The Eight Rules of Retailing

The '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 somegood ideas on how to improve their retail sales.

There was a time I would have had to convince operators thatcarrying retail products made sense. It's been a long time since I visited afacility that didn't stock at least some merchandise, but some do a far betterjob of profiting from it than others. So I'd like to give a few pointers tothose who a) think they can improve their retail business or b) think theirsales 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 area48 squarefeet of wall space and less than 16 square feet of floor spacecan earn youanywhere from $12,000 to $24,000 a year. If a piece of real estate sells for 10times its earnings (at a 10 percent cap rate), $24,000 in annual retail salestranslates into nearly a quarter of a million dollars in added market value. Thesales of moving and packaging supplies by truck-rental firms, office-productsuperstores, parcel- service centers and self-storage facilities is fastapproaching $750 million a year, and smart operators are out to get their share.

If the retail business has taught us anything, it is consumersdecide which companies succeed. The retailer who can define consumers' needscan redefine the marketplace. What the successful self-storage operation of tomorrow will belike is anyone's guess, but it's easy to predict its retail sales will play amajor role in satisfying customer needs, altering consumers' perception of thebusiness, and improving profitability.

If you're like the vast majority of operators, you're alreadydoing some retailing. But are you doing all you can? Following are eight rulesto help you maximize your merchandising.

Rule 1:
Use Your Planning Skills

Many self-storage owners are timid in their approach tomerchandising because they feel it is unfamiliar territory. Retailing is notdifficult if you apply the same skills you used when developing your propertyand creating its success strategy. So begin with some planning and research. Getto know your clientele, your neighboring market area, and your competitionnotjust other self-storage businesses but any selling similar products. If indoubt, seek sound professional advice.

Rule 2:
Make a Good First Impression

Your office and retail area tells your customers what theycan expect from you by way of service and security. If it doesn't convey theright image, you might not even rent them space let alone sell them retailgoods. So don't be afraid to redesign your office and retail spaceor ask a supplier who specializes in merchandising for advice.

Retail is all about presentation. In your layout, keep allproducts grouped together. Thiswill increase regular as well as impulse sales. Merchandise your supplies so they are easily seen andlogically organized. For instance, build box slots into a wall or counter or useattractive box-bin fixtures. Moving and storage boxes are large and take up agreat deal of space. A well-designed display eliminates clutter and makesselection easy.

Rule 3:
Give Them a Sign

Signage is like the "icing" of your sales programyou may have a delicious cake, but no one is going to try it if it doesn'tlook appealing. Your signage communicates vital information about the qualityof your business, so it should look professional. A primitive-looking sign orpoorly designed retail area is actually worse than nothing at all. Why createthe wrong impression?

A sign hung over your moving and storage supplies frames themand creates a supply department. A signs that reads "Pack your cherishedbelongings the professional way" expresses a previously unrecognized need. Signs can also build incremental sales, for example, "Buyfive boxes and receive a free economy-size roll of bubble-wrap." Finally,signage helps customers make decisions. Signs hung over box slots can indicatesizes, removing the guesswork from product selection and eliminating the need tohave boxes assembled on the floor.

Rule 4:
Pick Products That Sell Themselves

Your retail customer is attracted to products that are easy tounderstand and use. That's why the best packaging does most of the selling for youthrough the use of dynamic graphics, demonstrational photography and helpfulcopy.

Good retailers know an informed customer is more likely tomake a purchase or even multiple purchases. If he doesn't know what a cell kitis, 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 toeducate him. Package design is as important as price to your customersandshould be to you, too.

Rule 5:
Discover a Brand-New Way to Brand

In today's competitive self-storage world, a successful ownerknows his brand is more than a name or logo on a sign. It is everything thatdefines who you are to your customers and differentiates you from yourcompetition. In short, branding is far more than exterior signage.

Do you want customers to understand your facility isprofessionally managed? Keep your property and office area lookingwell-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 ahouse brand, they're known for the other high-quality brands they offer. Why do well-known names sell and lend prestige of those whocarry them? For years, these companies have invested a great deal intoadvertising to build their products and create sales momentum. Featurerecognizable, trusted brands on your displays. Your retail sales and image canonly benefit.

Rule 6:
Keep Your Eye on the Donut

Just about now, some of you are thinking, "The guy downthe street has cheaper locks or boxes," or "He has his ownbrand," or "His margins are bigger on private-labelretail products." And I'm reminded of the sign in thedonut shop that reads, "In life, keep your eye on the donut, not thehole." Here's what I've learned from successful self-storagebusinesses:

Rule 7:
Sell What They Need Not Just What They Want

A recent trade-magazine article featured a self-storage ownerwho thought it was a good idea to "save" money by stocking only thebest-selling retail items. It made me think of something I once read, that ofall the varieties of Campbell's soup in the supermarket, the bulk of sales comesfrom just three kinds. The reason the company continues to make so many"loser" soups is simple: First, the shopper expects the leading brandto offer more variety and, second, all those red and white cans act as a displaythat attracts shoppers.

So if you're only prepared to meet customer wants (the threemost popular sizes of packing boxes), you're basically in the commoditybusiness. You may not know this now, but as competition increases, you soonwill.

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 otherodds and ends your customer will need once he sees them, not just the boxes hewants. If you don't know what to stock, ask the advice of a company that offersturnkey 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 onwhat customers suddenly need than on what they think they want.

Rule 8:
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 retailarea 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 laminatedpadlock on his mobile cart. He demonstrates the benefits of each lock when he takescustomers to their storage units for the first time. He says his success ratein selling locks is about 95 percent. Another manager asks questions so she canrecommend retail products. If she learns a customer has a lot of china, she shows boxesto properly pack it. Once the customer is sold on the box, she recommendspartition kits and foam pouches. Next, tape and bubble-wrap are easily soldbecause 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 movingkits, which are pre-packed with various sizes of boxes, rolls of bubble-wrap, tapeand 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 ofthis for only $39.99." As a result, his sales increased threefold.

A professional image is one way to help rent units, and goodmerchandising is part of that image. It doesn't only increase retail sales, itgives customers confidence in doing business with your organization. Onceselfstorage owners understand merchandising is an important piece of themarketing puzzle, they understand it's not just about selling moving supplies.

Getting Started or Getting Better

Self-storage facilities are nontraditional retailers. Yourprimary enterprise is not the retailing of products, but rather the sale of aserviceunit rentals. The self-storage industry has prospered beyond manyowners' wildest dreams. However, for some, this very success has been anobstacle to developing a retail plan that pushes supply sales to an obtainable 5percent of gross sales. In some cases, the attitude is, "I'm alreadysuccessful. Why bother with something I really don't understand? I'll just keepdoing what I've been doing."

The self-storage industry is going through a transition. As itmatures, facilities will encounter changing customer demographics. Some of yourbest customers are businesspeople, and the college-educated, "soccermom" is steadily making more of the storage-rental decisions. This means your current or future customers soon will haveincreased market expectations.

So how do you improve your retail-sales profits? First, as youwould with any other business endeavor, take it seriously. Make a plan andfollow it through. Second, take advantage of all the professional helpavailable. Choose a supplier who can help you lay out or redesign yourretail 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 distributespackaging as well as moving and storage supplies. The company has developedmerchandising programs for many leading companies including Storage USA, theU.S. Postal Service, Kinko's, Mail Boxes Etc. and The UPS Stores.For more information, visit www.suplyside.com.