As Asia’s third-largest economy, India currently remains the fastest-growing major economy this year, thanks to a significant increase of infrastructure spending by the government, headed by Narendra Modi. Despite the growth of purchasing power of the 1.4 billion Indian population, according to many local sources, this year is showing significantly lower figures than initially expected, but is still contributing to the growth in demand for aundry and dry cleaning services.
Most of the growth is in the largest cities. As India still remains an agrarian country, where half of the local workforce is employed in agricultural sector, that limits more active growth of the industry.
As might be expected, the demand for laundry services in poor agrarian regions is significantly lower than in its central regions. This is despite the status of drycleaning as one of the oldest professions in India and its importance for the country.
However, the Covid-19 pandemic has led to an increased emphasis on hygiene in India, making people more inclined towards professional laundry services.
Data, according to Economic Times business paper, for the Indian laundry services market is currrently estimated at Rs 20,000 crores. (A crore denotes ten million and is equal to 100 lakh in the Indian numbering system) in value terms. The industry is expected to continue its growth over the next five years with the annual growth rate up to 8%.
Leading local laundry and drycleaning chains have announced plans for aggressive expansion and consolidation of their position in the Indian laundry services market. At the same time the market is charactrerised by a low level of consolidation, with thousands of companies (many of which are poorly organised), providing services in the field of laundry and drycleaning. Still, despite this and thanks to its huge potential, the Indian market is traditionally within the sphere of interest for global operators in the field.
Choleshwar Ratne, managing director of A2Z Laundry Solutions, a representative for German Kreussler in the Indian market in an exclusive interview has confirmed the importance of Indian business and told LCN about the growing demand for both industry machines and chemicals.
According to Ratne: “This year has brought a lot of changes in the laundry industry in India. It cannot be denied that Covid-19 era has left a huge impact on the mindset of the business owners. People have also started thinking short term. This year has shown a significant rise in the purchase of low cost machines in the range of of 10 kg-15 kg.
“These semi-industrial machines have received a huge response because of their low investment, making it easy to enter/start a business. Low-cost machines come with low risk and in case of business failure, it’s easy to exit by losing less money. Another logic which works here is that the machines are short lived and come with a lifespan of 5 to 6 years and it’s easy to replace them with the latest technologically advanced machines, instead of living with an industrial machine for 15- 20 years as the technologies are upgrading very rapidly.”
Similar to the trend in machine purchasing, says Ratne, sales of chemicalst in smaller packs have shown more popularity due to easy availability and faster delivery options taking away the worries of keeping track of the shelf life and storage of the chemicals.
“Industrial machines sales for higher capacities (15+Kg) on the other hand have also shown reasonable demand, as the projects on hold during the Covid-19 period are getting implemented now,” says Ratne. “Many companies have started selling laundromat franchises during recent years, portraying them as easy business with less investment, but this has slowed down in 2023, due to non-delivery of the promises made by these franchise selling companies. There is no surprise that despite all this the individual-smalllaundry/ laundromat business has shown a good boom in this year.”
Ratne adds that this year was also the year of the customer as increased competition due to increased number of suppliers/service providers, has given more choices to the customer and more power to bargain. Few other manufacturers are eyeing to enter in the Indian market as the huge population and economic growth of the country gives “illusionary inferences”. He reckons that further refinement in the business formats and the liking of technological advancement in equipment is expected by the end of this financial year.
In the meantime, another global player, Stahl, a producer of industrial laundry equipment, also considers India as one of the priority markets for its growth.
As Uwe Stahl says: “Stahl has been very successful in the Indian market as a late entrant and has installed some very big laundries in the commercial sector for some very reputed textile companies in Gujrat (Mafatlal Industries, for one).”
Regarding future prospects in the market, Stahl believes the demand for laundry services will obviously grow in India as well as in other Asian countries. He thinks that, in addition to India, the sphere of interests for the company in this region also includes Indonesia, where Stahl has just finished installing phase 1 of a new central laundry with the focus on hospitality. Uwe Stahl says: “Of course this is apart from OPL which Stahl is installing.”
In the meantime, representatives of Lapauw also consider the Indian market as one of the priorities for its growth. Talking about the most important events in the Indian market this year, a spokesman spoke about significant supplies of a number of ironing systems for the local hospitality sector by Lapauw. The company is ready for further expansion and development in the Indian market this year.
Lapauw says: “The quotation opportunities for India are regular throughout any given year so there appears to be demand. However, the incubation period for transactions to materialise are painfully slow for not good reason. The India market is certainly ripe for development however a good deal needs to be down to demonstrate the benefits of investing in the correct equipment.”
Dr Marco Niccolini from Renzacci, commenting on his company’s strategy in India, says: “We are assisting the industry to increase the use of machines that can enable the use of alterntives to perc. Why? The new generation is more aware of environmental issues and the sustainable economy. New stores are opening in the big cities where their customers insist they have a green and good looking image. They are professional people and they want service on demand. The buyer, them, is the most important factor.” So, to be successful in the market going forward, operators need green credentials.
“Wetcleaning is becoming important – professional cleaning with water teamed with professional chemicals and a professional machine will appeal to young people. However, when wetcleaning is proposed as an alternative to drycleaning – and India is no exception to this – it is completely wrong and even dangerous,” says Niccolini. “Whatever brand of machine you have, you will increase costs and decrease business by limiting the range of what you can process. So if hyou want to be successful you really need both drycleaning and wetcleaning to cover all options.”
Most of the analysts and operators interviewed predict generally bright prospects for the Indian market across laundry and drycleaning, as the increasing number of working population and rising awareness about personal hygiene are the major factors driving the growth. Among the other factors that will contribute to further growth of the market will be the ever growing adoption of the franchise model, the increasing popularity of online laundry services, and the rising number of laundromats.
As for industry products, according to a recent report from Mintel, liquid detergents are expected to play a dominant role in this market, driving not only its expansion but also leading to the introduction of new products. According to Mintel, in India, powder detergents have been traditionally the most preferred ones for fabric care. However, since 2019, liquid format launches have begun to overtake the powder format, and this trend will continue to dominate India’s fabric care category in the near future.
Still, there are a number of problems preventing more active growth of the market, among which are the high cost of machinery and the shortage of skilled labour. In the latter case, a number of leading Indian operators has put forward an initiative for the establishment of a network of specialised institutions, that will focus on training of industry’s personnel.
However, it is unclear whether this initiative will be implemented. There are plans to raise the image of the profession and increase average salaries in it. That, in turn, will lead to the reduction in the share of the so-called “unorganised” segment of the market, which is represented by small laundries and drycleaners, which work without any registration and where the quality of services is often poor. In addition, some work on a semi-legal if not illegal basis.
In addition, the traditional shortage of clean water is another problem, which limits more active growth of the sector and may seriously delay the achievement of its ambitious plans for the growth up to US$15 billion by 2025.
