Hanger
National Clothesline
National Clothesline
How shirts became a loss leader
There was an interesting subject on an Internet forum a few months ago in which I did not
participate. It had to do with using shirts as a loss leader.
I disagree with that philosophy
completely and if I wrote about
that this month it would be the
shortest column that I’ve ever
written.
There are simply other types of
garments that would be better
suited for the loss leader role,
but I cannot think of one that works in the same manner as milk does for the grocery store or
gasoline does for the convenience stores. We are in a different type of business.
Still, I wonder how it got started. I think that I know.
My paternal grandfather owned a company called Star Shirt Service in the ’50s and he sold it
to my uncle in the ’60s.
Back then, the business of washing and pressing shirts was quite a bit different than it is now.
What is the opposite of “wrinkle-resistant”? Wrinkle prone, perhaps?
Cotton used in shirting back then was really wrinkly. It was really not practical to iron this at
home. Bringing your shirts to the shirt laundry was as routine a chore as dropping garments off
at the drycleaner.
Drycleaners didn’t get into doing shirts as much because it really was a different business.
They cleaned clothes in mineral spirits and the laundry did shirts and wet-washing in water. A
laundry truck would pick up your dirty laundry and return it to you wet so that you could hang
dry it on a clothesline.
Things have certainly changed. Shirt laundries augmented their business by doing shirts for
some drycleaning shops. Consumers, I suppose, would be more likely to opt for commerce with
a drycleaner that took in their shirts as well, saving them a stop at the shirt laundry.
Sounds like good business to me.
The shirt laundry probably gave the drycleaner a “volume” discount. Although their cost to
service the drycleaning shop wasn’t any less than the costs they incurred for doing Joe
Consumer’s shirts, the volume was great for covering the fixed costs, so the discount was
worthwhile. The shirt wholesaler was born.
I presume that the only reason that the wholesaler would be motivated to lower his price
below the already discounted “volume” price would be to ward off competitors.
Whenever you charge any price, for anything, you must continually monitor how well it fits
into the marketplace. If you have a captive market or a supremely unique product or service,
you can charge a premium and make a better-than-average profit margin.
If you are high priced and cannot justify the reason for it (and sometimes, even if you can),
you leave yourself wide open to competition.
If, on the other hand, you were super efficient, did a great job and had rock-bottom operating
costs and priced your product to make one penny per shirt, you would never have a competitor,
unless you were asleep when a more efficient method came along. Think WalMart.
So the shirt wholesaler had a captive market 50 to 60 years ago because shirt units were not
for everybody.
But as soon as a local drycleaner buys a shirt unit, he is liable to compete with you. He could
market himself on quality or service, but if he markets himself on lower price, he will never fail
to keep that promise. He could drop the ball on service, he could let quality slip, but promising a
certain price is a very easy promise to keep.
Now the price of something that should be going up begins to go down.
This all began because a shirt unit wasn’t really a drycleaning shop product. You could easily
be a drycleaner without having a shirt unit. These days, I doubt that’s a true statement.
When my uncle owed Star Shirt Service, he made a nickel per shirt. Pretty good margin when
you realize that the retail cost to have a shirt washed and pressed was 20 to 25 cents. At a 20 to
25 percent net profit margin, it’s no wonder that the shirt launderer wanted to maintain his
volume level.
I think that the entire reason that shirt retail prices are lower than they should be is because
shirts were not always a drycleaner’s problem.
Let’s pretend that toppers and leggers were not standard drycleaning equipment. Your plant
has this equipment, however, and you have a sandwich legger and an operator that can easily
do 50 pants per hour. You pay this presser $12 per hour, so you figure that you can do pants for
24 cents each, and perhaps you double that for cleaning and supplies and equipment costs. Let’s
call it a half a dollar.
Do you see a pattern here? Does this sound familiar?
A local price war may commence and someone is out there doing wholesale pants for 99 cents.
Maybe even 80 cents! Hey that is a 60 percent margin!
What’s wrong with that? (Now do you see a pattern?)
If this had happened, the cost to dryclean a pair of pants would just now be sometimes over
$3.
There are a myriad of problems with this because someone else may enter the pants
wholesaling business who does not do 50 pants per hour, but wants the volume. He may charge
less than it costs him. (Familiar now?)
So I think that the more that we make our shirts part of our routine, the more we make them
as important as any other piece that we take in, the more the price will move into line with what
it should be. We can’t treat them like a loss leader, a commodity or a step-child.
Years ago, a drycleaner was considered upside down, or even on a death spiral, if he did more
shirts than drycleaning pieces. Now, this is quite common.
How much sense can it possibly make to do half (or more) of your pieces at a loss, just so that
you can get at the other half?
“If you do what you always did, you’ll get what you always got!” ‚Äč

desrosiers.jpg
Don Desrosiers has been in the drycleaning and shirt laundering
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