The laundry ﬁrm cleaning up
As other shops bite the dust, the American Dry Cleaning Company is expanding rapidly.
Bullish: Julian Stone
Talk about bucking the trend. More than 200 shops a day are expected to close this year as the recession deepens — victims already include Woolworths, MFI, Zavvi, Adams, Whittards, Waterford Wedgwood and The Pier, with heavyweight Marks & Spencer set to cut jobs. But Julian Stone, who established the American Dry Cleaning Company in 1990, says now is an opportune time for an aggressive expansion.
The company, which has 27 high street branches, has been expanding by 20 per cent a year. Group turnover is up 25 per cent on last year and is on target to hit £9 million.
The plan now is to have around 40 shops by 2012, four of which are set to open by the end of the first quarter of 2009.
“We have become quite bullish in terms of potential new sites,” says Mr Stone, 40, who holds a degree in microbiology. “I see it [the downturn] as a great advantage. Landlords in the areas where we previously would have found it difficult to get into, such as Marylebone High Street and the King’s Road, are now approaching us to take on new units on much more favourable terms.
“So, if you have the ability to commit to a unit and negotiate good terms, it doesn’t become such a risk. I always believe that if you get into something, you should look at your exit strategy in case it goes wrong.
One of the few businesses taking advantage of the downturn
“The only danger is if there are secondary or tertiary shops in the vicinity where there is competition.”
He adds: “People are going to be cutting back and investing in maintaining their existing wardrobes as opposed to buying new clothes. Our shoe repairs have gone through the roof, particularly for the more expensive end. Normally, people would wear them for a couple of years and then get a new pair, but they are now trying to maintain them.”
Nonetheless, Mr Stone acknowledges the general high-street situation is worryingly poor and poised to get worse. Retail sales volumes have fallen for the 10th month in a row and are expected to fall further, according to the Confederation of British Industry. The CBI’s Distributive Trades Survey for January showed that 63% of retailers said year-on-year sales volumes fell in the first half of January and more than 50 per cent expect sales to fall this month — the weakest forecast since the survey began in July 1983.
“Things on the high street are very challenging and I think they are going to become harder,” says Mr Stone. “People are being much more selective about where they spend.
“Unfortunately, our shop on Mill Hill Broadway [north London] is right near where Woolworths was and things are looking very glum out there.” He continues: “We do a lot of work with the fashion boutiques in the areas where we are. They are reporting that even when they are just trying to clear stock — not making a profit — people are still trying to negotiate better prices or not buying. I think prices will continue to come down in January.”
He says he has received an “unprecedented amount” of application forms from people in the retail industry — from fashion salespeople to fishmongers and cobblers — who have been made redundant from their jobs.
Yet, Mr Stone’s company has not escaped unharmed. The business has experienced a 40 per cent drop in its hotel servicing business, which has long constituted a majority of the company’s trade.
“Hotels used to be a consistent income stream for us but many hotels have been hit by the economy and company budgets for people’s spending have totally gone away. A couple of years ago they were sending a whole suitcase for laundry, where the bill would be around £400 of £500, but now, people are more interested in just having a bed and some food. The same thing happened after September 11.
“So we are going to focus more on the high street and opening more branches.”
Shops have recently opened on London’s King’s Road and Brompton Road, with new units soon to open in Fulham and Cobham, Surrey.
Currently, the group’s worst performing shop is Chiswick High Road. “I made a mistake when I opened it — there were 15 dry cleaners in the area.” The best performing ones are in Hampstead High Street and Maida Vale in north London.
He identifies the 2012 Olympics as a good opportunity for the business. “There will be a mass influx of spectators.”
There are tentative plans to open a branch in the new Stratford shopping centre, near the Olympic Village and Mr Stone admits he has been approached by the London Olympic Committee for laundry contracts.
And where was Mr Stone during the last downturn? Setting up his current company. “I bought a couple of flats in the late 1980s but got into trouble with the mortgages, so I started an ironing collection and delivery business from one of the flats. One thing led to another.”
His first shop was in the American Embassy. It was there that he had his lucky break, meeting a customers who helped him secure business from the Japanese community in London.
“This gave us a flying start and also helped me develop my property portfolio at the same time, before moving into the hotel side of things, and it all grew from there.”
He lives in Mill Hill, North London.