Is Your Self Storage Facility Capitalizing on Retail Sales?
Self storage is typically thought of as a service industry, providing secure storage units for people to store their residential and business belongings. But it can be more than that. The addition of retail merchandise to your facility provides you with great opportunities to increase your profitability as well as giving tenants and walk-in customers something that they need.
Whether someone is between homes, cleaning out a deceased relative’s residence, or in the middle of a divorce, they’re stressed and want to save time and effort. Convenience has value.
Following are some FAQs that will streamline your retail merchandise selling and buying efforts.
Self Storage Retail FAQs
How can I compete with the big box stores? You can’t. When customers are in the middle of a hectic event, anything that makes life easier will be appreciated. They will be less price sensitive and gladly pay a little more to avoid yet another stop in a crowded Home Depot or Walmart.
Will lower prices attract more customers? Retail sales are a byproduct of unit rentals. Reducing prices doesn’t bring extra business, it just gives away profit.
Should I be “salesy” when selling moving and packing supplies? No. It makes your customer uncomfortable, and you’re already in a great position to help them find what they need. After a customer rents a unit, ask if they’ve packed yet. Even if they say “yes,” they may not have finished. Point out your high-quality moving and packing materials and how they’ll keep possessions safe and protected. You might even offer to create a custom package of supplies, and sell them at a small discount.
Should I run special sales? Sales are meant to generate traffic; don’t run any unadvertised sales. If you do want to take advantage of advertising a sale such as “free” supplies with a rental,” it may work. On the other hand, boxes, locks, and supplies are secondary items, and renters aren’t overly price sensitive.
Should I market moving and packing supplies? Yes. Once you have the retail side of your business up and running, update your website with product information, and reach out to your local community. You may want to add “moving supplies available” to your existing signage.
What can I expect in yearly income and Net Operating Income (NOI) In the current environment, most self storage facilities sell the moving and packing supplies that their customers need. If your facility doesn’t sell these items, it won’t appear professional to prospective customers. How much revenue can you expect the retail side of your business to bring in over an extended period? That depends on how many tenants store with you over that period and how much each spends on supplies, minus what you paid for the supplies.
If you get 40 new customers per month, each spending an average of $20 on supplies that cost you $10, that is $10 profit per customer, or $400. Over a year that is $4,800. That may not seem like alot for the amount of trouble it is to add retail sales to your workload. But, look at it this way. Customers are more likely to rent a unit from you if you sell moving and packing supplies. They’ll see value in the convenience of having what they need without having to go elsewhere.
Additionally, the extra profit will impact your facility’s NOI. As an extra incentive, the increase in NOI can mean a better return when you sell your business.
Is the lowest price the best price? The smart retailers keep as little inventory on hand as possible. Buying in bulk may save a few cents but it will also tie up your capital. Make sure you have a supplier that you can rely on for quick delivery when you need it.
Should price be your only consideration? Service is as important as price. If the lowest bidder can’t offer quick turnaround then you may run out of inventory when you need it most. Does the supplier help with organizing displays? A well-planned display can boost sales by 12%. What about employee training? Some suppliers offer webinars and sales training materials to help managers sell more retail. These services add measurable value to your business.
How do I handle a price increase? Rising prices are inevitable, but you shouldn’t just accept them without doing some research. Get prices from other suppliers, but ask for a guarantee that prices won’t increase after you’ve switched. When you compare prices consider whether a 5 – 10% difference is worth the hassle of switching suppliers.
What is the best way to take advantage of a price reduction? Be cautious. Don’t overstock at the end of a busy season. Consider the cost of your capital and buy no more than a few month’s supply. If you’re wondering whether to pass the savings on to customers,a small price reduction won’t increase your volume and you’ll be giving away your profit.
Self storage is primarily a service industry, but retail sales plays a big part in the increase of ROI. Adding retail sales to your facility attracts customers, increases profitability, and adds value to your business when it’s time to sell. Don’t think of retail as added hassle; think of it as added opportunity.