A Crushing Advantage
|Copyright 2014 by Virgo Publishing.|
|By: Amy Campbell|
|Posted on: 10/01/2003|
With market saturation and overbuilding a continuing problem, self-storage owners and developers are looking for ways to stay competitive. Marketing has become more valuable than ever. And traditional marketing avenues—mailers, Yellow Pages and billboards—are commonplace. To stand out, selfstorage owners need a marketing edge. Some have discovered wine storage can provide it.
While not for everyone, wine storage can be rewarding for storage operators on several levels. The per-square-foot return can easily exceed that of traditional climate-controlled storage, making wine storage a very profitable business when full. Also, unlike boat or RV storage, wine storage is typically not seasonal. And because wine has such an upscale image, offering this highly specialized service can enhance a facility’s overall character.
Above all, wine storage is considered a unique service. “There are a few more people exploring wine storage for their facilities, but it is still a niche market,” says George McCord, owner of Southeast Storage & Development Co., which owns and runs four facilities in South Carolina under the name Plantation Self Storage. All four facilities offer wine storage. “It will never be elevated to the level of importance of your basic business, which is the rental of storage units. But it certainly can be an asset to marketing those storage units,” he adds.
Drawing a Crowd
Because of its distinctiveness, wine storage can draw attention where a typical self-storage facility might not. “It has brought people on to our property who might not have otherwise been there,” McCord says. “And we’ve also found about half the people who rent wine lockers from us also end up renting storage units. That was something we hadn’t anticipated.”
Jay Sundher, general manager of Hollywood Storage Center in Newbury Park, Calif., anticipated his upscale wine-storage center would bring in more customers when it opened last May. He estimated 30 percent to 50 percent of his wine customers would rent traditional self-storage units. “It also expands your market area. If you’re target market area is 3 miles, with wine, because it is unique, it can reach farther distances. So you’re expanding you’re market area up to another 10 miles,”he says. “Now I’m reaching a whole other market that wouldn’t come to me for regular storage.”
The single-room wine storage at Nantucket Storage Center in Nantucket, Mass., has also brought new tenants to the facility, according to Jim Chiswell of Chiswell & Associates LLC. Chiswell was involved in the initial feasibility study for the facility and continues to consult with the owners and management company. “We will be able to better judge how well the wine storage brings in new business in the next two years or so,” he adds.
Wine storage has opened new avenues for Guarantee Wine Storage in Jersey City, N.J., as well. “It is definitely opening up connections for art storage, into which our parent company is starting to venture,” says Elizabeth Van Dyk, Guarantee’s vice president of business development. While wine storage hasn’t brought in new customers for Lock Up Storage Centers, it has added some prestige, says co-owner Bob Soudan Jr. “People think, ‘Hey, if the facility can store wine at the proper temperature and humidity, it’ll do great with my furniture,’” he says. “It tends to make them feel a little more comfortable. It’s kind of a neat thing, and it’s something for small talk with the manager. They may mention it at the next dinner party they attend, but we’re not going to the bank on it. It’s not something that drives people to our facilities.”
Filling a Need
As with traditional self-storage, location seems to be a key factor to success in wine storage. “Depending on the character of your market —if you’re in an upscale market or in an area with wine drinkers—it can fill a need for them,” McCord says. “Wine storage enhances the overall image of your facility, if you’re trying to market to that kind of clientele. If you’re in the middle of an Iowa cornfield, you might not have the same effect as you would if you were in downtown Chicago, where there are high-rise condominiums and wine merchants looking for places to store wine.”
“It certainly is not for every self-storage location. In fact, there are very few markets where you can make a success of wine storage,” agrees Chiswell. A year after opening, the Nantucket facility has been slow to fill. Currently only eight wine-storage units are occupied.
Sundher imagined his location—Southern California—would be ideal for wine storage. “I knew there was a market for it in my area. The average income in my neighborhood is $85,000. So a good location is important.”
Lock Up Storage Centers has been hit and miss with its four stores offering wine storage. Two are doing well, two are not. In fact, one facility is nearly fully rented, while the wine storage has only four customers. Soudan attributes the success and failure to location.
“Wine storage doesn’t work in all places,” he says, echoing Chiswell. “Only a select type of person uses it. It’s definitely a luxury. It works in major metropolitan areas where there are fancy restaurants. In places like Chicago, New York and Grand Rapids, Michigan—no way. Even though they’re a big cities, it will never work.” Because of the lack of success, Lock Up won’t be adding wine storage to new developments, Soudan says. “It’s not quite what we thought it was going to be.”
Jay Sundher has three business cards: one for self-storage, another for records management and a third for wine storage. The business card for wine storage features a bulleted list outlining the main features, including the storage temperature, and boasts about a wine-tasting room and gourmet kitchen. “It’s a unique service, a unique environment, so we wanted to treat it as such,” he says.
Creating a separate identity from the traditional self-storage units is crucial. Plantation Self Storage has its own logo and brochures. “It helps us address the different clientele,” McCord says. The company also markets to local wine merchants. “We have ads in the local restaurant guide, and those are totally dedicated to wine storage. We’re isolating that aspect of our business. In target marketing, people will respond to that rather than a general self-storage advertisement.”
Nantucket Storage Center includes information on the unique storage option in all of the store’s general literature and promotional pieces. “In addition, we have participated in the past as an exhibitor at the annual Nantucket Wine Festival,” Chiswell says. “We have also talked with several liquor stores on the Island, so they are aware of this option for their customers. But, just like in the regular storage business, the best advertising is word-of-mouth.”
Partnering with wine retailers or restaurants is another way to bring in new customers. Lock Up Storage Centers found success with this when it partnered with a large wine retailer near its Chicago location. “That has driven a lot of customers to our downtown Chicago location. That’s why that wine storage is successful,” Soudan says.
Sundher took the idea a step further, hiring outside salespeople to meet with restaurant managers. “My salesperson will tell them how our services will help them and ease their problems regarding storage of wine.” Wine-storage sales are also introduced inhouse. Potential customers taking a tour at Hollywood Storage are introduced to the wine-storage area and given an overview of how it works.
Co-hosting a wine tasting with a local wine merchant is one of the best ways to draw in wine connoisseurs, says McCord. “That brings their customers to your site. It introduces them to the storage facility and the wine storage. It all works hand-inhand.” The wine merchant typically handles all the expenses and will help market the event. “Wine merchants can be a natural ally,” McCord says. “If they have a place where their customers can store wine, they have a better chance of selling more wine to them.”
Hollywood Storage Center turned to the local chamber of commerce to help market the opening of its wine storage. Billed “Hollywood Nights: A Wine-Tasting Affair,” the event drew nearly 400 attendees. Sundher spread the word about the event with fliers to the chambers’ 1,600 members; postcard invitations to local media, corporate facility managers and other business contacts; and media coverage. “It was very successful,” he says.
Elaborate murals depicting European countrysides, soft lighting, spacious booths and trendy posters can also serve as distinctive marketing tools and create a magical atmosphere. Plantation Cellars is set apart from the rest of the self-storage facility by a hand-carved mahogany door designed with a wine motif. The wall surrounding the door is painted to look like the exterior of a vineyard in France. Inside the room, a mural portraying a wine cellar lined with barrels gives the illusion of depth and dresses up a back wall between lockers.
Entry to the wine-storage area at Hollywood Storage Center is in the retail store. There is a rock façade and an old, wooden wine door with wrought iron and a large window. Inside, there is an illusion of an old-fashioned cave with barrels of wine. Sundher even added a wine-tasting room and a gourmet kitchen. Customers can add food to their event by contacting a local catering company with which the facility is affiliated. “We’re setting it all up and making it really simple for them, so it’s enjoyable and relaxing,” he says.
In the right setting, and with the right marketing campaign, many self-storage operators have found wine storage can be an effective marketing tool. “I never looked on it as a real money-maker in terms of the base business of running units. I looked at it as more of a marketing tool,” McCord says. “If it rents up, I certainly make money at it. It gives a character to your facility that enhances its marketability in the community. It’s unique enough that we get more notoriety out of wine storage and publicity than we could buy through advertising a storage facility.”