At the turn of the century, jan/san distributors were already immersed in battle with big-box stores who invaded the jan/san marketplace. Home Depot, Lowe's, Wal-Mart, Sam's Club, Costco and other large, national retailers, stole distributors' customers from out beneath them with their massive facilities chock-full of marked-down cleaning supplies and a business model focused on high-volume turnover.

A few years later, another threat from outside the industry — national uniform rental companies such as Cintas, Aramark, UniFirst and G&K Services — carved their own path into the jan/san market, making the competition on the street level a bit more crowded for distributors.

Nearly a decade later, these publicly traded uniform rental companies (Aramark is privately-held) have successfully infiltrated the jan/san market, with a focus on being a one-stop shop with an array of products and services.

Expansion Into The Jan/San Market

Cintas was the first uniform rental company to expand into the jan/san market in 2002 after the company identified that it was "a growing need" of its customers. Aramark, UniFirst and G&K Services soon followed Cintas' lead by stocking facility restrooms and janitorial closets across the country. Besides renting uniforms and shop towels, these companies jumpstarted rental programs for matting, mops and microfiber products, on top of selling toilet tissue, paper towels, hand soap, odor control products, first aid, safety supplies and chemical dispensing systems. These companies also recently expanded into carpet and tile cleaning, adding to the growing list of services they offer.

Of the big four national uniform rental companies that were contacted by Sanitary Maintenance for this article, only Cintas agreed to be interviewed. The company declined to comment on specific business direction or plans for expansion into the jan/san market.

However, based on financial earnings documents, a case can be made that Cintas and its national competitors have made a concentrated effort during the last couple of years to sell their existing customer base on their facility service product offerings as well as win new customer accounts in the market. Rental uniforms and ancillary products (segments consisting of the rental and servicing of uniforms, mats, towels as well as sales of restroom supplies and other facility products and services) accounted for 71 percent of Cintas' revenue according to the company's 2011 third quarter earnings statements — up 6.8 percent compared to the company's 2010 third quarter earnings.

Meanwhile, the company's latest organic growth showed a rise of 4.3 percent over last year, and is an improvement over the company's second quarter organic growth of 1.9 percent. Cintas credits this to improved sales productivity — both in gaining new business opportunities and in customer penetration. This comes as a result of Cintas increasing its investment in its sales force in the third quarter of 2010 to focus on growing business in existing customer accounts in areas such as facility services.

UniFirst, too, has seen some recent success because of its continued push into the jan/san market. The company's revenue for the first quarter of fiscal 2011 was a record $273.1 million, a 6.6 percent increase over the previous year.

"Our laundries, facility service and ancillary product sales continue to show positive gains…improving year-over-year," Ronald Croatti, president and CEO of UniFirst told the company's investors in a financial earnings call in January. "These increases are a direct result of our unwavering focus on selling total business solution packages over selling just uniform programs alone."

With uniform companies already in most jan/san distributor's accounts for other product categories or services, distributors across the country are — or should be — expressing concern over lost profits due to customers jumping ship for lower prices on jan/san products from uniform companies.

Losing Business

While the push into the facility services arena is a thriving business endeavor for uniform companies, jan/san distributors says these competitors are using their weight and their existing relationships with customers to beat distributor pricing on janitorial and paper products.

"So now if there's a jan/san distributor in there and the uniform company really wants that business, what they're going to do is undercut the price to get the business from you," says Andy Brahms, president of Armchem International Corp., Fort Lauderdale, Fla.

In fact, Brahms experienced this firsthand three years ago when his company lost a customer with 30 locations to a uniform company. Brahms says the uniform company, which rented uniforms to the customer already, low-balled his company with inferior products so they were able to get the customer to switch suppliers. Brahms says the uniform company was trying to pass of generic products as quality products.

"I told my salesperson, ‘Listen there's no way they could sell products for that price,'" says Brahms. "'Go and take a look at the product.'"

Brahms says his salesperson quickly found that the uniform company was preying on his customer's intelligence by trying to pass off generic paper products as quality products. His salesperson sat down with the customer and compared what they were previously purchasing from his company to what they agreed to buy from the uniform company. The customer was surprised to find out that the paper was in fact lower quality and was not the same weight or length as it was previously purchasing.

"So my salesman wound up getting that account back," says Brahms. "I said, ‘fight for your business, don't give up.'"

Hidden Costs

Distributors say it's important to warn customers who may be looking for a quick savings because they may not be receiving what they were expecting when they sign on to do business with uniform companies.

Besides receiving generic products, end users could be charged additional fees.

"The uniform people are notorious for cheating," says Brahms. "Hidden costs on the invoice that they won't tell you about. All the time. And because you signed a contract, they'll say they didn't read the little print, so they stick them."

The hidden costs of dealing with uniform companies on the national and local level can be devastating, especially if it's a customer who already is limited by a shoestring budget in what is still an uncertain economy.

Distributors say they must train their salespeople and make sure they know exactly what the uniform companies are doing. Go over contracts line by line with customers, explaining where potential savings can be achieved by purchasing through a distributor and explain what exactly they're being charged for by the uniform companies.

"Unless you educate both your customers and your salespeople, you can lose a lot of business to these companies if you sit back and do nothing about it," says Brahms. "It's about better education, making sure salespeople know what to do with a customer who has been approached or even has switched without you knowing."

A lot of times, uniform companies will put up a soap, towel or tissue dispenser and they'll charge the customer anywhere from $.50 to $2 a week for it, unbeknownst to the customer when signing a contract, according to distributors. Meanwhile, distributors will loan these dispensers to customers as long as the customer agrees to purchase paper or soap from the distributor. Distributors say uniform companies also charge end users restocking fees and often prices will fluctuate without receiving notification, even though they are locked into a contract.

"The interesting thing is if you can get the attention of the customer and tell them to pull out a bill, they say ‘Wow, I didn't realize I was being charged $1 or $2 a week for a dispenser," says Mike Sulkin, president of LBH Chemical & Industrial Supply in Fort Wayne, Ind. "That's where we come in and we look at the bill, go over it with them and say, ‘Look, you're spending up to $104 a year on one dispenser. After that, it's hard for the uniform companies to have a lot of credibility."

Distributors say it's important to stress to customers that there are no hidden costs when purchasing from a distributor.

"What you see is what you get with us," says Chris Nolan, president of H.T. Berry Co., Canton, Mass. "We're the guys with the trucks, with the warehouse, with the expertise. We just take it upon ourselves like you entrusted to buy these core products from us, we're going to deliver them on our truck, you're going to get an invoice from us and it's going to be what it is. There's no hidden charges. You tend to get more loyalty that way in my opinion. Because the last thing a customer wants is something they didn't expect."

Winning Business Through Product Knowledge

Distributors say uniform companies have become relentless in pursuing their customers in the jan/san market. In order to compete, distributors must prove the benefits of purchasing from them vs. uniform companies. Distributors say that starts by pitting their company up against uniform competition. If distributors really do their due diligence and dissect what uniform companies are doing, they can put programs together that can really save customers money and at the same time save their own bottom lines.

Uniform companies are playing a game on price and distributors don't have the ability to drop their product prices as low as these large, national, publicly traded companies. However, distributors can demonstrate where purchasing cheaper, generic products may not be saving customers money in the long run. Thus, the battle should be fought on product knowledge, instead, says Dan Merkel, an industry consultant and former executive director of RDA Advantage, Littleton, Colo., who adds that uniform companies are trying to make commodities out of everything the distributor sells.

"It's about out-selling, out-valuing, out-smarting, out-marketing your competition," says Merkel. "Distributors are the experts. What are they? They're uniform guys. They're ‘Johnny-come-lately's' to this."

Distributors say that uniform companies aren't bringing any value to customers. All they're doing is giving customers a low price and the only thing the customer is getting is a delivery driver dropping off product.

"There's nothing value-added that uniform companies bring," says Nolan. "It's just a price. It's just a delivery. Our business is like street work. We're out there calling on our customers trying to service them the best we can and get them the right product mix. We're more value-added, more consultative and that's what a lot of our customers want."

Distributors provide value by finding out what exactly their customer's needs are. The more a distributor can discuss a customer's particular needs and the solutions that they offer, the less chance that distributors will lose customers to uniform companies, solely on the price of products. Understanding each individual customer's needs and then tailoring a value proposition goes a long way in not only showing a customer that the distributor truly cares about their business, but more importantly it helps distributors maintain customer accounts.

Demonstrating Savings

There are product categories that distributors say they can focus on in order to win back accounts or even steal business away from uniform companies.

For example, microfiber is a popular product that uniform companies recently started renting to facilities, especially in the healthcare market. Although the uniform companies are locking these facilities into multi-year contracts, distributors say they are able to get customers to switch back to purchasing these products instead of renting at the conclusion of their contracts.

Ryan Myers, vice president of Little Rock, Ark.-based Myers Supply & Chemical, says he tells customers that they can fall into a major financial trap by renting microfiber products from a uniform company, especially if no one is keeping track of the number of products being delivered and picked up to be laundered on a weekly basis.

"The uniform companies don't record shortages until you want to get out of the contract," says Myers. "And when a customer wants to get out, they'll say we delivered 4,000 microfiber heads and you're only returning 2,000. So you get a delivery ticket, but no one is keeping track of what's being delivered to them or counting what's being sent out and they're not weighing or counting, they're just leaving it up to the uniform company to say what has been returned."

Myers says a large hospital in his area recently fell victim to this trap and as a result was hit with a $56,000 bill for unreturned microfiber products over the course of a year. Not only was the hospital forced to pay this penalty, but this also cost the head of environmental services of the hospital his job. Because the hospital didn't have any reporting, it didn't really know what they were giving back other than what the uniform company was telling them.

"There's always loss, but there's no way over a period of a year that they lost $56,000 worth of microfiber," says Myers. "But they didn't really have any legs to stand on because there was no accountability and they had to pay it."

When asked by SM about informing customers about lost items at the conclusion of a contract, Cintas "operates with honesty and integrity," says company spokeswoman Heather Maley. "As a result, we are transparent with our service agreements, which outline the terms (considered standard in the industry), any changes that may take place, and charges that may be incurred upon termination of the agreement for things such as unreturned items. This is regularly communicated to our customers through our service sales representatives during their weekly service visits. It is also noted on the invoice, and in some cases, may be outlined in a letter sent directly from the company."

In accounts where customers are renting microfiber from uniform companies, Sulkin says it has been helpful to show the benefits of owning vs. renting and laundering microfiber in-house.

"So, we're saying, you know what, when does your contract end? We can show you a microfiber program where you can bring in 300 microfibers, we'll even give you a washer and you can wash your own in-house and you can save a lot of money," he says.

The backbone of jan/san distribution is delivering value along with products. Showing customers the true benefits of staying within the jan/san channel and purchasing from a knowledgeable source has been successful for distributors in overcoming competition impeding on their marketplace. As uniform companies continue to make a concentrated effort to pursue jan/san customers, distributors must be prepared to fight for their business.

Get End Users To Switch From Shop Towels To Wipers

Automotive shops, manufacturing and industrial facilities often rent shop towels from uniform companies. However, studies show the laundering process is not environmentally friendly and often expose employees to unsafe toxins. Read how distributors have been able to win these accounts from uniform companies by getting customers to make the switch to disposable wipers here.