Many of these will use their mothers house, the apt mat in the basement, or your competition, so the next thing to do is to calculate your potential share. This is where most demographics go wrong, as distributors or investors use pie in the sky estimates that they will blow away their competition.

So, you calculate your total number of customers per week, then multiply by what you think the average amount spent per customer will be. $10 is a typical number and conservative enough for this purpose. Again, you can calculate this by monitoring the traffic and income at your current stores.

Their are other traps. One is estimating your actual market area. In an urban city, this might be no more than a mile, with the majority in less than 1/2 mile. I have a rural store which takes more than 100% of the total traffic within a 5 mile radius, and I have a competitor in the same town who does 80% of what I do. Both stores pull from more than a 20 mile radius. As you expand your radius, you will have a lesser share, as other competitors overlap your radius. So you might have 50% of the 1/2 mile business, 25% of the 1 mile radius and 8% of the 2 mile radius.

By trying to figure out how the demographics fit the stores you already have numbers on (your own, plus others on the market), you are now better equipped to calculate demographics on new locations.

There are many assumptions you must make regarding your potential market share and market radius. If you are conservative, and your numbers still work, you might have a potential new location. In addition, you must be careful about other pitfalls. One local possibilty has huge demographic potential, surrounded by numerous low income apartments. However, further study will find that all of these complexes provide a washer dryer in each unit.

Using this approach, I nailed the demographics for my 2nd store within 5% of the actual number I am pulling. Frankly, that's about as good as it gets. I had another location picked out, that I walked from, and the landlord built anyway. He's hitting about 60% of my projection and losing money (just tears me up). Turns out the competition 1/2 mile away decided to upgrade all of their equipment, plus he failed to figure in the effect of my new store. Changed the numbers, so the new guy got significantly less market share than he anticipated. Didn't change the total market, just the share he is pulling.

Bottom line, this is a very inexact science, with pitfalls. However, it will almost always show a bad location, just not always a good one.

Charlie

[CharlieS]

Mark's is correct. The numbers he gave are typical starting points, but they will not be the same. You must again use educated judgement to decide how to reconcile the discrepancies.

However, choosing the conservative numbers is a safer route. Again, be conservative. If the numbers still work, you have a good shot at a decent location. Don't puff them up.


This requires local knowledge of the area. Another reason distributor demographics fail. Garbage in, garbage out. And use this in two ways

1) to eliminate bad locations

2) to look good in your business plan.

The ultimate call is from the gut!

Charlie