Some owners are passionate about providing ancillary services as profit centers and marketing tools. In the opposite corner are those who believe ancillaries are nothing but a drain on the main attraction of renting units. Obviously, the scope of ancillary services has evolved beyond selling boxes, tape or locks. Many facilities now offer free moving trucks, package delivery, mailboxes, Internet access, business centers and wine storage. Are their efforts worthwhile? We asked operators in the ISS 2006 Top Operator list to give us the skinny on what works for them.
Rank No. 4
U-Haul International Inc., Phoenix
All U-Haul International storage centers stock a full complement of moving supplies, trucks, trailers and towing equipment but many have expanded their inventories to include ski and bike racks, cargo carriers, furniture pads and more. Some larger facilities offer propane, lifting aids, carpet cleaner and dozens of other retail items. These are all revenue generators, says Joanne Fried, director media and public relations.
Of the companys 1,047 facilities nationwide, only a few provide record or wine storage. These services usually are in place when the site is acquired by U-Haul, Fried says. Its dependent on the store, where its located and when it was built, For instance, a U-Haul site in Chicago offers wine storage, but its not in the companys game plan. The demand drives services and products, Fried explains.
U-haul offers eMove, a free online relocation service that connects consumers with businesses in the do-it-yourself moving industry throughout the United States and Canada. With more than 1,700 companies listed, a customer can locate a U-Haul center or independent storage company, reserve and pay for a truck, moving equipment or unit. Shoppers can purchase supplies and have them delivered. The site links to other affiliated vendors offering packing, loading, unloading, driving, maid service and more.
EMove is a one-stop shop that is great for seniors, single mothers, baby boomers or parents with children moving across the country to attend college, Fried says. The site contains unedited customer reviews to help other consumers select the mover that best fits their needs. This is not only a convenience for our clients, it protects them from moving scams.
Rank No. 17
StorageMart Partners, Columbia, Mo.
Everything a site offers should reinforce the theme of making moving and storage experience easier, says Chris Burnam, president for StorageMart Partners. If its not connected, then chances are it doesnt belong in the store.
Each of the companys locations devotes about 1,000 square feet to products that can include almost 200 different moving and storage-related items. The bulk of sales is in boxes, tape and packing materials, but stores also stock items such as closet organizers and furniture covers.
Although an extensive line of retail products reinforces the company image, the items also add significantly to the bottom line. Wed be pleased if we broke even with product sales, but we actually make a lot of money, Burnam says.
Image is also behind StorageMarts approach to truck rental. The service drives traffic to the store and some truck customers become tenants. Truck rentals are not for everybody, Burnam says. Whether you own your trucks or are an agent or franchisee for another company, you have to be prepared for challenges such as vehicle maintenance, forms and insurance.
Private mailboxes are an inexpensive service that keeps customers coming into a facility daily, Burnam says. They are cheap to install, take little room and are easy to rent.
StorageMart sites dedicate a space equivalent to a 5-by-5 unit that can accommodate 30 to 60 mailboxes in a prominent location such as the lobby. Even at only 35 percent occupancy, its considered profitable. The rule of thumb is to plan three times more mailboxes than the site thinks it can rent, he says. Lots of mailboxes give the image you do a big trade in private post boxesthat you can be trusted with the consumers mail.
Although wine storage can be profitable, StorageMart offers it at only a handful of stores. Wine lockers are situated next to the office, in view of all storage customers. It gives style and a positive statement about our security, Burnam says.
Marketing wine storage has its challenges. It takes considerable time to lease up, but once full, it stays that way, he says. StorageMart used word-of-mouth and held on-site wine tastings with local merchants to cross-market the service to collectors and dealers.
Its all about renting units, Burnam says. You must communicate the quality of your service and products from the first moment the customer contacts you all the way through the rental period.
Rank No. 23
Pogoda Management Co., Farmington Hills, Mich.
Maurice Pogoda, owner of Pogoda Management Co., says his storage facilities limit ancillary services to truck rental, boxes and related packing items as ancillary services. The reason? Our mission is to provide storage, and we need to keep focused on the main business. The company offers its own branded trucks for new customer move-in. Van use is free for a certain time period or customers can rent one when they move out.
Pogodas stores are local dealers for U-haul and Budget trucks. Each facility keeps vans on site and handles the reservations. Truck rentals are advertised in the Yellow Pages, on the Pogoda website and are marketed by the call center. The service has a tendency to market itself, since people looking for rental trucks look at a number of different sources, he says. Pogoda doesnt consider it a moneymaker, although some storage companies do. You can make a fair amount from it, he says. But its a supplement to our main business of storage. At our strongest facility, we earn about $1,500 from trucks, but typically a site may see $200 to $300.
Pogoda questions what a shipping outlet or business center has to do with storage. I know people argue that it brings in more peopleand that is positivebut it takes the managers focus away from renting units.
Rank No. 25
Urban Self Storage Inc., Seattle
Ancillary sales and services allow a store to build depth into its customer base, since breadth is limited by the number of storage units it has, says Patrick Reilly, vice president for Urban Self Storage Inc. Wherever an Urban site offers truck rental, the company found it earned more in merchandise sales and unit rental. Customers renting a truck realize they also need moving and packing supplies. Typically they come in for a van before deciding they need storage, Reilly says. Those who rent a unit get credit for truck use.
Merchandise is a revenue generator for Urban. Weve revamped the way we market moving supplies and have added many impulse items to the inventory, Reilly says. The company retrofitted several stores and stocks them with a variety of items.
It does no good to keep products in the back room, he says. There is a psychological factor: If people see a near-empty display, they dont buy. Product sales vary by region but are usually tied to the amount of discretionary income in each market. Some stores report taking in as much as $3,000 per month, occasionally exceeding $5,000. And if the customer is unable to load the merchandise in his small vehicle, Urban will deliver it free.
Urban also offers mailboxes, not only for recurring income, but to maintain a business relationship with customers. A client keeps his mailbox even after he no longer needs storage. Later, he will rent again from the facility without shopping around. Part-time help is used to ensure mail is distributed on time. Mailboxes arent considered major profit centers, but some locations generate $2,000 a month.
Although wine storage is offered at a few facilities, results have been mixed, Reilly says. This service is demographically driven, but weve found if youre keeping wine, there is an expectation of a higher quality of storage and additional security. He adds that wine storage comes with liability issues when climate-control systems fail.
Operators have to be willing to test new ideas, even if they might not generate the income expected. Urban tried a program of leasing Rubbermaid totes, but the poor response didnt justify continuing it. The company also tried installing shelving in some markets. Unfortunately, the supplier we partnered with underperformed, Reilly says. This reflected badly on Urban. If you decide to partner with a company for any services, be sure they deliver.
Wireless Internet is an easy service to offer and is popular with business renters such as pharmaceutical reps. Urban set up a simple counter where customers could place their laptops and log on for free.
Rather than generate income, the Internet service is an excellent customer perk. However, if an operator is considering establishing a business center, he must be willing to staff it appropriately. Not doing so is a disservice to employees and the customer, Reilly says.
Reilly has seen storage facilities retailing impulse items that range from automobile parts to novelty toys. He believes the practice dilutes from the main focus of storage. Our managers wear a lot of hats, so if we were selling bumper stickers for 50 cents apiece, that takes their focus from renting units, he says. If we decide a service is good for the business, we staff it appropriately; we give it space and we give it time.
Rank No. 29
Investment Real Estate Management LLC, York, Pa.
All Investment Real Estate Management storage properties offer moving trucks and a full-line of Supply Side products, says Dennis Nelson, vice president operations. The companys larger facilities also sell additional moving supplies, such as packing blankets and metal bars designed to hold a truckload in place.
Van rental is an enhancement to renting units, Nelson says. The stores offer the truck free with a move-in, or the customer can rent it at reduced rates. Some locations are affiliated with U-Haul, but mainly the company has its own vans for the branding opportunities. Store managers are encouraged to use a truck for short errands during the day so people see the advertising on the side, he says. A new facility may not yet have a Yellow Pages listing, so the truck acts as a rolling billboard.
Wine storage is available at only one climate-controlled site in an upscale neighborhood. The store dedicated a 10-by-20 unit near the office and installed small lockers. We worked with several larger wine stores, went to wine tastings and spent considerable time promoting the service, Nelson says. Now revenue is excellent, although it took about two years to fill.
Every facility should offer some supplies, Nelson says. If youre on a busy thoroughfare, the reader board is an effective method to advertise moving and packing products. Its best to target the customer who is planning a move, usually when he comes in to rent a truck. By the time he rents a unit, he has already started the packing process and doesnt need supplies. With proper marketing, retail sales can be considerable$2,000 to $3,000 per month, he says.
Rank No. 35
Storage Deluxe, White Plains, N.Y.
Storage Deluxe offers a full range of packing and storage supplies and two truck-rental options at all of its stores. In its online reservation program, customers can order products from the companys website and have them delivered.
Storage Deluxe provides two means for clientele to transport their goods to the facility. Through an affiliation with U-Haul, two to four co-branded trucks are maintained at every store for rent at U-Haul rates. In addition, Storage Deluxe has partnerships with local movers to provide a truck and a driver free for the first two hours on the day the client moves into his unit. Although labor is not included in this service, our customers love its convenience and use it a lot, says Nick Coslov, president.
One of Storage Deluxes sites offers a business center with an ATM, UPS package service, a computer with Internet access, and fax and copy equipment. We are considering expanding the business centers to all of our locations within the next 12 months, Coslov says.
Ancillary services should be included with a companys marketing strategy. Storage Deluxe promotes its supplies, trucks and moving plans in the Yellow Pages, on its website and in every telephone sales presentation.
Although providing ancillary services is for the customers convenience, some of our locations earn a modest income from it, Coslov says. We use these services more to differentiate us from competitors than as an additional revenue generator.
Owners considering ancillary services should be prepared for some loss leader, according to Coslov. It costs Storage Deluxe to pay for the first two hours with a mover. But if you can negotiate good terms with a local mover, it can actually cost you less than offering the first-month free on a unit.
Conclusion
Whether ancillary products and services are considered a loss leader to attract customers or an integral part of a companys bottom line, storage consumers are looking for easier solutions to moving and storage. Will your company be on the progressive edge to meet those needs?
Editors Note: The Inside Self-Storage top-operator ranking is based on rentable square footage.