Greater demand for quality finishing

The Italian economy continues to baffle. Retail sales fell in June at their fastest pace for 15 months, while taxes, borrowing costs and the price of petrol and utilities all continue to rise.

This should mean that people have less disposable income, and most predictions are that growth is likely to slow as consumer spending is particularly important to the economy. The respected Economist Intelligence Unit believes gross domestic product growth will slack off from 4.4% last year to 3% this year and 1.6% next year.

However, unemployment fell to a record low during the first three months of the year, exports boomed, and at the same time consumer spending rose, rather than fell. The continuing good cheer for business is that in May public sector wage settlements were higher than expected and now retirement pensions are rising. These pensions already account for 15% of gross domestic product.

This good news is soured somewhat by a warning from the Organisation for Economic Co-operation and Development that Italy’s exporters could soon face stiff competition from emerging manufacturing countries, notably China and India.

The mixed economic messages make it difficult to make firm statements about the state of the laundry and drycleaning industries.

Yet there is a general optimism about the laundry sector.

For the large German group Kannegiesser, Italy is an expanding market. “We are selling well and have increased our staff of service people,” says Horst Löffler, managing director of the group’s Italian operation.

In particular, Italian laundry companies are ordering more automated machinery to improve their efficiency.

One obvious reason for the work boom in the laundries is the tourism trade, which is said to be having a bumper year.

Hotels, restaurants and bars are doing great business and, as usual, filling the Italian coffers.

Daniele Baldi, a director of Tecnowash, a distributor for Girbau of Spain, points out that the Italian hotels represent a huge market and so guarantee continuing business.

Clement Silvaggio, western Europe sales director for the Jensen group notes that tourism brings the renewal factor into the laundry sector. The laundries are exceptionally busy during the spring and summer, but then they invest for the next season.

One growing trend has been noted by the manufacturers as marking out the Italian laundry sector. More and more operators are looking for equipment that provides a quality result. This applies especially to ironers and this demand is driven by the tourists’ requirements.

Wim Demeyer, export director of the Belgian manufacturer Lapauw, explained that most people who holiday in Italy have fairly sophisticated tastes.

Looking for fine art

Tourists in Italy are looking for world-famous sights and great works of art. They are more likely to be found strolling through the Uffizi gallery in Florence than sunbathing on the beach. They pay more for a holiday and expect higher standards all round.

The geographical element is interesting too. The demand for quality is especially strong from the Venice area, Tuscany and the two regions on the French border – Piemonte, including the large city of Turin, and Liguria, dominated by Genoa. Demeyer concluded: “Our agents are saying demand is high for quality work.”

The healthcare sector is also contributing to the flurry of activity in the laundries.

Most of the work is done by two co-operatives, Servizi Italia and Servizi Ospedalieri, owned by their parent company Manutemcop, and they provide regular business for the manufacturers.

“They are customers of ours and they are growing,” according to Löffler at Kannegiesser.

A third reason why laundries are thriving in Italy is the gradual take-up of workwear and corporate wear in factories and hospitals.

It is leading to specialisation in the laundry industry.

Jensen’s Silvaggio says: “For the first time we have sold a large installation for workwear.”

Changing tastes and attitudes are leading to a new demand. Until recently Italians have insisted on 100% cotton garments. Today, possibly thanks to the experience of a more travelled younger generation, polycotton is catching on.

The result, says Silvaggio, is a rise in demand for automatic sorting systems and tunnel finishers. When hospitals switch to polycotton the demand for this equipment will increase further.

More on-premises laundries are appearing in hotels, restaurants, spas, fitness centres and hairdressing salons, says Cristina Zuliani, marketing manager for Electrolux Italy. The owners of apartment blocks are also placing small laundries on site for occupants’ use.

Electrolux has installed one at a block in Alessandria, near Milan, and has an order for another at a planned development in Rome.

Changing society

Another trend arises from the changing pattern of Italian society. Coin-operated cleaning shops, noticeably popular in the USA, Britain and Belgium, are gradually popping up in Italy.

The trend for building smaller apartments means there is often no space for washing machines. The coin-op is the obvious answer in these cases, but there are several other reasons for the spread of this convenient type of laundry shop.

Italy has more immigrants and a growing number of students, and both groups of people lack homes of their own and access to washing machines. More women now find it cheaper to take their bed linen and duvets to the coin-op than to wash them at home.

Andrea Rotondi, the sales director of the Italian Rotondi group, which distributes for Alliance International, maker Ipso branded equipment, says: “In three years the coin-op shop market has grown a lot in Italy. We delivered 41 units last year and even more this year.”

Daniele Baldi raises a rather worrying trend. Sales are good, he says, but debt chasing is an increasing problem.

Slow payers

Equipment prices are lower in Italy because of intense competition and the resulting hard bargaining, but then many laundry companies are slow to pay their bills.

Unfortunately, says Baldi, there is little protection for the victims of non-payment. He is now trying to gather the suppliers together to seek ways of speeding up payment.

The satisfaction that laundry equipment makers express about their market is not widely shared by the manufacturers of drycleaning machines, in spite of the outlook of some like Roberto Grandi, sales manager of the Italian manufacturer Realstar.

Grandi says: “The industry is very good for us at the moment, developing and growing very fast. This year is a very good year.”

However, the general view is that big changes are unsettling the market. The number of shops continues to fall – from 40,000 in 1900 to 20,000 in 2005 and 17,000-18,000 now.

The suppliers are generally agreed that there is insufficient work for even this number of cleaners, and Gabriele Cuppini, sales director of Union, believes Italy has room for no more than 15,000.

The reasons for the decline have often been listed. Some shop owners close down because they cannot afford the machinery to comply with new environmental regulations, some cannot persuade their sons and daughters to take over the business when they retire and some fail to make a good living.

This is bad news in itself for the manufacturers. More bad news is the number of second-hand machines being put on the market by people who started franchise drycleaning businesses but failed within a few months because they lacked experience and training.

Busy, thriving remainder

However, if the remaining shops are busy and thriving, then they should be able to buy new machinery, which is more positive for the manufacturers. Cuppini certainly sees a future for Union’s new hydrocarbon machines.

Marco Niccolini, export director at Renzacci, fears many shops will close when the deadline for compliance with the environmental regulations runs out at the end of October. He points out that the operators who can show they are making the change are likely to be treated leniently, but the complacent ones who rely on the government inspectors taking a relaxed attitude and extending the deadline will be in for a shock.

He thinks a smaller sector would be more realistic and benefit existing drycleaners, but warned: “We believe that at the end of October people will suddenly wake up.”

Even in this shrinking sector, the manufacturers are trading. Valerio Gatti, export manager of Italian manufacturer Firbimatic, says: “Business is going well for us in Italy this year. New European Union regulations mean new machines are being bought. Since the Detergo exhibition, held in Milan last November, business has been good.”

Prosperous north

Böwe, the German manufacturer, has found sales consistent but sales manager Edwin Schmutz says this is because his company supplies top-quality machinery and the demand comes from the more prosperous areas of northern Italy – Tuscany, Umbria, Le Marche and Rome.

The market has been less than kind to the makers of finishing equipment. Corinna Mapelli, marketing manager of Trevil, says demand for her company’s products is falling.

She explains that shops that spend the equivalent of £15,000 on renewing their drycleaning machines have nothing left for finishing equipment.

She expects the surviving business to become more professional and bigger, and eventually to have the funds for finishing equipment too.

Survival in this business climate will be the reward, but it will require effort. Service and quality appear to be the means to this end.

According to Union’s Cuppini: “People will want better finishing, and they will want stains removed – with upgraded equipment.”

Some will survive by improving their efficiency and cutting operational costs, says Valerio Gatti, while Italclean’s Boni observes that some are courting their customers by turning back the clock and offering a home delivery service.

Some cleaners are introducing an alterations and repairs service and others are selling certain products such as moth repellents, says Mapelli at Trevil, although she says “those tactics will not revolutionise the way they operate.”

Boni suspects that if drycleaners are to attract enough customers, then their future may lie in the big commercial malls.

But in a country that defies the economic rules, the small traders could surprise us all and start to prosper again.

BUSY SEASON: Tourism has brought the renewal factor into the laundry sector. View of St Mark’s Basilica courtesy of the Italian Tourist Board venice QUALITY FIRST: Demand for quality is strong in regional centres such as Turin (main picture). Image courtesy of the Italian Tourist Board torino BRIGHTER OUTLOOK: Consumer spending has risen in the first three months of this year. Picture of Rome courtesy of the Italian Tourist Board rome street IMPROVEMENT: Valerio Gatti of Firbimatic (above) says drycleaners will survive by improving their efficiency and cutting operational costs valerio gatti PROFESSIONAL: Corinna Mapelli of Trevil (above) expects surviving drycleaning businesses to be more professional and bigger Corinna Mapelli MEETING REGULATIONS: Marco Niccolini of Renzacci (above) fears many drycleaning shops will close when the deadline for compliance with environmental regulations runs out in October this year Marco Niccolini (left)