This month’s Reportage will outline the actual current conditions of dry-cleaning businesses in Italy. For this reason, Detergo Magazine has arranged a wide panel discussion, a round table, with the participation of dry-cleaning sector associations: Assosecco (Confcommercio), represented by Gabriella Platè, the President, CNA with Antonella Grasso who is in charge of CNA Servizi alla Comunità (Community Services), and Confartigianato Pulitintolavanderie, represented by Carla Lunardon, the President.
The debate focused on problems, expectations, willingness and efforts to relaunch the business sector that translates to 36 thousand operators that produced a total turnover of 1.3 billion euro in 2019. The figures, reflecting the perimeter of this category, speak for themselves. A market with a thousand different aspects where the traditional laundry activities are undoubtedly dictating the main pace but where laundries also invest, innovate and accept the challenges of growth during this complicated period. Hopefully, we still have some room to relaunch perspectives. Let us have a look at the debate.
For almost a year and a half now, the pandemic has affected companies and their finances, our personal and work lives. Today, the distribution of vaccines is giving us a little more hope. We can slowly start making some evaluations, but, first
of all, what can we say about the second half of the year? Can we already start speaking about a restart?
Gabriella Platè (Assosecco): the pandemic has generated a radical change in our lives but not in our hopes or dreams. They have remained stable but they have just been postponed. From a practical point of view, the loss in turnover has been quite generalized even if laundries did not make part of the category subjected to the lockdown. Some specialized businesses providing services to companies or lab services for third parties, managed to absorb the losses. The laundries “on the road” and those inside shopping malls were the most affected ones due to the imprecise communications released by the numerous Government Decrees, which, needless to say, complicated things even further rather than simplify the situation. The seasonal change, usually awaited with great enthusiasm, was just a simple wardrobe “refreshment” in 2020. In 2021, we are still witnessing some insecurity that will hopefully be overcome in autumn once the vaccination plan is completed.
I believe that a part of the change in consumers’ behavior is due to the fact that people have been wearing the “complicated and rotative” garments less often. I am speaking about suits, jackets and shirts. What is more, people have learned how to wash these garments at home rather than take them to a laundry, like they used to. We can call it a new awareness. It has affected our sector badly, unfortunately. The desire to come back to “the old normality” and therefore to the consumptions registered say in 2019, is not guaranteed, yet, strongly hoped for (perhaps) by everybody. As far as new positive trends are concerned, we have noticed a strong request for guaranteed sanitization/disinfection services. They had already been offered and given for granted in the past, while they are now specifically requested by customers. To sum up, in comparison to year 2019, on average, the sector has lost between 40% and 50% in turnover. Smart working, the closure of bars, restaurants, theatres and all those places where people meet to socialize, the limitations in travelling and the closing of shopping malls at the weekends have all strongly influenced our sector. Nevertheless, we should not get discouraged as these figures relate to an average trend, so the challenge is to intercept the segment of customers that are still willing to spend money on laundry services and, at the same time, try to offer new services to new customers. Surely, the laundry sector, that had already been facing a decline for some time, was put to an even harder test by the pandemic. Still, the crisis is an occasion to think about “the world to come”, about the new opportunities to seize. We should approach our work in a different way and with different strategies, but first of all, with skills. I am going to discuss it better when answering the second question.
Antonella Grasso (CNA): over the fifteen months of the pandemic, we can trace a picture of a traditional laundry that has been strongly affected, with the turnover presenting important losses (30% –65%). This factor has deeply affected not only the lives of the entrepreneurs but of their staff, too. Many small businesses were forced to close down due to the total lack of work. They were based in the center of small towns where the social life stopped completely, therefore many laundries started facing the crisis and, as some people were getting close to the retirement age, they took advantage of the situation and simply closed down to avoid the slow agony. Middle sized family businesses and laundries that hired staff are among those businesses that faced the pandemic crisis better than the others. However, also in this case, we have registered significant changes both in the organization of the business and its management. Big laundries inside shopping malls were heavily affected due to the lockdown of all the shops inside the mall except for the food supermarket. The losses in turnover were heavy also due to the high cost of the shop rental space. The current mass vaccination is giving high hopes for the market recovery and for the return to the social life as we know it, which can hopefully lead to an increase in turnover.
Another significant support to the sector would be the restart of weddings as the figures regarding this sector greatly contribute to business volumes of a laundry. I have always believed that the pandemic has produced losses in turnover but it has not, however, led to an economic crisis, similar to the one we faced in 2007. If we give the population the possibility to live normally, people will spend money. We actually noticed it after the first pandemic wave and we are witnessing it now with the Italian regions becoming orange and yellow zones (ed. Italian measures to contain the outbreak). It will most probably take at least two years to get back to the 2019 turnover but we can actually slowly see a positive future scenario.
Carla Lunardon (Confartigianato): the recession initiated by Covid-19 pandemic has, without doubt, seriously affected the 12.500 dry-cleaning and dyeing businesses operating in Italy and their 36 thousand employees. Our research office estimated that our sector generated 1.3. billion turnover in 2019, which almost halved (-37.1%) in 2020 due to the lockdown and the restrictions imposed because of Covid-19. We are talking about 499 million euros less as far as income is concerned. Still, the apocalypse was not really considered by the Government Ristori Decree. Disappointed because excluded from the Ristori ter Decree, that however did include our industrial “sisters”, our high hopes were in vain again when it came to the following Support Decree and the ATECO codes, which did not lead to obtaining the aids we had hoped for. Yet, our world and services, that remained opened as considered “essential”, needed to face the following: the decrease in the number of tourists combined with travel restrictions which influenced the textile and professional accessories sector. The closure of skiing resorts resulted in the reduction of the request for the maintenance of skiing equipment, the widespread smart working formula and the cancellation of events and celebrations led to the decrease in the necessity of wearing high quality garments. Hopefully, the vaccination campaign in progress and the consequent decrease of the contagion spread will allow our country and its economy to go back to normal. The first signs arriving from our associates are telling us that they have reopened their businesses. Still, I am more than sure that not all the laundries will be able to restart working again as if nothing happened. We need a new plan.
What are the opportunities that a dry-cleaning laundry could seize in order to relaunch the business successfully? In brief, what are the suggestions that you feel you could give your colleagues who can and want to invest in the increase of profitability and work volumes? What laundry model is the most reliable? Where should we start from during the second half of the year?
Antonella Grasso (CNA): after the pandemic, also the traditional laundry will have changed completely and it will become much more careful about the diversification of services offered by extending the horizon towards different customers. As always, the future is in our hands and it will be us who are going to be the main players of the nearest future linked to innovation and technology. Our businesses will need to become enterprises that do not leave anything to a chance. It will be extremely important not only to be able to do our jobs very well but also to know how to sell ourselves, e.g. through an internet website or social networks such as Facebook or Instagram where we can create our own internet page. We will need to spoil our customers with attention, logistic support and home delivery services as well as place customers at the center of the organization letting them know that our objective is to offer services aiming at the personal wellbeing.
Carla Lunardon (Confartigianato): I am convinced that thanks to our occupations, this extraordinary global health crisis could not make us even more aware of the fact that professional laundries are strategic in the fight against the spread of Covid-19, and not only. On the other hand, garment maintenance and cleaning definitely constitute crucial services, especially in the times of a pandemic as far as both wet and dry-cleaning are concerned. As a category, we need to enhance, in terms of marketing, what was stated about Covid19 by the circular letter n.17644 dated 22 May 2020 issued by the Ministry of Health (D.G. Prevenzione Sanitaria del Ministero della Salute): garments washing, either in water with the use of usual detergents or by dry-cleaning at professional dry-cleaning laundries both definitely constitute a good practice able to meet the hygienic requirements. Also, we need to eliminate the out-of-date image of an old-fashioned launderer and give laundry operators a new identity: qualify them as the professionals of cleaning. Apart from treating the stains, they guarantee the hygiene of the processed garments which was demonstrated by microbiological tests carried out by two analysis centers: Ritex and Laboratorio Fratini. Gabriella Platè (Assosecco): over the last fourteen months, we could notice that responsive businesses, that expanded the offered service range, managed to get by better than those that decided to keep the traditional approach which has led them to having difficulties. Still, it is important to underline that acting under pressure did produce, in some cases, instinctive reactions instead of reasonable ones, which often did not result in obtaining positive balance. Surely, it is not trivial to accept the challenge, trying to do our best while looking for solutions. It is always a good practice to do so as it makes us more flexible and versatile in regard to the market. Today, such qualities are also a must-have. We can define “artisan laundries” those dry-cleaning laundries that address and work with private customers but do not participate in public or private tenders. A piece of advice for those laundries would be to invest in technology and try to prolong the opening hours. For example, an automatic 24H delivery will allow to decrease the fixed running costs. The pandemic has actually contributed to the acceleration of all those changes that had already been taking shape but were going to take place over the next three/five years. This time slot has been reset. It is likely that the entire sector will go towards the “wearable” products, the less cured ones, cheaper and more attractive, trendy clothing for new generations. Therefore, investments should be in line with this new productive/commercial path. It has become crucial to consider the productivity, and therefore, the profitability as central themes of a serious analysis of strengths and weaknesses.
Another crucial element is the research on the environmental sustainability. The market is more and more sensitive to this topic and, most likely, it will soon start rewarding the efforts made in this direction. Another point we can mention relates to the variety of services offered by laundries. Similarly, the question we should ask is: how come Horeca Food managed to segment the services offered by assigning suitable prices for each type of pocket while our sector is almost completely crushed by the price leverage regardless the service? Once again, efforts were made to make the sector more professional through Law 84/2006. A healthy investment in training would allow only the skilled and qualified to access the sector with an overall beneficial effect for the entire sector. Prices are not the only variable point to consider, we need to work on communication and the consistency of the services, too. Needless to say, our category is of a primary importance. Freshly cleaned and sanitized garments need to be at the base of our actions.
What initiatives did your Association carry out in order to give support to the association members and what other actions are going to be proposed over the next months?
Carla Lunardon (Confartigianato): Confartigianato is working on three different fronts. The first one is the legislative one. We are getting to the end of a battle that started the day after Law 22 February 2006, n. 84 was released, called “Protocol on professional activities of a dry-cleaner’s” (Disciplina dell’attività professionale di tintolavanderia), to distinguish in a coherent and precise way a traditional laundry service from a self-service laundry, with a complete respect to the roles and skills. The second front is the support of communication. Let me mention the recent national campaign “Fallo Secco” (“Make it Dry”) that has given support to our members’ social network initiative promoting drycleaning in the fight against the pandemic. We have also sustained another wonderful campaign called “Questo è un capo sicuro” (“This is a secure garment”) promoted by the dry-cleaning community of Confartigianato Imprese Marca Trevigiana. The initiative underlined the value and the key role of dry-cleaners in the fight against Covid through a video realized for social networks.
Finally, the third front concerns our new role in the Agenda 2030. As a matter of fact, I believe that dry-cleaning and dyeing businesses constitute some sort of a forerunning “shared” concept aiming at a more sustainable future. In Italy (according to ISTAT 2019), there are 25 million families that own a washing machine. Fewer families have a car, 24.237 and fewer people have at least one mobile phone, 24.474. Washing machine is the most popular electric appliance with 97.6% of Italian families owning one. Although it is not easy to imagine a country where this precious white good is lacking, it would be understandable to use it less (and in a better way). We would reduce water and energy consumptions. Also, the pollution would decrease as laundries use professional products and in the right quantity. We behave like this when it comes to cars, bicycles, scooters hotel rooms and clothes. Why not give value to the largest washing platform we can possibly have?
Gabriella Platè (Assosecco): the Association, through the administrative office, has constantly worked on providing correct information and clarifications on the numerous Government Decrees that, often contradictory, kept being released at a great pace without really clarifying whether dry-cleaning laundries could remain opened or not. During the emergency, our Association represented the point of reference more than ever. Over the next months we are going to develop contents for training seminars online. We are also making some surveys on the introduction of the optimization actions aimed at the reduction of the environmental impact, which constitutes a topic of great interest today.
Antonella Grasso (CNA): experiencing the pandemic pushed CNA to show its strength not only on social media channels destined to companies, where we provided continuous information in regard to the Decrees of no easy interpretation, but also through consulting support. We are very satisfied by all this because our Facebook page is followed by about 1200 companies today, with 4000/5000 monthly accesses, about 26thousand accesses to a video on Covid-19 emergency and over 80thousand people reached. There have been numerous initiatives and we can say that almost all the regional headquarters supported their associates, and non associated business, through webinar sessions. They provided support in terms of information, safety protocols and other professional aspects in regard to the most suitable solutions on how to deal with the pandemic in the best possible way. CNA has dedicated great attention to the construction of a safety protocol dedicated to the sector. Dry-cleaning laundries have always dealt with the cleaning and sanitization of garments, but the pandemic highlighted the importance of communicating it correctly and clearly. Customers need to be informed on the subject of safety procedures applied that protect everyone’s health. The global health emergency taught us a different way of being an Association. Social distancing does not necessarily mean isolation and the collaboration between businesses and the association members can make a difference during the most difficult times. We have discovered the value of digital solutions as a tool for a successful communication and getting together. In collaboration with the national CNA, many local CAN offices arranged free of charge seminars and debates online with the objective of keeping the attention level high and suggest possible solutions to face the emergency.
Among the many topics discussed there were: new services for customers, new business strategies, greater attention to the running costs, greater attention to communication with customers. The national CNA has just finalized a free of charge training program for the members of the association. It will soon be presented to companies. It is an e-learning program that will be uploaded on our platform and put to the disposal of businesses, following the working hours needs. The sector has always showed great interest towards training sessions attended in person. As a matter of fact, the numerous initiatives arranged over the past years have always been highly attended. The current situation does not allow us to be present in person but as training reflects a fundamental part of personal growth, we have taken advantage of digital solutions to support businesses and always look towards the future.
Measures in favour of small dry-cleaning businesses, tax reduction, exemption from tax, incentives relating to hiring new staff, tax credit: what have you applied for and what have you obtained? What are you going to ask the Government for
to help the sector grow?
Gabriella Platè (Assosecco): we need to find a higher sustainability model in comparison to the one implemented so far. Let me start with some criticism towards our sector that, in too many cases, destroyed values by following price policies that could not be sustained by customers on the medium-long term. The structural reduction of the cashflow starts from here and it does not only affect our field. After this important introduction, the exemption from tax, also through the reduction of the VAT tax, should be followed by tax credit linked to investments in technology that presents lower environmental impact. Tax credit already exists but, after the incredible last fourteen months, it is necessary to re-introduce cash, and therefore to reduce the VAT tax, at least temporarily. Claiming that una tantum devolution or ristori Decree aids have worked, is actually wrong. As far as the important part is concerned – the one linked to personnel – let us not forget that laundries are based on human labour that accounts up to 40% of the turnover – we wish there would be a tax reduction linked to hiring staff under permanent work contracts as well as greater flexibility when it comes to fixed term contracts. The latter being necessary during the seasonal changes. According to the laws and regulations currently in force, a person hired one time cannot be hired again if not under a permanent work contract which results in continuous search for personnel, often non-specialized staff, during seasonal work. Laundries are seasonal businesses but it looks like it is hard to acknowledge it. To follow the going back to normal stage, it is necessary to keep the furlough going which has actually helped avoid numerous painful lay-offs. Perhaps this occasion offered by Detergo could become a bridge between the various associations of this sector that could reach the Ministry and establish round tables for debate as a united single voice. In conclusion, let us go back to the topic of VAT reduction. Considering that our business activities make part of personal care services, we could have some chances in reaching the goal if all the associations of the sector worked together.
Carla Lunardon (Confartigianato): as a sector association, we are present at many round tables and we are constantly in touch with the Ministry and the technical figures of the Government. Over the last two years, we have focused on institutional work to obtain some results, among which: Tax credit for ecological transition. The Budget Law 2020 (L160/2019) introduced the concept of “Transizione Ecologica” (“Ecological Transition”) that awards business investments leading to improvements in efficiency, durability and the reduction in the environmental impact. The Decree of 26 May 2020 published in the gazzetta ufficiale (TN. official publication containing the text of new Italian laws) on 21 July 2020 stated that the fiscal benefit for those companies that adopt the “Ecological” solutions equals to 10% of the value of the investment. The benefit increased by 15% according to the Budget Law 2021 (L178/2020): As far as the investments in Research&Development, innovation, design and green policies are concerned: the recognized tax credit increased from 12% to 20%, with a limit of 3 to 4 million euros. As far as the investments in technological innovation, design and aesthetic design go, the recognized tax credit is 10% with a maximum limit of 2 million euro. In case of investments in technological innovation aiming at the realization of products or new production processes to obtain the ecological and digital transition, (Green), the recognized tax credit amounts to 15% with a maximum limit of 2 million euros (Article 1, paragraph 1064 L178/2020).
Investments in machines, plants, software and instrumental goods – Nuova Sabatini (TN. economical facilitation regulation). The measures regarding instrumental goods (“Nuova Sabatini”) have been put to the disposal by the Economic Development Ministry. They aim at facilitating companies’ access to a tax credit and at increasing the competitivity of the national production system. The measure supports the investments in the acquisition or in leasing of machines, equipment, plants, instrumental goods used in production, hardware and software, and digital technology. The measure is a reference point for artisan dry-cleaning businesses, therefore, through our designated offices, we have collaborated with the Economic Development Ministry on the distribution, so that everything can be delivered through simplified modes, within short periods of time and in one solution.
SelfIemployment. We are spreading the SelfIemployment awareness, a measure that finances, through zero tax loans, the start of small entrepreneurial initiatives promoted by the NEET organization. The fund is managed by Invitalia through the Garanzia Giovani program, under the supervision of the Ministry of Labor.
Antonella Grasso (CNA): the pandemic made the Government provide us with numerous initiatives and incentives to sustain and innovate dry-cleaning businesses starting from tax credits to the 4.0 transition. The moment is definitely optimal to invest in technology, and never before has it been so beneficial due to the low interest rates, which can lead to important investments. What businesses are asking for today, is, first of all, to be able to work and be supported by the Government. Another important chapter is the mortgage loans issue. For more than a year now, they have been suspended as a capital share but with a quickly increasing interest share. For instance, who had a mortgage loan of a hundred thousand euros on 28 February, today, their capital share has been suspended and the interest share has been growing significantly, therefore the debt has grown by about six/ seven thousand euros, which could lead to the risk of default for many small and medium businesses.
by Marzio Nava
Detergo
June 2021
