Julius von Eickstedt,
“LAV’LOUNGE is a place where every individual can get his or her dirty clothes washed while enjoying the pleasure of a café and the convenience of a grocery store”.
Following this mission, we will introduce and analyse the business model of this new concept. Our business model combines three different formats: a laundry, a café and a grocery store. The goal is to deliver our customer a welcoming and cosy atmosphere whilst he or she enjoys the pleasant experiences of meeting friends, being able to study, shop for groceries, relish on a relaxing moment and the ability to do their laundry at the same time. Hence, our company name and logo “LAV’LOUNGE” simultaneously incorporate the meaning of washing (laverie) and social time (lounge).
Our slogan “Une vie plus facile” enhances the customer value of simplifying one’s life. Our business model targets young professionals and students, between 18-35 years of age, male or female who do not have access to private washing machines. The young professional segment can be characterized as having a strict time schedule and the need to access laundromats during late evenings or after working hours. The student segment can be characterised as having a more flexible time schedule, being more price sensitive and simultaneously looking for study opportunities while eliminating waiting time for laundry. Both of the segments’ shopping behaviours are based on impulse and urgent needs.
LAV’LOUNGE will be 150 m2 large and will be divided into three main areas: convenience store, café and laundry room. The laundry room will be separated from the café area by a glass wall, which creates an open atmosphere without disturbing noises of the machines. There will be space for ten washing machines and five dryers. The café, taking the majority of the space will have a coffee bar with cosy sitting area, whilst the small convenience store will have five shelves in the rack layout for grocery product offerings.
The product range for LAV’LOUNGE will resemble the product range offered at a typical convenience store that caters to the needs and shopping missions of our target segment. Being able to meet these needs at different points of the day will increase frequency of the trips to our store. The assortment strategy takes into consideration the shopping missions (e.g. after hours shopping need or emergency products), size of store, product turnover, product perishability and available budget. The result is the selection of ten grocery categories. The offer range for the café will resemble the food and beverages found at typical barista cafés. It is important to differentiate the café from the grocery store, by not serving the same items, to prevent cannibalism.
LAV’LOUNGE will be located in Jean Macé, 7th Arrondissement in the city of Lyon, France. This location has been selected due to the presence of three universities in Jean Macé that attracts a student and young professional population of 5,250, who needs access to laundry facilities. Jean Macé is close to the city centre and easily accessible from the neighbouring districts via public transportation (metro line B and tram line 2) and bike within 10-15 min. Rent is estimated based on commercial rent in the neighbourhood. It is considered more affordable in comparison to other districts. The store size of 150 m2 will require 14,449.09 EUR per month. There are currently no stores offering all three of these concepts in one. Our main competitors are established grocery stores as they have the capital to set up a similar concept. However, this would require heavy investment and redevelopment of their current stores. Their size should make them less flexible and decrease the speed in which they can answer to our new concept.
We have estimated the income statement for each part of the store for the first five years. Our capacity for washing machines is based on how many students/young professionals live in our area, how many are using public laundries, competitors in the area, how many washing machines we have, opening hours and how often students do their laundry. In terms of gross sales, the revenues for the washing machines and dryers are estimated to increase thorough the 5 years. We estimate 1/3 of capacity to be used in year 1, 1/2 of capacity in year 2 and 2/3 of capacity in years 3-5.Our cost of goods sold (COGS) involves the purchase of washing machines and dryers. Due to high costs for bathroom facilities and storage the EBIT is going to be negative for the following 5 years.
Overall, total revenues are based on average in-store sales. We anticipate a sales increase in the next 5 years. The EBIT is expected to be negative for the first year. In year 2 we will reach a positive EBIT and break even. Our advantage is that the washing machines and dryers don’t have any COGS after year 1. Furthermore, we are able to expand in machines to increase capacity if necessary. In terms of communication, most important in the beginning is customer awareness. Our goal is to be recognized by our target segments and become their first choice when it comes to laundry places. Web and Facebook pages are our opportunity to deliver the message to our target segments and to get their feedback. Information about events, promotions and laundry vacancy will be available there. At the beginning of the semester we will approach universities/student events and hand out fliers about our launching party.
Launching party will be a fun event with games and competitions. We will prepare goodie bags with branded gifts. For post-launch and continuous promotion we propose loyalty cards and organization of several events after the launching party. With this viable business model, we will ultimately provide the answer to an unmet need in the retail, washing and gastronomy industry.