Leader of the Pack — You Can Thrive in its Presence
Every decade or so there are game changers that profoundly influence the entire car wash industry. In the 1940s, the automatic car wash was invented. In the ‘50s, Dan Hanna, Sr. set the evolution of car wash equipment into motion. In the ‘60s, Big Oil began using in-bay automatic systems to sell gasoline. The ‘90s ushered in the era of the exterior express format.
Exterior express is a reinvention of the exterior-only format prevalent for decades in Midwestern and Northeastern states. Instead of pay stations, entry gates, and free-use vacuums, exterior-only has salespeople and coin-operated vacuums.
However, it has been exterior express and not the exterior-only format that’s grown by as much as 18 percent annually, according to the International Carwash Association.
As shown in the figure below, estimates of sales per square feet of store for the industry benchmarks provide some evidence of this.
What exterior express does best is compete on price and convenience. Although there are people in the industry who believe growth of exterior express creates new value, there are probably an equal number who believe it’s a race to the bottom.
Or perhaps growth in exterior express can be described as reflecting shifts in how and what people purchase.
For example, in the 1990s, the Gap set the bar for specialty stores by offering a narrow assortment of goods and a novel presentation and in-store experience. By comparison, exterior express offers only a few wash choices, there is the novelty of vacuuming your own vehicle for free, the quick ride-through experience, and, like an Apple Store, there is no salesperson on commission trying to empty customers’ wallets.
What is going to happen with exterior express and other segments in the next decade remain to be seen. Some people believe the express format will become a leader by gobbling up industry retail space. However, there are also good reasons to think there could be a resurgence of existing sites as well as the redevelopment of former sites (i.e., gas stations, fast food, etc.) as new car wash sites.
Arguably, whatever happens, the leaders will need to be more than a place to buy an exterior wash. If a car wash just fulfills this basic need, it is transacting and not creating value for consumers. Any car wash can do that.
How can a car wash operator create more value? For some owners this will require distancing from the “how can we sell more stuff” mentality.
For instance, the National Federation of Independent Business notes that small firms have largely shifted the emphasis from selling products to providing services.
Today, the more successful brick-and-mortar retail stores are those that contain products that people are actually going to use. The stores always have enough associates on hand to help people find the right product, show people how to use things, and, if there is a problem, get things fixed faster.
Besides low price, people also visit Walmart and Target because they offer one-stop shopping and a huge assortment of basic brand-name goods. This means lots of commoditized stuff that doesn’t require a high degree of salesmanship or service. It is this characteristic that allows small businesses to compete in the shadow of big-boxes.
For example, local mom and pop stores often survive by leveraging higher prices with experienced, knowledgeable staff and providing a level of convenience and service that big-boxes find hard to replicate. At big-box stores, customers must trust product brands. At Joe’s barbershop or hardware store, customers trust Joe.
Some folks may question the relevance of this today because of the number of firms that emphasize lowest price and fastest fulfillment. However, there is no good reason why a car wash business can’t flourish in the presence of a low-price wash.
Car wash operators that stumble in the face of low price/free vacuums may find there is nothing wrong with capability but rather there are issues with products and services, or image, or store environment, or communication, and/or execution.
Bob Roman is president of RJR Enterprises — Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at email@example.com.