No large companies dominate the U.S. dry-cleaning industry. The industry has some 30,000 individual businesses employing...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
No large companies dominate the U.S. dry-cleaning industry. The industry has some 30,000 individual businesses employing around 165,000 people. Most establishments are very small. The top 50 enterprises in the industry are estimated to account for no more than 40% of industry revenues. According to the Dry-cleaning & Laundry Institute, the median annual sales for a commercial dry cleaner are less than $250,000. The industry is a favored starting point for many immigrants, who are attracted by the low capital requirements. More than 80% of industry revenues can be attributed to individual retail customers, with hospitals, hotels, and restaurants accounting for much of the balance. The larger companies in the industry tend to focus on serving larger establishments such as hospitals and hotels. Total industry revenues are estimated to be around $9 billion. Between 2007 and 2012 demand shrunk at 2.5% per annum. A weak economy with persistently high unemployment, the rise of "business casual" dress norms in many companies, and the development of new clothing materials that do not need dry cleaning or pressing are all cited as reasons for the weak demand conditions. Demand for dry-cleaning services is very local. All dry cleaners within a 10-minute drive of each other are often viewed as direct competitors. Convenience seems to be one of the major factors leading a consumer to pick one dry cleaner over another. Dry cleaning has been described as a classic low-interest category-there is very little about dry cleaning that excites consumers. The industry has defied efforts to consolidate it. The largest national dry-cleaning chain in the United States is Martinizing. Started more than 60 years ago, in 2012, Martinizing had some 160 franchisees that operate more than 456 stores. However, as recently as 2001 its franchisees operated almost 800 stores, so the company seems to have been shrinking steadily over the last decade. In the late 1990s the founders of Staples, the office supply superstore, entered the dry-cleaning industry, establishing a Boston-based chain known as Zoots. Backed with up to $40 million in capital, they had visions of transforming the dry cleaning industry (as they had done with office supplies), consolidating a fragmented industry and creating enormous economic value for themselves in the process. They created of cluster of 7 to 10 stores around a central cleaning hub. Each store had a drive-through window, self-service lockers for leaving and picking up clothes, and one or two full-time staff members on hand to help customers. The hub had about 40 employees engaged in cleaning processes. Zoots promised to get dry cleaning done right, reliably, and conveniently, and to do this at a reasonable price. Unfortunately, Zoots found that the done with office supplies), consolidating a fragmented industry and creating enormous economic value for themselves in the process. They created of cluster of 7 to 10 stores around a central cleaning hub. Each store had a drive-through window, self-service lockers for leaving and picking up clothes, and one or two full-time staff members on hand to help customers. The hub had about 40 employees engaged in cleaning processes. Zoots promised to get dry cleaning done right, reliably, and conveniently, and to do this at a reasonable price. Unfortunately, Zoots found that the service-intensive nature of dry cleaning and the very high variability of clothing made it all but impossible to standardize processes. Costs were significantly higher than anticipated, quality was not as good as management hoped, employee turnover was high, and demand came in below forecasts. Today, Zoots has less than 40 stores and remains concentrated in the Boston area. The founders are no longer involved in the business and, clearly, it did not come close to transforming the industry. Sources: IBIS World, "Dry Cleaners in the US: Market Research Report," October 2012; Myra M. Hart and Sharon Peyus, "Zoots: The Cleaner Cleaner," Harvard Business School, September 20, 2000; Fulcrum Inquiry, "Valuation Guide: Dry Cleaners," www.fulcrum.com/drycleaning_appraisal.htm. Question:- Q.1. In the context of CASE STUDY 1: CONSOLIDATING DRY CLEANING, (a). Describe two compelling reasons, which made Zoots unable to consolidate the dry-cleaning industry, despite adequate capital and the managerial talent? (b). Name the strategy you would recommend to Zoots with reason. No large companies dominate the U.S. dry-cleaning industry. The industry has some 30,000 individual businesses employing around 165,000 people. Most establishments are very small. The top 50 enterprises in the industry are estimated to account for no more than 40% of industry revenues. According to the Dry-cleaning & Laundry Institute, the median annual sales for a commercial dry cleaner are less than $250,000. The industry is a favored starting point for many immigrants, who are attracted by the low capital requirements. More than 80% of industry revenues can be attributed to individual retail customers, with hospitals, hotels, and restaurants accounting for much of the balance. The larger companies in the industry tend to focus on serving larger establishments such as hospitals and hotels. Total industry revenues are estimated to be around $9 billion. Between 2007 and 2012 demand shrunk at 2.5% per annum. A weak economy with persistently high unemployment, the rise of "business casual" dress norms in many companies, and the development of new clothing materials that do not need dry cleaning or pressing are all cited as reasons for the weak demand conditions. Demand for dry-cleaning services is very local. All dry cleaners within a 10-minute drive of each other are often viewed as direct competitors. Convenience seems to be one of the major factors leading a consumer to pick one dry cleaner over another. Dry cleaning has been described as a classic low-interest category-there is very little about dry cleaning that excites consumers. The industry has defied efforts to consolidate it. The largest national dry-cleaning chain in the United States is Martinizing. Started more than 60 years ago, in 2012, Martinizing had some 160 franchisees that operate more than 456 stores. However, as recently as 2001 its franchisees operated almost 800 stores, so the company seems to have been shrinking steadily over the last decade. In the late 1990s the founders of Staples, the office supply superstore, entered the dry-cleaning industry, establishing a Boston-based chain known as Zoots. Backed with up to $40 million in capital, they had visions of transforming the dry cleaning industry (as they had done with office supplies), consolidating a fragmented industry and creating enormous economic value for themselves in the process. They created of cluster of 7 to 10 stores around a central cleaning hub. Each store had a drive-through window, self-service lockers for leaving and picking up clothes, and one or two full-time staff members on hand to help customers. The hub had about 40 employees engaged in cleaning processes. Zoots promised to get dry cleaning done right, reliably, and conveniently, and to do this at a reasonable price. Unfortunately, Zoots found that the done with office supplies), consolidating a fragmented industry and creating enormous economic value for themselves in the process. They created of cluster of 7 to 10 stores around a central cleaning hub. Each store had a drive-through window, self-service lockers for leaving and picking up clothes, and one or two full-time staff members on hand to help customers. The hub had about 40 employees engaged in cleaning processes. Zoots promised to get dry cleaning done right, reliably, and conveniently, and to do this at a reasonable price. Unfortunately, Zoots found that the service-intensive nature of dry cleaning and the very high variability of clothing made it all but impossible to standardize processes. Costs were significantly higher than anticipated, quality was not as good as management hoped, employee turnover was high, and demand came in below forecasts. Today, Zoots has less than 40 stores and remains concentrated in the Boston area. The founders are no longer involved in the business and, clearly, it did not come close to transforming the industry. Sources: IBIS World, "Dry Cleaners in the US: Market Research Report," October 2012; Myra M. Hart and Sharon Peyus, "Zoots: The Cleaner Cleaner," Harvard Business School, September 20, 2000; Fulcrum Inquiry, "Valuation Guide: Dry Cleaners," www.fulcrum.com/drycleaning_appraisal.htm. Question:- Q.1. In the context of CASE STUDY 1: CONSOLIDATING DRY CLEANING, (a). Describe two compelling reasons, which made Zoots unable to consolidate the dry-cleaning industry, despite adequate capital and the managerial talent? (b). Name the strategy you would recommend to Zoots with reason.
Expert Answer:
Answer rating: 100% (QA)
a Zoots faced two main challenges in its attempt to consolidate the drycleaning industry Firstly the serviceintensive nature of drycleaning and the hi... View the full answer
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
Posted Date:
Students also viewed these general management questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
1. How strong are the competitive forces confronting J. Crew in the market for specialty retail? Do a [Michael Porter] five-forces analysis to support your answer. (see chapter 3 in the textfor...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Someone once commented that advertising is Americas greatest export. Discuss.
-
As a safety engineer, you must evaluate the practice of storing flammable conducting liquids in non conducting containers. The company supplying a certain liquid has been using a squat, cylindrical...
-
The ends of a beam are elastically restrained by linear and torsional springs, as shown in Fig. 11.11. Using the finite difference method, express the boundary conditions. k W(x) k 00000 Deflected...
-
There are many national paralegal associations. Determine whether California has its own paralegal association.
-
Airline passengers arrive randomly and independently at the passenger-screening facility at a major international airport. The mean arrival rate is 10 passengers per minute. a. Compute the...
-
Bianca, a sole trader, owns and manages a business which manufactures and sells one special type of garden furniture for garden centres. Set out below is the sales revenue and profit for 2021....
-
Keenan is purchasing a new boat that sells for $56,214, including taxes and fees. He receives $17,000 as a trade-in on his old boat and uses the money as a down payment. Keenan finances the balance...
-
Your are the new auditor for Beauty Blend Cosmetics Co (BBCC) for its December 31, 2020 year end. The business distributes its products to beauty stores in Canada and the US, and it is looking to...
-
What are the advantages and disadvantages of using an increase in the gasoline tax to move road transport decisions toward both efficiency and sustainability?
-
Define business strategy. (Section 25.2) Data from section 25.2 The successful management of a business depends on having a successful business strategy. It has been argued that if the business...
-
Concerned individuals can now seek to reduce their carbon footprint by buying offsets. Air travelers, for example, are now asked if they wish to purchase offsets when they buy their ticket. Is this a...
-
Define a non-controllable cost. (Section 23.3 .2) Data from section 23.3.2 In planning how to report, the general principles applied will be those of respons- ibility and the separation of...
-
European countries have relied to a much greater extent on emissions charges than has the United States, which seems to be moving toward a greater reliance on cap-and-trade. From an efficiency point...
-
Discuss the rights of shareholders and the mechanism available to them to enforce their rights in instances where there is a lack of fair conduct by the company with regard to the standard of dealing...
-
Beginning with a country that has a trade deficit, demonstrate graphically what will happen to a countrys potential output with globalization if that countrys costs of production fall. Explain your...
-
List at least three common controls for petty cash.
-
Ford 10-K, Toyota 20-F a. What are the key acquisition and inventory cycle accounts for Ford? What are the critical accounting policies for these accounts? Ford 10-K, Toyota 20-F b. Compare Ford and...
-
MULTIPLE-CHOICE QUESTIONS 1. Assume that an auditor is physically examining a client's equipment. What type of audit procedure is the auditor performing? a. Inspection of documentation. b. Inspection...
-
True or False. The motion diminishes to zero in both underdamped and overdamped cases.
-
True or False. The loss coefficient denotes the energy dissipated per radian per unit strain energy.
-
True or False. The complex stiffness can be used to find the damping force in a system with hysteresis damping.
Linear And Projective Representations Of Symmetric Groups 1st Edition - ISBN: 0521104181 - Free Book
Study smarter with the SolutionInn App