Laundry Services Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Laundry Services Category Overview

The global laundry services category is anticipated to grow at a CAGR of 7.0% from 2023 to 2030. Growth of the category can be attributed to rising demand from the hospitality & healthcare sector, consumer prioritization for well-maintained and clean garments, rapid urbanization, rise in disposable income, and emergence of online and on-demand laundry services. Moreover, the category is witnessing an increase in end-usage among restaurants, educational establishments such as schools and colleges, and salons. For instance, in hotels and hospitals, it is crucial to maintain immaculate uniforms and linens, due to stringent hygiene and quality standards. Outsourcing laundry services provides several benefits to end-users such as cost savings, time efficiency, and compliance to safety regulations (e.g., using authorized cleaning agents). Few of the key challenges in this category include equipment management (e.g., replacing ageing equipment and maintaining new equipment), rising operational costs, meeting customer preferences that vary according to end-use, staff shortages, and technology integration. For instance, in Q4 2023, the laundry cost index increased by 9.3% due to a rise in global energy prices. Moreover, in 2023, regional laundry service providers in Australia and New Zealand faced labor shortages due to a rise in labor costs. In another instance, in 2021, certain key laundry service providers in the UK struggled to meet demand from hotels and National Health Service (NHS) facilities due to staff shortages.

Key technological advancements driving the global laundry services category include Artificial Intelligence (AI) and Machine Learning (ML), use of smart and digital laundry equipment, waterless laundry, Internet of Things (IoT)-enabled cleaning appliances, and software-driven management systems. AI and ML use algorithms to assess data from laundry equipment which is then used to optimize laundry processes with respect to time and efficiency. ML can help in predicting maintenance issues in laundry equipment and evaluate laundry preferences of customers. Smart and digital laundry equipment such as smart washing machines are endowed with self-cleaning programs and can be operated via smartphones. Moreover, they also have features such as automatic detergent dispensers and smart diagnostic tools. Additionally, features such as Radio Frequency Identifications (RFID) help smart machines to determine the type of wash required. IoT enabled cleaning appliances are equipped with ‘Wi-Fi’ and ‘Bluetooth’ options to facilitate the monitoring of incident detection, machine status, wash cycles, and remote supervision which makes it easier for service providers to enhance operational efficiency. Software-driven management systems are equipped with cloud-based technologies and can provide real-time feedback related to operational efficiency and service performance. Waterless laundry can reduce the quantity of water being consumed by 90%, thus making it cost-effective and environmentally friendly.

The laundry services category is fragmented and consists of a large number of global market players, turning the category to be competitive. Key players in the category set themselves apart by continuously upgrading equipment with latest technologies, improving turnaround time, optimizing service quality, engaging in strategic partnerships, adopting effective marketing strategies, having a strong digital presence, and emphasizing customer satisfaction in order to enhance their service portfolio and to stay competitive. Moreover, key players are actively focusing on improving environmental sustainability by using energy-efficient equipment and eco-friendly detergents, and ensuring frugality in water usage. Additionally, key players are also focusing on improving the overall customer experience by offering tailored pricing plans, contactless pickup and delivery, on-demand and express services, and catering to personalized packaging preferences. Buyers in the category possess high bargaining capability owing to an extensive supply base.

Labor, equipment, detergents and chemicals, maintenance and repair, energy, and other costs such as rent and utilities, transportation and logistics, sales and marketing, compliance, insurance, and taxes are the key components of this category. Labor and equipment account for the largest share of the cost structure. A prominent pricing structure used in this category is unit pricing or per-piece pricing, in which rates are charged based on the number of items being laundered. Another key pricing structure is weight-based pricing, wherein the prices are determined by the weight of the laundry load. Periodic pricing or subscription-based pricing is also used, wherein customers pay a pre-determined fee on a weekly or monthly basis in exchange for services. Few key service providers have a tiered pricing that varies by volume, frequency, and type of item. Few of the key factors affecting the prices are fluctuations in labor costs, rise in industrial electricity prices, and high cost of equipment replacement and upgradation. Additionally, the pricing may vary based on the length of contracts. Buyers and service providers prefer longer-term contracts for added security and stability, steady pricing structure, and stronger partnerships. According to data published by FRED, the Producer Price Index (PPI) for commercial laundry and dry-cleaning machinery and equipment in the U.S. increased from 333 in December 2022 to 348 in May 2023, which contributed to a rise in the total costs of commercial laundry services in the U.S. during this period.

Asia Pacific dominates the global laundry services category, holding a significant portion of the global market share. Key driving factors for this region include rapid urbanization, improved demand from emerging economies such as India and China, and rapid growth among leading end-user segments such as hospitality and healthcare. Few of the leading players such as Alliance Laundry Systems LLC have been focusing on capacity expansions in Asia Pacific to cater to the high demand. Key driving factors in developed regions such as North America and Europe include high degree of urbanization, emphasis on time-saving solutions, technological advancements, and stringent hygiene guidelines in facilities such as hotels and hospitals. Asia Pacific is expected to continue its dominance during the forecasted period due to a surge in the number of facilities such as hotels, hospitals, restaurants, salons, schools, and colleges that are outsourcing commercial laundry services. Comparing the prices charged by various service providers, assessing service capabilities based on pickup and delivery options, lead time, and minimum order volume, evaluating the experience level of service providers, comparing technologies used in equipment and service provision, measuring service quality based on customer testimonials, and checking adherence to safety and environmental norms are some of the best sourcing practices considered in this category.

Laundry Services Procurement Intelligence Report Scope