The Eight Rules of RetailingThe 'same old, same old' or something more?
By Roy Katz
Some travelers seek out gourmet restaurants. Others hunt for historic sites. But when I travel on business,
I visit self-storage facilities. I like talking shop with owners and managers.
I've learned a lot about self-storage from them and, I hope, given them some
good ideas on how to improve their retail sales.
There was a time I would have had to convince operators that
carrying retail products made sense. It's been a long time since I visited a
facility that didn't stock at least some merchandise, but some do a far better
job of profiting from it than others. So I'd like to give a few pointers to
those who a) think they can improve their retail business or b) think their
sales can't be improved.
Retail and Returns
Self-storage professionals who are good at retailing have figured out what it adds to their bottom line. An 8-by-6-foot area—48 square
feet of wall space and less than 16 square feet of floor space—can earn you
anywhere from $12,000 to $24,000 a year. If a piece of real estate sells for 10
times its earnings (at a 10 percent cap rate), $24,000 in annual retail sales
translates into nearly a quarter of a million dollars in added market value. The
sales of moving and packaging supplies by truck-rental firms, office-product
superstores, parcel- service centers and self-storage facilities is fast
approaching $750 million a year, and smart operators are out to get their share.
If the retail business has taught us anything, it is consumers
decide which companies succeed. The retailer who can define consumers' needs
can redefine the marketplace. What the successful self-storage operation of tomorrow will be
like is anyone's guess, but it's easy to predict its retail sales will play a
major role in satisfying customer needs, altering consumers' perception of the
business, and improving profitability.
If you're like the vast majority of operators, you're already
doing some retailing. But are you doing all you can? Following are eight rules
to help you maximize your merchandising.
Use Your Planning Skills
Many self-storage owners are timid in their approach to
merchandising because they feel it is unfamiliar territory. Retailing is not
difficult if you apply the same skills you used when developing your property
and creating its success strategy. So begin with some planning and research. Get
to know your clientele, your neighboring market area, and your competition—not
just other self-storage businesses but any selling similar products. If in
doubt, seek sound professional advice.
Make a Good First Impression
Your office and retail area tells your customers what they
can expect from you by way of service and security. If it doesn't convey the
right image, you might not even rent them space let alone sell them retail
goods. So don't be afraid to redesign your office and retail space
or ask a supplier who specializes in merchandising for advice.
Retail is all about presentation. In your layout, keep all
products grouped together. This
will increase regular as well as impulse sales. Merchandise your supplies so they are easily seen and
logically organized. For instance, build box slots into a wall or counter or use
attractive box-bin fixtures. Moving and storage boxes are large and take up a
great deal of space. A well-designed display eliminates clutter and makes
Give Them a Sign
Signage is like the "icing" of your sales program—you may have a delicious cake, but no one is going to try it if it doesn't
look appealing. Your signage communicates vital information about the quality
of your business, so it should look professional. A primitive-looking sign or
poorly designed retail area is actually worse than nothing at all. Why create
the wrong impression?
A sign hung over your moving and storage supplies frames them
and creates a supply department. A signs that reads "Pack your cherished
belongings the professional way" expresses a previously unrecognized need. Signs can also build incremental sales, for example, "Buy
five boxes and receive a free economy-size roll of bubble-wrap." Finally,
signage helps customers make decisions. Signs hung over box slots can indicate
sizes, removing the guesswork from product selection and eliminating the need to
have boxes assembled on the floor.
Pick Products That Sell Themselves
Your retail customer is attracted to products that are easy to
understand and use. That's why the best packaging does most of the selling for you
through the use of dynamic graphics, demonstrational photography and helpful
Good retailers know an informed customer is more likely to
make a purchase or even multiple purchases. If he doesn't know what a cell kit
is, or that larger diameter bubble-wrap is better for packing heavier products,
or that disk padlocks provide a greater level of security, how will he learn?
The average customer usually won't ask. Instead, he relies on the packaging to
educate him. Package design is as important as price to your customers—and
should be to you, too.
Discover a Brand-New Way to Brand
In today's competitive self-storage world, a successful owner
knows his brand is more than a name or logo on a sign. It is everything that
defines who you are to your customers and differentiates you from your
competition. In short, branding is far more than exterior signage.
Do you want customers to understand your facility is
professionally managed? Keep your property and office area looking
well-maintained and merchandised. That's branding. Customer perceptions are influenced by the smallest details,
so training employees to serve them better and more professionally is branding,
too. But did you know you can use well-known brands to build your own?
Consider your top-end retail stores. While they may have a
house brand, they're known for the other high-quality brands they offer. Why do well-known names sell and lend prestige of those who
carry them? For years, these companies have invested a great deal into
advertising to build their products and create sales momentum. Feature
recognizable, trusted brands on your displays. Your retail sales and image can
Keep Your Eye on the Donut
Just about now, some of you are thinking, "The guy down
the street has cheaper locks or boxes," or "He has his own
brand," or "His margins are bigger on private-label
retail products." And I'm reminded of the sign in the
donut shop that reads, "In life, keep your eye on the donut, not the
hole." Here's what I've learned from successful self-storage
- Customers may shop around for the best rental rates, but
once they've chosen a facility, a few cents more or less on locks, boxes, etc.,
won't faze them. They're as close to a captive audience as you could want, so
cheaper retail prices won't really improve your sales performance.
- Customers really do associate name brands with a quality.
What are they going to think about Crazy Irv-brand locks at Crazy Irv's Self
Storage? Is that better margin worth the risk? You bank dollars not margins.
Would you rather have 50 percent profit on a cheap $3 lock or 40 percent profit
on a $5 brand-name lock? Always determine the actual dollars you'll net—it's an
Sell What They Need Not Just What They Want
A recent trade-magazine article featured a self-storage owner
who thought it was a good idea to "save" money by stocking only the
best-selling retail items. It made me think of something I once read, that of
all the varieties of Campbell's soup in the supermarket, the bulk of sales comes
from just three kinds. The reason the company continues to make so many
"loser" soups is simple: First, the shopper expects the leading brand
to offer more variety and, second, all those red and white cans act as a display
that attracts shoppers.
So if you're only prepared to meet customer wants (the three
most popular sizes of packing boxes), you're basically in the commodity
business. You may not know this now, but as competition increases, you soon
The answer is to borrow a page from the retailer's playbook.
Your goal is one-stop convenience. Stock all the markers, tape, labels, box cutters, and other
odds and ends your customer will need once he sees them, not just the boxes he
wants. If you don't know what to stock, ask the advice of a company that offers
turnkey merchandising programs with displays and layouts (called plan-o-grams)
based on sales experience. Though these displays are designed for self-service,
with a little employee training, you can find yourself making more money on
what customers suddenly need than on what they think they want.
Provide Super Service vs. Self Service
While a good retail program should be designed to sell itself,
there is no substitute for one-on-one selling. When customers enter your retail
area and see a comprehensive selection of products on sharp, modern displays,
the sale is more than half made. Add to that a greeting by cheerful,
well-informed personnel and they may be your customers for life.
One manager I know always keeps a disk, brass and laminated
padlock on his mobile cart. He demonstrates the benefits of each lock when he takes
customers to their storage units for the first time. He says his success rate
in selling locks is about 95 percent. Another manager asks questions so she can
recommend retail products. If she learns a customer has a lot of china, she shows boxes
to properly pack it. Once the customer is sold on the box, she recommends
partition kits and foam pouches. Next, tape and bubble-wrap are easily sold
because she now is a trusted advisor. Most of her tenants spend an average of
$50 or more on supplies.
One item that usually sells well for facilities are moving
kits, which are pre-packed with various sizes of boxes, rolls of bubble-wrap, tape
and a marker. One manager created a display with every item in the kit,
assembling all the boxes and adding a sign that read, "You can get all of
this for only $39.99." As a result, his sales increased threefold.
A professional image is one way to help rent units, and good
merchandising is part of that image. It doesn't only increase retail sales, it
gives customers confidence in doing business with your organization. Once
selfstorage owners understand merchandising is an important piece of the
marketing puzzle, they understand it's not just about selling moving supplies.
Getting Started or Getting Better
Self-storage facilities are nontraditional retailers. Your
primary enterprise is not the retailing of products, but rather the sale of a
service—unit rentals. The self-storage industry has prospered beyond many
owners' wildest dreams. However, for some, this very success has been an
obstacle to developing a retail plan that pushes supply sales to an obtainable 5
percent of gross sales. In some cases, the attitude is, "I'm already
successful. Why bother with something I really don't understand? I'll just keep
doing what I've been doing."
The self-storage industry is going through a transition. As it
matures, facilities will encounter changing customer demographics. Some of your
best customers are businesspeople, and the college-educated, "soccer
mom" is steadily making more of the storage-rental decisions. This means your current or future customers soon will have
increased market expectations.
So how do you improve your retail-sales profits? First, as you
would with any other business endeavor, take it seriously. Make a plan and
follow it through. Second, take advantage of all the professional help
available. Choose a supplier who can help you lay out or redesign your
retail area, provide you with brand-name products, and help train your
employees. After that, the rest is easy.
Roy Katz is president of Supply Side, which distributes
packaging as well as moving and storage supplies. The company has developed
merchandising programs for many leading companies including Storage USA, the
U.S. Postal Service, Kinko's, Mail Boxes Etc. and The UPS Stores.
For more information, visit www.suplyside.com.