Competition and consumer habits tend to provide the impetus for businesses to change practices, products and services. What worked 10 years ago or even last week can become blasé or obsolete, and if self-storage owners and managers aren’t paying close attention, the market can unsuspectingly pivot to a new normal. The last thing experienced operators want to do is chase lost business when they’ve grown accustomed to routinely corralling it.
The enemy to anything considered “routine” is complacency. It’s far easier to fall into patterned habits and implement business systems by rote than continually taking a critical, inward look at operations and measuring against the competition and consumer trends. Businesses can have organic elements to them, but evolution typically needs to be forced, driven by sales goals, creativity and sharp minds.
As we’ve been reviewing video footage from the Inside Self-Storage World Expo education sessions in preparation for the release of the ISS Store’s 2016 education DVDs, a couple of themes keep popping up during the presentations—namely the need for self-storage businesses to be adaptable and scalable.
While these are qualities every new storage business should adopt as it forms a business plan, designs a modern facility, breaks ground and eventually begins to lease up, they are also critical to the survival of veteran, independent operators. If a 20-year, single-location storage business performed a feasibility study on its market location today (as if the facility didn’t exist), generated a business plan and operating pro forma, and designed a facility from scratch, how close do you think the results would come to matching the facility and business practice in actual operation?
Many operators perform internal audits each year as a way to measure the inner workings of the business, review managerial performance, examine liability and risk, and look for ways to improve revenue management. Regularly scrutinizing management-software reports also helps operators understand the dynamics occurring within its tenant base and unit mix. Knowing what’s occurring within the business enables reinforcement of strengths and an opportunity to eliminate weaknesses.
Altering the bones of a facility to meet new market demands, however, is a much tougher task if scalability wasn’t a forethought of the original project. The advantage new construction and conversion projects have is their clean slate and opportunity to design for the moment as well as the future. This is the crux of a phased approach and building flexibility into a design.
During the Global Track sessions from the expo, it was interesting to hear international operators testify to the changing dynamics of their tenant bases. Most emerging self-storage markets tend to lease up commercial businesses first, followed by residential tenants. This means the unit mix first skews toward larger spaces, but as consumers begin to understand the value of self-storage, residential demand rises, triggering a need for a larger supply of smaller units. Savvy operators plan for the shift so they can roll with the ebbs and flows of the marketplace.
This is where development and market dynamics collide. U.S.-based operators don’t have to worry about educating consumers about the product, but markets and consumer demands change over time. In some regions, mixed-use projects are on the rise because they are either a more attractive way to lure business or an easier path to municipal approval. New proposals seem to pop up every week in Florida and, particularly, Charlotte, N.C., where retail or offices must occupy the ground floor of a mixed-use project that includes self-storage.
What’s likely to occur in your market, and how equipped are you to evolve with the changes? Once a market reaches its development equilibrium—where storage supply equals demand—what will be the key differentiators to entice customers to a particular facility? Many operators have already incorporated elements of retail, specialty services and technology to attract prospects. Going forward, technological advancements and added conveniences are likely to play a larger role in self-storage as consumers become more accustomed to both in other areas of their everyday lives.
Some products released during this year’s ISS Expo offer a peek at what’s on the horizon, including an “intuitive” kiosk and smartphone apps that provide owners and managers remote control over facility security (including overlocks) and enable tenants to monitor the status of their units. Along this same line of thinking, we had a dedicated education track on technology during the expo, which included a session devoted to mobile apps and their role in self-storage.
The self-storage industry doesn’t change quickly, but that’s precisely why it’s easy to get caught off guard when dynamics morph slowly over time. This is the lesson repeated in every episode of “Kitchen Nightmares” and similar “business-makeover” shows. Taking the time to build adaptability and flexibility into your business is a proactive way to meet future challenges head on. It also puts independent operators in a strategic position to build customer loyalty and compete against the deeper-pocketed resources of regional and national players who may be encroaching on your territory.
What strategies have you put into place to morph alongside the markets in which you operate? Please share an example in the comments section below.