Initially, I titled the article, “The Structure of Laundry and Dry cleaning Industry in Nigeria.” However, I changed the title because of the fundamental differences between laundry and dry cleaning.
And because garment cleaning is a more appropriate term to describe both laundry and dry cleaning, I revised it to “The Structure of The Garment Cleaning Industry in Nigeria.”
I will situate this article within the theory of Strategic Management and Competitive Advantage Concepts. The term “structure” refers to the garment cleaning industry structure in Nigeria measured by the following factors:
The number of competing firms.
Homogeneity of services.
Cost of entry and exit.
#1. The Number of Firms in Garment Cleaning Industry in Nigeria
According to the Corporate Affairs Commission (CAC), Nigeria had 3.1 million registered companies by March 2019. However, the commission did not provide specific numbers by industry and sector.
Number of Laundry Firms
There are no incentives to incorporate laundry business because of the low cost of entry and scant government regulations. This has led to the development of a larger informal laundry sub-sector of the Nigerian garment cleaning industry.
Number of Dry Cleaning Firms
The number of dry cleaning firms is low because of the high cost of entry, including government regulations and steep capital outlay.
#2. Homogeneity of Services
Although garment cleaning can describe both laundry and dry cleaning, they have fundamental differences.
Basic Difference between Laundry and Dry Cleaning
Traditional wet cleaning involves the immersing of garments in the water together with other cleaning agents such as soap, detergent, or softener. However, a dry cleaning process makes use of a solvent to clean the garments.
It is “dry” as it does not use water. Most cleaning firms use the chemical perchloroethylene (PERC) to remove grease and stains from clothing.
We agree that laundry is an aspect of dry cleaning. Therefore, dry cleaners can launder garments, but launderers cannot dry clean.
#3. Cost of Entry and Exit
As I have established from my introduction, there are fundamental differences between laundry and dry cleaning. Therefore, the cost of entry and exit for both cleaning processes differ.
The threat of entry depends on the cost of entry, and the cost of entry depends on the existence and height of the barriers to entry. The relationship is such that, the greater the cost of entry, the greater the height of these barriers.
The Cost of Entry and Exit of a Laundry Firm
Laundry startup costs range from a few thousand Nairas to hundreds of thousands. These include the cost of incorporation, equipment, and so forth. This low startup cost encourages a lot of entrepreneurs and firms to enter the laundry sub-sector.
Also, most laundry firms remain small because the laundry sub-sector has a few economies of scale and even some important diseconomies of scale.
The low barriers to entry have led to a proliferation of laundry firms in Nigeria.
The Cost of Entry and Exit of a Dry Cleaning Firm
The cost of entry and exit into the dry cleaning sub-sector is high because of the following factors:
The high cost of dry cleaning machinery and technology.
The high cost of dry cleaning inputs.
Compared to laundry firms, dry cleaning firms’ operations have significant occupational hazards. This is because of the storage, usage, and disposal of chemical solvents that can damage the environment.
Therefore, dry cleaning firms require major investments in managerial knowhow.
These high barriers to entry limit the number of firms entering the dry cleaning sub-sector of Nigeria’s garment cleaning industry.
Entrepreneurs and firms enter the laundry business because of the low cost of entry and lax government regulations. This has led to a proliferation of incorporated laundry firms and an even larger informal laundry sub-sector.
Dry cleaning firms are not as many as laundry firms, although they comprise a healthy percentage of the formal garment cleaning industry. Also, the number of laundry firms operating a different business model i.e. on-demand laundry platforms is growing.
Finally, the result of the analyses of the three factors suggests that the Garment Cleaning Industry in Nigeria is fragmented.
‘Rotimi MUDE is the founder/promoter of MALaundry (a website for booking laundry home services in Lagos). Having launched the business in Lagos and Edo States respectively, he has a uniquely strategic perspective of the industry. And with nine years of experience, he shares his thoughts and insights in a collection of articles on the laundry and residential cleaning. Rotimi has a Bachelor of Science (B.Sc.) in International Relations from the Obafemi Awolowo University (OAU), Ile-Ife, Osun State. He is also an alumnus of the FATE Foundation, Lagos. His mission is to democratize domestic-support services in Nigeria.