Calculating Retail Profit: Add-On Merchandise Helps Boost Self-Storage Revenue
By: Bill Meyers
Posted on: 06/18/2010

If you own or operate a self-storage facility, you’re always looking for ways to create additional revenue. The sale of retail merchandise to your existing tenants and walk-in customers provides you with daily profit opportunities. This revenue stream not only provides additional earnings, it improves your facility’s value by increasing your net operating income (NOI).

How much revenue can you make from selling retail product such as boxes, locks, moving supplies and more? The following “profit calculator” will generate data that will help you set goals and enhance your bottom line.

Retail-Profit Calculator

To begin, you must identify a few key aspects of your everyday business. First, what is your average number of move-ins every month? Next, what is the average amount of your retail sale to each customer at move-in? Once you have those numbers, you can easily calculate your baseline retail potential.

For example, let’s assume you move in an average of 25 customers per month. The following chart shoes your average monthly and annual income for each level of sale.

 Average Move-In Retail Sale Monthly Income Annual Income \$5 \$63 \$750 \$10 \$125 \$1,500 \$15 \$188 \$2,250

If you’re an independent single-facility operator using a 50 percent margin strategy on retail items, you can determine how much additional profit you can add to your bottom line by increasing your average retail sale at every move-in. For example, if you average \$10.50 in retail sales on each of 25 monthly move-ins, you can increase your income \$1,500 annually by raising your average retail sale to \$20.50.

 Average Monthly Move-Ins 25 Increase in Average Retail Sale \$10 Monthly Retail-Sales Increase \$250 Annual Retail-Sales Increase \$3,000 50 Percent Margin \$1,500

This is an increase in NOI that will ultimately enhance the facility’s value should the property be sold. The \$1,500 annual increase may not seem very significant to a multi-facility owner, but if you calculate this increase as part of a 30-store chain of self-storage properties, the annual boost in bottom-line profit from retail sales is \$45,000.

Delivering Goods

Don’t overlook your opportunity to capture and increase profit from retail sales. You have a captive audience that needs certain items to properly complete its storage activity. Your products will help customers keep their belongings safe (locks), in good condition (boxes and appropriate packing material), and organized. Offering the right products provides convenience to customers and keeps them from going elsewhere to purchase those items. It might even influence their decision to store with you.

Maintaining a retail program and promoting it with effective street signage and marketing campaigns will make existing customers aware of your offerings. It may also attract customers who don’t need space but want packing materials to store belongings at home, execute a move, or complete a household-cleanup project. Finally, an effective retail program can give you an advantage over your competition.

Retail sales are part of good customer service. Your attention to every customer during move-in will increase your profit; just use the calculation outlined above and see how easy it is to add more to your bottom line. Plus, your tenants will have a positive experience and will remember to tell their friends about your facility.

Bill Meyers is the national account manager for Supply Side USA, which offers retail products for self-storage businesses, including locks, packing tape, protective products and boxes. For more information, call 800.305.6110; visit www.supplysideusa.com.

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How to Upsell Ancillary Services and Retail Product in Self-Storage

Self-Storage Retail: Become a Merchandise-Selling, Cash-Extracing Expert

Choosing the Best Retail Boxes to Sell in Self-Storage

Retail Display Tips for Self-Storage

What You Need to Know About Buying and Selling Self-Storage Retail Products