Tuesday, April 28, 2015

Land of the Dry Cleaners

There is a commercial street not far from my house.  It has a couple supermarkets and sundry other smaller merchants, the sort of thing you see in the suburbs.  One of the things our family needed when we moved in was a dry cleaner.

1) Initially, I took our dry cleaning and the Significant Other's business shirts to the closest cleaner, pictured below.

Nice place, really friendly proprietors.  But when, within a couple months, they had managed to destroy a designer necktie and turn part of one of my favorite shirts from all white to pinkish in places, I moved on.  

Still, the place is in business and does not appear to lack customers.

2) I next went to the other dry cleaner/shirt laundry a little farther down the street.  

This worked out better.  The workers were a teensy bit less friendly but perfectly nice and reliable, and there was a good alterations worker on staff to boot.  I have taken our cleaning there ever since.

In the intervening years, the street has turned into Dry Cleaning Central.

3) First a new cleaning establishment was built and opened one block from my current dry cleaner.

This establishment promotes 24/7 service and environmentally friendly cleaning fluids.  Since I don't do errands in the middle of the night and my current dry cleaner also uses environmentally safe products, I have stuck with it.  

4)  Then, just across the street from the last place, a car radio store closed and was replaced by yet another dry cleaner.

 This dry cleaner is in an unfortunate location, on a small triangular lot between two very busy streets that join at its apex.  Driving into its lot is a challenge, and driving out of it looks impossible.  But it advertises based on price, and for all I know, it is doing well.

5) Up the street a bit, a bank branch closed last year.  The building was torn down, and now a new business building is under construction.  It of course is another dry cleaner.

When the new dry cleaner opens, there will be five such stores -- up from two not so many years ago.  All will be located within less than a half mile of each other. 


Why is this happening? 

     -- The neighborhood is an established one, and the surrounding population is stable, 
     not increasing.

     -- The number of jobs requiring people to wear suits, ties and business shirts is 
     actually decreasing, which would suggest a declining demand for dry cleaning and shirt        laundering businesses. 

I am particularly puzzled by the construction of a brand new building for a dry cleaning establishment in an apparently overserved market.

New commercial buildings are traditionally financed with construction loans.  To get a construction loan, a developer has to submit information about his/her business plan.  This information usually includes a "market analysis," identifying prospective cash flows that will be needed to pay off the construction loan.

Are real estate lenders not skeptical?  Would they not be concerned about the business prospects for a fifth entrant in a small market that recently supported only two?  Would they not worry about price competition or customers' reluctance to switch away from businesses they already like?


I suspect my town is like most in that it has a growing number of empty store fronts.  There are businesses we need and prefer to have nearby -- groceries, banks with ATMs, gas stations, hair salons -- but not as many as in the past.  The street I am discussing has lost a gym, a RadioShack, the car radio store, a plant nursery and a shoe store; the big drug store is building a new facility in a more central location.

Dry cleaners fall into the need-close-by category, but there is a limit to how many a given community can support.  My guess is that, in my neighborhood, we've passed that point already.

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