LATHAM, N.Y. -- He's picking up tools and some coffee, maybe filling up on gas, when he decides to zoom through the car wash at Home Depot's convenience store, Fuel. She's headed to Costco to stock up on diapers and groceries when she notices car wash on the big box's lot. They're not pulling out of traditional car wash operators' lines for a better price, or complaining about servicethey're simply drawn to the one-stop convenience of the big-box car washes, reported Professional Carwashing & Detailing magazine.
It asks, just how big of a threat [image-nocss] is the big-box industry? Do any of these companies stand a chance at knocking the professional car wash industry off its feet? Or are these new faces simply a reminder of the growing popularity of the commercial car washand an advantage in increasing exposure and consumer education?
So far, three big-box companies have entered the car washing realm. Sam's Club, Home Depot and Costco all currently operate car washes and have intentions to open more, said the report.
Sam's Club leads the way with 17 car washes, although its units are more scattered (in both type and location) than Home Depot or Costco. It operates tunnels and in-bay automatic washes. It has sites in 12 states, and is most concentrated in its Arizona market.
Costco has been the most cautious operator, opening its first car wash in April 2006 after a decade of research and one failed attempt in 2003. Its second facility is planned for the San Diego area for early 2008.
Home Depot has been the most forward about its plans, and also the most optimisticthe company hopes to have 300 convenience store locations, most of them with in-bay automatic carwashes, by 2010. The c-store/gasoline/carwash concept has been branded Fuel and will be built on the retailer's store lots, attracting contractors and construction workers.
The c-store/gasoline/carwash combination makes it the most marketable big box operator, said Carwashing & Detailing.
Click here to view selected CSP Daily News' coverage of Home Depot's c-store venture. For other Home Depot news, search on the phrase Home Depot.
Concerning big-box encroachment, car wash industry experts predicted a variety of possible effects, said the report. In some scenarios, professional car washes would benefit from the increased exposure. In others, carwash owner/operators (specifically, gasoline retailers) would buckle under the immense pressure of competition from big boxes. And in still others, the industry would suffer a tarnished reputation at the hands of shoddy big-box operators.
In areas where big-box car washes have moved in, operators report the effects were small and short-lived, said the report. While it may put a dent in volume for a few months, it seems a new investor car wash or an expanding local carwash chain is a bigger problem than Sam's Club stealing customers, according to the magazine.
If big boxes succeed in going national with their car washes, experts predict the effects would be a mixed-bag. Steve Robinson, marketing manager of Mark VII, a manufacturer of in-bay automatic and conveyor car wash systems, compared the situation to the c-store wave. Over the past couple of decades, c-stores have been a major factor in causing home car washing to decline, Robinson told the magazine. [They] introduced many consumers to the value proposition of a professional car wash. Robinson said he thinks the trend is likely to continue, with big boxes making more customers out of home washing consumers.
But Robinson also pointed out the negatives of big-box involvement. Of course, both c-stores and the big-box retailers will also increase competition for independent car wash operators in the same market area, but that's the nature of free enterprise. Robinson said independent operators should carefully consider the strengths and weaknesses of their competitors and strive to fill the gaps that exist in their offerings, whether it be the style of washing, the range of services offered, the quality of service provided, or a combination of these factors.
The biggest difference between big-box operators and individual operators may prove to be the professional car wash industry's saving grace, the report said. Size, although limiting in some respects, will also help individual operators stay ahead of the game. Given the high margins of car washing compared to margins generated by other profit centers at a big box, you would logically expect c-store and big-box retailers to put a lot of focus on car wash operations. But in the real world, many of them are pulled in so many directions that they fail to fully realize the profit potential of the car wash, he said.
Car wash industry executive Ron Holub said time will test Home Depot's and other big-box's success. He has watched a Georgia Home Depot location carefully and thinks the company may pull out of the car wash industry all together. He told the magazine that the threat to the industry will fade once big-box retailers find out just how much work and personal dedication it takes to keep the carwash running smoothly and on a profit.
So while big-box operators may have the capital necessary to keep washing cars into the next few decades, they will not have the staying power to truly dominate the industry, Carwashing & Detailing predicted. They have been hesitant players to begin with, and will continue to be for at least a few more years. A look at what big boxes have done to the supermarket, pharmacy and gasoline industries, however, shows that operators will need to stay positive and alert. But if operators keep the vibe positive, the industry will stay strong and benefit from the big-box boom.
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