The Riddle of 'Location'
|Copyright 2014 by Virgo Publishing.|
|By: Harley Rolfe|
|Posted on: 01/01/2000|
The Riddle of 'Location'
By Harley Rolfe
The buzz these days is playing Q & A--you give the answer, then guess the question. Ready? Here's the answer: Location, location, location.
I know, you've heard that one, but an old adage applies here: "You have to ask the right question to get the right answer." What's the right question? "What is a good location for a self-storage facility, and will it stay 'good' for the useful life of the facility?" What other dimensions of location might there be?
If things are going well, it's probably because of the location. If things aren't going well, it may be for the same reason. Operators tout that their success is due to a unique feature of their facility. They certify that it will be hard to duplicate, offer rationale about why the site works and believe that, in all the talk of competition, location will carry the day. Let's take a closer look.
The Whole Truth
Self-Storage is a retail operation, so the most common location idiom for that business is a high-traffic retail-style model. Why do so many off-the-beaten-path facilities do so well? That's a riddle. Maybe the retail model isn't totally right for self-storage. Marketers are always trying to unravel their markets, then form and prove theories or insights on why they are behaving in certain ways. That's how you discover niches.
The usual retail-store prospect's interest centers on the goodies at the store. The goods are the focus of the prospect's activity--the self-storage locker is not. The tenant interest in the unit is passive. The only thing that happens for the user is that time passes while other things occur. Thus, the acceptability of a/the location relates to the other location, the one where the contents are destined (or perhaps where they originated). That other location controls the value for any given self-storage site.
OK, so where is the "good" location, then? It varies with the segment. For the lawyer, the "good" location is that nearest to his office; for the person moving to a new residence, either the present or the new location; for the distributor, either the most convenient location to the interstate or the center of the distribution routes; for a contractor, close to his job site, etc. I'm emphasizing the significance of segments because the answer to what each tenant values is wrapped up in what he's up to, i.e., his use, business, problem....
How can an out-of-the-way location be a good thing? Security is an ever-present element choosing a facility. We install surveillance cameras, imposing fences, coded gates, on-site managers--all aimed at giving signs of our concern for tenant-property safety. High-visibility locations have a security flaw. They facilitate vandals committing their drive-by crime. Locations on side or dead-end streets, however... Well, out of sight, out of mind. So, it is certainly possible for a by-way location to do the job.
Keep in mind that a good retail location is actually a form of media that announces the facility to the thousands of passersby. A by-way location must be promoted, along with reminders of its virtues. That gives you a chance to use one of the most effective sales approaches--featuring an apparent sales weakness. Sound strange? It's daring, but it works like a charm. It dumfounds your competition (who believe that a highway is the only way) and instantly disarms what is "bad" about your facility by aggressively showing the positives of a by-way location.
There is one self-storage development out there that makes the significance of location disappear. Magic? No. Containers. Location is important because the tenant must travel to the storage site. What if he never needs to go there? For those segments where the use of containers will work (residential moves, for instance) the storage location site is of little consequence. The client doesn't know or care as long as it's safe and the goods reappear at the destination on time. This extends the useful range of the facility from a couple of miles to whatever distance is practical for trucks to deliver containers. This is one to watch.
For the Ages
Another condition of the location picture is the effect of time. Your facility will be physically fit for 25 to 30 years. The passage of time can assail assumptions that pertained initially. Where the facility once served a bedroom community, now development changes it to commercial or even industrial environment. Yellow Pages content must be revamped, other messages and media need re-direction--all because the changing character of the area has recast the mix of uses that a location should serve. On-going surveys of the types of applications to which the facility is being applied will reveal these shifts and trigger management to take note of evolution. It is no fun to see the income being threatened for a facility in good physical condition because management is oblivious to shifts in the neighborhood.
One day an operator will want to sell. Appraisers accord location a lot of weight. Abstract evaluations of facility value (traffic counts, capped income, highest and best use, comparable sales, etc.) may work for banks and financial people, but these methods are backward looking. A facility buyer only looks to the future and must believe that he will be able to sustain and improve net-operating income. He uses any unknowns to discount a facility price. The fewer the unknowns, the less basis for haggling. It will help if the current owner has methods in place that show how he determines and regularly calibrates his location to the evolving character of the market.
Take Me to Your Leader
So far, we've been talking about the location of the facility. We need to be curious about the location of the decision-maker, also. That's the most important person in the marketer's life. He may or may not be located in the usual service area. My experience indicates that personal segment decisions get made locally, while those juicy commercial ones happen all over the place. This is especially telling in larger communities. Media choices are controlled by the location of decision-makers. Thus, we need to see where they call home.
Do an examination of your tenant addresses as they appear on the lease. Inexpensive computer programs can do that. You input the addresses of tenants, which then pop up graphically as dots on an area map. Separate them by segment, then inquire of the various tenant groups the use to which they are putting the unit. Once you know how your location works for each segment, you can compose a trenchant message to each kind of user. Existing facilities have a big advantage in that myriad decision-makers--past and present--have already made their evaluation and are telling you (by their presence) that your location works.
Location is the one thing the operator can never change. But he can adjust the way he presents his site to the emerging activity around him. He needs also to be conscious of the chance that those decision-makers he needs to reach are not located in his service area.
Missed some previous issues? Check the Web site at www.hardnosed.com, which has been modified to include a search engine. It permits you to locate an expanded discussion of certain terms or concepts as they appeared in the original nine-part series.
Harley Rolfe is a semi-retired marketing specialist whose career included executive-level marketing positions with General Electric and AT&T. He also owned lodging and office facilities for more than 20 years. Mr. Rolfe holds a bachelor's degree in economics from Wabash College and a master's degree in business administration from the University of Indiana. He can be reached at his home in Nampa, Idaho, at (208) 463-9039. Further information can also be found in Mr. Harley's book Hard-Nosed Marketing for Self-Storage.