Nordic textile care sector ready for breakthrough

13 March 2020

The Scandinavian textile services industry is on a steady course for development but maybe growth is set to be a little slower than in recent years. Eugene Gerden reports

Nordic laundry and drycleaning services are steadily developing, although the current growth of the market is slower than that observed in recent years, according to recent statements made by representatives of some leading local textile care providers and local analysts.

2019 was a relatively tough year for the sector, mainly due to the lack of additional drivers for its growth and stagnation in local demand According to some analysts’ estimates, the current turnover of the market is estimated at €1.5 billion, with annual growth rates predicted to be no higher than +2-3%.

Of the four Nordic states, Sweden accounts for the biggest share of laundry and drycleaning services, provided in the region. This is mainly due to the size of the country and its population.

As Daniel Kärrholt, head of the Swedish Laundry Association, Tvatteriforbundet – a public association, which represents the interests of dry cleaning and industrial laundry enterprises in Sweden – said in an exclusive interview with the author in 2019 the overall turnover of the sector amounted to SEK5.56 billion (€522 million), generally comparable to the figures of some previous years.

Analysts of Tvatteriforbundet believe the demand for laundry and drycleaning services will remain stable among the Swedish population within the next several years and there will be some opportunities for the further growth of the market this year.

According to them, in recent years the issues of sustainability and environmental compliance have become among the major trends for the textile care sector of Nordic states. An example of this is the ongoing efforts, taken by the Swedish environmental regulator the Swedish Environmental Protection Agency, to solve the problem of high release of microplastic fibres by industrial laundries in Sweden.

In recent years, this problem become has become very pressing for the industry and in accordance with some recent reports prepared by the Agency, only in Sweden the current release of microplastic fibres with household laundry water is varied in the range of 800-1000 tonnes, which is a large figure for the industry and is abut 10 times higher for commercial operations.

In the meantime, according to analysts’ predictions, the ever growing environmental concerns will result in more active opening of eco-friendly laundries in the region, which may take place already within the next several years.

In fact, one of the first of such laundries was opened in 2018, in the Swedish city of Kalix, close to the Arctic Circle. Offering mat services, the company has received several awards for its ecosmart solution laundry system that reuses 98% of water. There is a possibility the same approach may be used by other Scandinavian enterprises, operating in textile care.

It is much the same in Norway where the textile care market is, however, substantially smaller than that of Sweden. The rise in unemployment in the country and the subsequent reduction of the purchasing power of local populations, caused by the decline of global oil prices (taking into account Norway’s status as one of the leading hydrocarbons producers in Europe), has led to more cautious spending of local customers, including laundry care and drycleaning. Due to environmental and allergy concerns, most local customers prefer to use products that contain fewer chemicals. This move forces their producers as well as local textile care operators to more actively review their ranges, moving from standard to concentrated powder detergents and improving their formulas to achieve more concentrated liquid detergents.

Ulrika Stenson, an official spokeswoman for VIC Textiltvätt AB, one of the largest laundry and drycleaning enterprises in Sweden, in an exclusive interview with the author told the market has a large potential for further growth, however, there are certain issues, which prevent its more active development and growth.

Stenson comments: “The Nordic market is unchanged. Probably the market for household laundry is growing but it will take a few years to change the household behaviour. Still the households mostly do their laundry at home. Drycleaning demand is stable. More and more garments are made in fabrics that are washable in water.”

Almost the same position is shared by Nikolai Jensen, a senior sales manager for Jensen Nordics, the Nordic subsidiary of Jensen- Group according to which, there will be some opportunities for growth in the region for some leading local players.

According to him, the popularity of the three capital cities of Copenhagen, Stockholm and Oslo has been soaring for some time. As Jensen has also added, the same can be said of other touristic hotspots. Happily, more tourists mean more linen and more business for laundries.

In the case of Jensen Group the company is satisfied with the results, which were achieved last year, planning to accelerate its expansion in the Nordic textile care market this year.

Nikolai Jensen comments: “2019 was an exciting year for the Jensen-Group and its Nordic team, as it launched a new series of flatwork finishing machines that premiered at the Clean Show. Laundries in all three Scandinavian countries were the first ones to install the new KliQ feeder, the new EXFG ironer and the new Katana folder, confirming their pioneering spirit as ‘former Vikings’ in exploring new paths and new technologies. Our partner Inwatec (see picture below, taken at Clean Show), has also been able to install a number of robot systems, and together with them, we are taking automation to a next level. This is particularly important in countries where labour cost are high.”

In the meantime, in addition to well-established local textile care providers, an interest in the expansion in the Nordic textile care market in recent years has also been expressed by some new market players.

Tim Maxwell, president of GreenEarth Cleaning, one of the US leading providers services in the field of fabric care said the company also sees potential for the development of the company in the Nordic region.

Maxwell says: “I believe that the services sector has room for significant future growth. Developing a service for global consumer’s full garment care requirements presents an opportunity for forward thinking providers of garment care.”

Due to this, the company has not ruled out the possibility of expansion into the Nordic textile care market in the short-term.

Economic Forecast

A poll by news agency Reuters (published 18 October 2019) indicated Nordic economic growth will likely slow in 2020 as trade tensions hit home. The report warned that the poll found the economies of Sweden, Denmark and Norway are cooling off after years of expansion as global trade tensions and domestic issues combine to inhibit investment.

According to Reuters, the export-dependent region has for decades benefited from the gradual globalisation of markets. However, it continues “the ongoing trade war between the United States and China over tariffs and trade, as well as lingering uncertainty over Britain’s pending exit from the European Union, are seen hurting investment and demand”.

“We keep seeing worse numbers, especially for the manufacturing industry globally, and that’s affected by the trade war, falling investment in China and a general recession after the long upturn we’ve had,” Danske Bank chief economist Las Olsen told Reuters..

The report concluded: “The largest Nordic economy and the fastest growing each year from 2013 to 2018, Swedish GDP is set to expand by 1.4% in 2019, down from 2.4% last year. That’s the weakest in six years and below a 1.8% forecast in a July survey.

“It would make Sweden the most sluggish of the three countries this year and could remain so in 2020, when growth is expected to slow further, to 1.3%, predictions showed.

“In Norway, growth is likely to drop from 2.3% in 2019 to 1.8% next year as a boom in oil industry investment in recent years is forecast to gradually fade.

“Denmark is expected to see a decrease from 1.9% growth in 2019 to 1.5% next year. The economy is close to full employment, Danske Bank’s Olsen said, and the economy had largely run out of spare capacity.”

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