The Importance of European Storage Marketing
|Copyright 2014 by Virgo Publishing.|
|By: Kelly Gallacher|
|Posted on: 11/01/2002|
To introduce the topic of marketing self-storage in Europe, let me share with you a scenario recently experienced throughout the continent. In 1957, the Treaty of Rome declared a common market as a European objective so that, despite broad differences in language, history and economics, participating countries could unite in a common cause of economic prosperity.
It wasn't until 1992 that a contingent of leaders representing many European countries introduced the Economic and Monetary Union. This group was able to agree on one joint effort: a standard monetary system now called the euro. The entire process took on a life of its own while each country grappled with the issue of acceptance. At the end of the day, the only real question was "How does this benefit consumers?"
The euro has been in use since Jan. 1. For the past year, every purchase in each of the participating countries reflected two different prices: the price based on local currency for that country and the corresponding euro price. This was done in an effort to get people comfortable with the new monetary system. Comments in Germany relating to the new currency were that it was "spiel gelt" or "play money." Other countries referred to it as Monopoly money. But no matter how badly anyone wanted to disparage the new euro, it was here to stay.
The respective alliance agreed to spend millions to promote and educate the public on use of the euro. Billboards, television and radio ads, newspaper and magazine articles, and multiple other marketing concepts were employed. The marketing process began a few years ago and intensified immensely during the last two years. In some countries, every household was mailed a "Euro Starter Kit" valued at more than four euros. Needless to say, the effort to market the currency was enormous; but now that the euro is in place, the need to advertise or market this new "product" is no longer required.
Self-Storage: A Similar Challenge
As an emerging concept, the self- storage industry is facing many similar problems experienced during introduction of the euro, but with one huge difference. The euro was forced on the public by governing bodies, while self-storage does not enjoy the same government enforcement.
Only a few short years ago, the first self-storage facility was introduced in The Netherlands. After only five years, this country now boasts 25 facilities by five different operators with plans to expand to as many as 80 projects over the next five years. The same phenomenon is taking place in Belgium, France, Norway and Sweden. The concept is in its infancy in Austria, The Czech Republic, Denmark, Germany, Finland, Italy, Spain and Switzerland.
Although the United Kingdom is far and away the industry leader in Europe with more than 250 self-storage sites, all agree that continental Europe will ultimately far exceed it. Paris already easily supports more than 60 facilities with more on the drawing board. Self-storage in Europe is here to stay, and those who have been in the business for some time understand the benefits of having competitors in the market.
Getting Down to Business
What does the word "marketing" actually entail? According to Webster's dictionary, marketing is defined as "the act of buying or selling in a market including the activities of advertising, packaging, and selling goods from the producer to the consumer." Accordingly, the key word is "market." The self-storage industry is prey to the conditions associated with a free-market system—unlike what happened with the forced acceptance of the euro. Those of us in the self-storage business must apply a variety of different marketing approaches. We must create a market where none existed by appealing to:
The marketing of self-storage is complex and time-consuming, and requires patience and money. It is not for the faint of heart. The most important constituent and the source of all revenue and value is, in short, the customer.
Although each owner/operator has performed his own limited survey as to the general awareness of self-storage on behalf of the European public, no serious study has ever been conducted—and with good reason. Everyone already knows the results. No meaningful percentage of market awareness or penetration would ever be found, except possibly in the United Kingdom where self-storage has been in place since the mid-1980s. Until there are a substantial number of facilities in each of Europe's major cities, the large market analysis would be a wasted and expensive venture.
What can be done? Industry participants can produce their own set of statistics by providing their actual results in lease-up, rates, velocity, move-outs, demographics, etc. This will result in an excellent sample of how the business of self-storage is doing overall. As self-storage professionals, you need to ask yourselves:
1. What are the problems in marketing self-storage to the general public?
2. What difficulties have you had explaining the self-storage industry to:
a. Equity sources?
3. What are the most successful marketing concepts for each city and country?
4. What hasn't worked and why?
5. What cultural differences have you seen in the different countries?
6. How have the building departments treated you in regard to building standards and code enforcement?
7. What is the one thing you would like to change in the industry, or what concept(s) would you like to accelerate?
8. How has the marketing changed over the years, even while self-storage was still in its infancy?
9. How big do you think the self-storage market will be or could be in (name the country)?
10. How will the industry police and/or protect itself from poor operators and substandard projects—or can it?
The answers to these questions will begin to provide the statistics needed for everyone's benefit. This is critical to the growth of the industry, since the only way to have exponential growth is to open the doors to the major capital supply—the institutional investors community. In an equal role to institutional capital is the involvement of the lending community. The lenders must be comfortable with the product or asset class before they will lend on it. Without the lenders, the self-storage industry is only half of what it could be; and lenders and institutional investors require information and market analysis.
More Than Consumer Message
To make this asset class an acceptable investment, every aspect of the self-storage development and operations process needs to be involved in contributing needed information. This, is turn, will provide everyone additional opportunity for growth and expansion. Until the self-storage industry comes together and provides this information in a unified and standard approach, all those in the European self-storage industry will be negatively affected.
This is why the definition of marketing in our industry is multi-faceted. The approach is not just restricted to the producer/consumer relationship but to all those involved in the process of developing, building and operating self-storage facilities. One critical part of the equation often taken for granted is the industry supplier community. These firms have invested their time and capital and want the industry to grow as much as, if not more than, the owner/operators. They are an excellent source of information and a barometer for growth and success. Their support in providing industry-wide data is crucial.
The self-storage industry in Europe is here to stay. But use of the product is far from understood or accepted by the public. Our growth as an industry will be continually stifled until the sources of capital in equity and debt come to understand the business. We, as an industry, can help the market accept our product by joining to provide those viable statistics that will validate their decision to invest millions of euros.
Although trite, it is applicable: The future is up to us. We control, to a large degree, our own level of success or failure by agreeing to work together for everyone's benefit. The road will be long and difficult, but those who have ventured into the game of European self-storage agree: It is and will continue to be worth the short-term cost for the long-term benefit.
Kelly Gallacher is president and chief operating officer of Devon Self Storage and the managing director for Devon Storage Europe. For more information, visit www.devonselfstorage.com.