Diversifying Into New Chemical Proportioner Markets
Warewashing and Laundry Programs Can Help Distributors Grow Profits
- Transition To Niche Market Could Present Obstacles
- Staying With Technological Advancements
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For jan/san distributors, stocking and servicing chemical dispensing systems can provide an easy segue into new markets: Clients with onsite laundry and kitchen facilities often require chemical proportioners that function similarly to those used for janitorial services. With a foot already in the door, distributors can more easily diagnose a facility’s laundry and warewashing needs, potentially winning the customer’s business.
“Diversification by offering new products to existing clients is a lower-cost, lower-risk way of growing sales,” says John Goetz, global product manager for Hydro Systems in Cincinnati. “The channel and relationships to reach the market already exist and do not have to be bought or created.”
According to Goetz, warewashing and laundry are large, growing markets for distributors to diversify into. The most recent data from Kline, a global market research firm, reports the U.S. laundry chemicals market represents $986 million and the foodservice chemical market represents $2.5 billion a year.
“Many sites in hospitality and healthcare have basic jan/san needs but also have an on-premises laundry or kitchen to serve guests,” says Goetz. “On a per-site basis, laundry chemical spending tends to be higher; some industrial laundries can spend as much as $125,000 on chemicals per year. If a distributor can capture just a small percentage of these markets, it can have a big impact on their top and bottom lines.”
Indeed, the healthcare and hospitality industries are two of the biggest end users of laundry and warewashing proportioning systems. Tim Kinser, product and technical manager for DEMA Engineering Co., in St. Louis, estimates that half of the company’s laundry equipment is located in nursing homes, a percentage he attributes to aging Baby Boomers. Hotels account for approximately 30 to 40 percent of DEMA’s sales, followed by smaller businesses and institutions, such as schools, prisons and carwashes.
Manufacturers of chemical dispensing equipment agree that warewashing and laundry accounts are good adjuncts to janitorial services.
“They’re complementary because distributors already supply many of the same institutions,” says Bill DeCristofano, general manager for Seko USA, Tullytown, Pennsylvania. “As a supplier already providing solutions to the facility in other areas, the sale of these related products and services should meet less resistance when presenting your program.”
In addition to increasing sales, distributors that diversify into these markets are able to lower costs associated with one of their major expenses: deliveries.
“If you get into the laundry or warewashing business, you’re delivering a whole new set of products to the same facility that you’re delivering housekeeping chemicals too,” says Dave Kernes, sales executive for RD Industries, Omaha, Nebraska.
Despite the benefits of diversifying into new markets, some distributors are hesitant to make the transition — and rightly so. According to chemical proportioner manufacturers, warewashing and, particularly, laundry are more complex operations that require a greater level of technical expertise.
“Sometimes distributors are afraid,” says Kinser. “The perception is that they can’t do laundry; it’s over their head. But once they learn how to do it, they want to continue doing it because it’s more profitable.”
More often than not, distributors will kick-start a laundry program only to find they are — in Kinser’s words — all thumbs. “I tell them to hire a laundry expert,” says Kinser. “And, almost always, they do.”