One factor car wash operators may want to consider moving forward is the notion of homogenization. Homogenization in business is the process of people, products, and places becoming the same.
For instance, the term “clone town” is used to describe towns where the center area has become dominated by the same chain stores, making them all very similar.
Homogenization of areas has led to the loss of numerous small independent businesses and increased traffic congestion. It has even changed the nature of neighborhoods. For example, my neighborhood has gone from cozy suburban with character to urban jungle with chain stores over the course of only 10 years.
Land once used for a golf course and restaurant is now home to hundreds of luxury apartments. A former restaurant and hotel is becoming a Wawa super site. Instead of a lot of mom-and-pop stores, there is Starbucks, Jimmy John’s, Dairy Queen, Papa John’s, etc.
In fact, the traffic congestion from new development in my neighborhood has gotten so bad that my wife and I no longer take what once were our regular routes to get to places. Of course, this means not passing by many of the local businesses that depend on such traffic.
Let’s consider potential impacts on a larger scale. For example, Wawa has more than 100 stores in Florida and has plans to develop 50 more in Palm Beach and Broward counties over the next five years. Wawa Inc. is a chain of more than 750 convenience stores (500 offering gasoline) with operations in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and Central Florida.
The stores offer an extensive fresh food service including built-to-order hoagies, freshly brewed coffee, hot breakfast sandwiches, built-to-order specialty beverages, and an assortment of soups, sides, and snacks. This, along with a dedication to customer service excellence, has allowed Wawa to develop a cult-like following with customers. In fact, when Wawa opened its first store in Orlando in 2012, Governor Rick Scott attended the ribbon cutting.
Recently, developers spent $17 million to assemble the property for five new Wawa stores in Palm Beach County. Sites range from 2.5 to 4.0 acres and represent a minimum $6 million investment, including employment for about 130 construction workers, plus jobs for 50 store employees.
Generally speaking, we might expect each of these new stores to generate gas sales volumes three to four times greater or more than the typical convenience store. Consequently, we would expect the entry of the new stores to cause the gas and in-store sales volumes of nearby c-stores as well as their related car wash volumes to drop precipitously.
The reason for this is fairly simple. Experience has shown that building a new c-store and gas station in a mature market does not create new demand for products in a trade area. All the people who will buy convenience goods and gas at the new store are already buying all the products they need somewhere else.
Similarly, we find homogenization or cloning within the car wash industry. For example, if we examine supplier activity, we find express exterior is the prevalent construction trend. Generally speaking, this means a one-acre site, several pay terminals, 4,000 square-foot contemporary building, and two rows of centrally controlled vacuums.
Furthermore, we find companies are dedicated to targeting a subscription economy (unlimited washing) as well as indirect traffic generated from website activity, mobile app, viral marketing, and social media activity.
While there is no study on the exact size of the industry, there is enough published information to conclude that conveyors have captured a dominant share of the total available market. Consequently, the greatest growth is mostly likely going to come from car wash companies that are all very similar.
Arguably, the pace of homogenization will quicken. For example, just this past April, Sonny’s announced the opening of its second CarWash College — on the West Coast in Buena Park, CA. Similarly, National Carwash Solutions, home to the MacNeil and Ryko brands, has developed a College of Clean in Grimes, IA.