A positive drycleaning strategy as JSG announces strong results30 March 2015
Johnson Service Group CEO Chris Sander talks to LCN editor Janet Taylor about the thinking behind the strategy for drycleaning revealed in the company's pre-close statement, in January
The Johnson Service Group's pre-close statement, issued on 6 January, reported strong results, and has been well received. Following its publication the group's market capitalisation has risen by around £25million.
''The group is now very strong," says CEO Chris Sander. "As the statement shows, we performed well in 2014 with results expected to be slightly ahead of expectations and much better than in 2013." He adds that following publication, the rise in share price and an increase of around £25million in the market cap, underlined JSG's achievements.
The drycleaning division's results were also in line with expectations, but its positioning within the group has changed significantly over the past 5 - 10 years. "It used to dominate but now it represents less than 10% of our business," says Sander. Over the same time, Johnson's textile rental business has grown rapidly. Acquisitions such as Cannon and, in particular, of Bourne in 2014, have proved very successful and textile rental is now the main focus.
Sander says that the strategy for the drycleaning sector reflects the changing face of this industry and the way the retail market is progressing. The high street is a difficult area. The group closed around 100 stores in 2012 and since then it has been looking at trends.
From the consumer's view, the retail market is governed by convenience. That has always been the case with the drycleaning business and factors such as easy-to-reach locations and the availability of parking have been strongly influential.
The decline in the high street's convenience has been exacerbated by
out-of-town moves, the growth in online-shopping and the introduction of the click and collect option.
So JSG is exploring ways other ways to offer drycleaning to the public.
"In the last two years, we have been partnering with Waitrose and this is proving a convenient way to operate a drycleaning service - it allows customers to drop-off cleaning with the shopping and collect the finished order next time."
Drycleaning is one of several services provided under the My Waitrose banner.
The collection points are operated by Waitrose staff who take in the cleaning, do the ticketing and return the cleaned work to the customer. They are supported by a Johnson team who train them, handle branding and marketing of the service and of course collect the goods to be cleaned and return them to the store.
Sander says that Johnson currently has 78 of these Waitrose-partnered operations and expects to have a further 46 by the end of Quarter 1.
Office-based collection and delivery operations are another area that Johnson is exploring but Sander stresses the service is specifically targeted.
The group has been trialling this for two years and the service is designed for large organisations, such as banks, or multinational companies, that have a high proportion of white-collar employees and are in targeted locations.
The third part of the strategy is to develop an online service for handling the more expensive items that can be difficult to carry to a store. Initially online ordering will focus on wedding dresses but later will take in textiles such as duvets and curtains, and specialist items such as motor cycle leathers. The service will be offered in partnership with a courier service for collection and delivery.
JSG plans to launch its online service mid-year and will confirm progress as it reaches key stages in the project.
With regard to the high street, Sander says that this retail sector faces challenges that haven't yet "fully cycled." There are a still external factors that the could influence the size and shape of UK cities: Local and central government policies on matters such as congestion, parking and public transport, and more importantly perhaps the decisions of major retailers that will influence smaller businesses.
The group's strategy for high street drycleaning stores is to work with them and take decisions appropriate for the medium term. Sander says that the decision to operate with a portfolio of 198 stores is the right one in this respect.
CONVENIENT: JSG's drycleaning strategy recognises the importance of factors such as easy parking at its retail stores