THE STATE OF THE INDUSTRY 2020

THE STATE OF THE INDUSTRY 2020 TAKEAWAYS TO ENHANCE YOUR INCOME

Have you read the SSAA’s new State of the Industry Report? If you are a member, then it's essential reading. There is a solid raft of information contained in this far reaching report that can benefit all members. It’s a lot more than a few numbers, it's real insight into our industry and those that supported its production are to be congratulated. By Dallas Dogger.

Iwas involved a long time ago in the first statistical analysis conducted by the Financial Management Research Centre at Armidale and the new study reveals that we really have matured as an industry, especially over the last 10 years.

The last Demand Study which was (not the same as the State of the Industry, but has some cross over data) completed in 2013 provided a snapshot into how our industry was performing and it’s been 7 years since a detailed study of the industry has been undertaken and it must be said that the new study is very comprehensive providing an early snapshot of the work undertaken by the SSAA.

After a good read, what can we take away from the study that can make a material difference to the ‘average’ self storage site? 1 VACANCY The average occupancy of the industry was reported at 83%. My calculations show that’s around $294 million dollars of revenue annually not in self storage owners bank accounts.

We must have some vacancy, but do we need this much?

TAKEAWAY 1.

What can you do to increase occupancy and therefore income? Have you got a compelling offer? Is your unit mix, right? Are your spaces clean and tidy? Can customers find you online? Is your facility well signed? Take time to review each of these and see where improvements can be made.

Given the cost of construction, have you factored in the cost of vacancy? Did you really build 500 spaces only to have

85 of them empty? How do you account for this real cost? Self storage sites need to be able to sell space every day and optimising the business to balance what is available and what needs to be rented is the key. Analysing your ‘average length of stay’ will help you plan for stock needed to be rented. Everything else should be rented and at the best rate you can achieve. Whilst the average is 83%, who wants to be average?

TIP: The cash locked up in the vacancy is yours!

2SIZES AND PRICES ONLINE Let’s get this myth out of the way straight up. In the 2013 study, 80% of potential customers were asked ‘What was the most important feature they needed on a self storage website’? You guessed it, prices and sizes. With at least 80% using the Internet for primary self storage information, it is essential to show prices and sizes. Many sites still resist this basic need by customers. As one large operator in the US revealed recently: ‘If you are not online you are roadkill’.

Not my words but you get his point. The COVID-19 Pandemic has seen a tripling of online contactless move ins, helping to bolster our industry.

TAKEAWAY 2.

Dramatically, consumers are taking a lot less time to make up their minds about renting space and 58% expect to be able to transact online. More than 70% of enquiries come from the Internet, why be disconnected from this part of the business? Not showing prices online leading to a contactless move in model is harming your income. Without these tools you drive customers to competitors and you never get any of the afterhours rentals that many enjoy.

It’s just another reason you’re not full!

think it’s too much of a hassle to move stuff in and out of our sites with 26% saying so. We need to work on our value drivers and maybe there is a way to help these potential storers. Someone will, if you don’t. A generation of discounting (you know the stuff others do but you don’t) may have played into the hands of the consumer. 67% said they look for discounted rates when choosing a site, making discounts part of the routine cycle for operators. Why do so many consumers look for discounts for a new rental? Is discounting an admission we charge too much for space? Somehow, we have taught consumers to expect discounts and we even go out of way to advertise discounts hard at our busiest times. Why not save that promo for quieter times? We give away income in the summer months when the consumers rent anyway. When have you ever seen an airline discount airfares at Christmas and Easter? Fundamental changes to discounting as a concept are needed too, if the industry is to have any impact on the perception that storage space is too expensive. Compared to the USA, we have a much larger spread of prices for the same size space in a location. How does a consumer know which is the right space to rent when there can be as much as 50% difference in the same size space? The Report revealed that lowest price was not the core driver for rentals. Convenience was. Understanding why your customers rent with you is the 3 REALITY V PERCEPTION Like in 2013, there remains a disconnect between the perception of the price of a self storage space and its first step to getting pricing right. real price, with 49% indicating self storage is too expensive. Not much has changed. Uber Eats proves that consumers will pay for convenience. It seems some potential renters

Understanding why your customers rent with you is the first step to getting pricing right.

TAKEAWAY 3.

If there remains a disconnect between the perception of the price of a storage space and the price it is, with about half reckoning we are too expensive, then how do we break down

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this perception? Comparisons help like ‘Ever wondered how much it really costs to leave all your stuff in your garage?’ What about advertising ‘XYZ space, great for storing ABC only $250 per month. Save $30’. This form of advertising sets an expectation and for those not immediately storing it sets a price in their memory. That is why you anecdotally know the prices of cars you don’t even want to buy. Cars are mostly advertised on price and the car industry is rapidly moving to a ‘no haggle’ standard price model, mainly driven by online pricing.

Local customers will pay to rent with you, reconsider your level of discounting, while staying competitive.

MY TOP 5 TIPS:

TAKE AWAY 4.

Read the report cover to cover and see how your We can do much more locally to expose our facilities to the local general public. measure up. From shopping centre displays to local community activities. Why not try  Get online and show engaging with your locals? They are prices and sizes and your potential customers. ensure you have If you have a prominent site with contactless move ins on good road exposure, decorate it for your site. (contact your Christmas and enter it in the local software provider, they Christmas lights competition, many will can help). drive past to see your display. This has  Do more local awareness worked for sites I have been involved in. activity – engage the local Reminding your local market that community. self storage is a better, safer option  Review discounting and don’t do it when you don’t than other forms of storage will help build awareness. Be creative! need to. CONCLUSIONS 4 AWARENESS Take away the multinational operators and after 30 years or  Analyse your deals and discounts. Often you give away money for no The SSAA has delivered real insight into how our industry is performing and I have only scratched the surface of more, awareness of brands remains in reason. what you can do to improve your site’s single digits for most brands. income.

Some brands work hard on We are blessed in the fact that we awareness, getting their name out to as have weathered the COVID-19 storm. many people as possible and that has increased awareness Reading the report and understanding where you fit in is of the industry. the first step in improvement. l

Storage is a product that is not aspirational. People don’t spend Saturday afternoons browsing around sites. Around 20% surveyed could not nominate any storage Dallas Dogger is a life member brand. Given that self storage is a local convenience product, of the SSAA and chairman of the much more can be done to expose your brand in your local Centreforce Technology group, community. A long time ago, I was the GM for Premier Storage (the forerunner) of National Storage. I decided we needed representing Sitelink Web Edition, R6 Digital and Storage income an awareness campaign for the group and organised a Pros, all designed for self storage stand at the Brisbane home show. The result was very rentals. He has several commercial good with over 5,000 flyers handed out and more than interests including self storage 70 reportable move ins. investments and is a former successful operator.