Ancillary Products: Fiction vs. Fact

Bob Strenk Comments
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It’s hardly surprising that so many in the self-storage industry still underestimate the potential of retail sales. After all, retail falls under the category of “ancillary products and services.” The dictionary defines ancillary as “subordinate,” so it’s understandable when owners decline retail meetings. “I’m not interested in anything that distracts my people from renting units,” they say.

To convert skeptical self-storage executives and show the already-convinced how to make more through retail sales, it’s time to dispel the fictions and review the facts.

Fiction: “Selling retail products distracts employees from renting units.”

Fact #1: Retail products actually facilitate the renting of units by adding to the initial comfort level of prospects. A bare-bones office can make prospects uneasy about choosing your facility to store their possessions. A store-like surrounding is more familiar and friendly.

Fact #2: Helping new renters with products they need builds goodwill and adds profit to the initial sale. And a well-rounded selection of handy products makes your operation appear more helpful and thoughtful than other self-storage firms.

Fact #3: Well-designed packaging and displays encourage self service. When renters return to make other purchases, they can easily find what they need without interrupting employees closing another rental deal.

Fiction: “At best, the total level of retail sales doesn’t justify the effort.”

Fact: On average, retail sales could account for $12,000 to $24,000 in added profits per year. By using the real estate rule of thumb that commercial property should sell for 10-times earnings (10 cap), $24,000 additional retail sales translates to nearly a quarter of a million dollars in added market value! Do I have your attention now?

Fiction: “Retail products take up valuable space.”

Fact: A well-planned retail area mostly uses wall and floor space currently unused and not rentable. In fact, that $12,000 to $24,000 in added profits could be generated by an 8-by-6-foot wall space and less than 16 square feet of floor space. In case you’re wondering, that’s $250 to $500 of profit per square foot for “office” wall space!

Fiction: “Self-storage can’t compete with retail prices of big-box stores.”

Fact: This would be true if we actually had to compete with them. But, just as with convenience stores, people will gladly pay a little more for your retail products to save time.

Fiction: “Self-storage people aren’t trained to sell retail.”

Fact: Training takes on many forms and your staff can quickly learn without formal training sessions. Here’s how:

1. Well-designed signage helps the consumer and your staff. Ask your retail supplier for signage that lists everything needed for storing, shipping, moving and packing. For example, my firm has a series of five consumer posters aimed as much at the staff as the public. And they work.

2. Organize products into “kits.” Display together everything a customer would need for storage or shipping and give it special kit pricing. Create signs for kits that “teach” your people to cross-sell products.

3. Motivate staff with extra rewards for extra SKUs sold. Most people are creatures of habit. Sure, they’ll sell boxes and tape; but to make selling Bubble Wrap and protection kits a habit too, you need to motivate them for awhile. If your average sale is for four items, reward those who sell six or more. Given the right motivation, people train themselves.

Fiction: “Self-storage people don’t know what products to stock.”

Fact: Care to tap into the combined experience of all successful self-storage operations? The secret is in two words: plan-o-grams and displays. In simple terms, plan-ograms are shelf-stocking blueprints. Professionals, like soup and cereal companies, supply them to supermarkets to explain pictorially where the best sellers should go on the shelves and how many facings to give them.

In self-storage, the best retail suppliers offer plan-o-grams along with displays and merchandise. After all, it’s in their interest to sell you only those items that sell well—and tell you how to make them sell even better.

The best suppliers furnish professional displays that keep your retail area from looking overcrowded. They should be pre-organized, with each spot labeled to ensure a permanent home for every item. At a glance, you can re-stock and even re-order inventory. In other words, the displays should be pre plan-o-grammed.

Fiction: “Inventory ties up too much capital.”

Fact: How much inventory is too much? Well, a good supplier can provide you with recommended minimum- and maximum-inventory levels for each SKU based on experience.

Your supplier should average a 24-hour order schedule. Just add one day of processing to the number of days in transit, and you’ll know exactly the minimum inventory level you’ll need. On a daily basis, re-stock display slots and pegs, and advise your manager on inventory levels. You’ll soon find it easy to keep capital investment to a minimum.

Fiction: “Renters aren’t a good source of repeat business.”

Fact: While many renters may limit their initial purchases to locks and boxes, they often become good repeat customers if you offer other products and services. For example, because they know their way to your business and parking is no problem, you can become their parcel shipping center. After all, you already carry cartons, packing materials, labels, tape, etc. Arranging for shipping and regular pick-ups with a major parcel carrier isn’t difficult. As a shipping center, you’ll be able to sell decorative packaging products and promote holiday gift shipping as well.

Fiction: “Good retail consultants are hard to find and expensive.”

Fact: The problem with hired consultants is that once they are paid, they often disappear. On the other hand, retail-goods suppliers work for free and have a vested interest in seeing their customers succeed.

Fiction: “To succeed all you have to do is stock the products most people want.”

Fact: To succeed you need to sell them what they need—not just what they want. If you’re only prepared to meet customer wants (the three most popular locks or box sizes), you’re basically in the commodity business. 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 they see them ...not just the boxes they want.

If you don’t know what to stock, call in a company that offers turnkey merchandising programs with displays and plan-o-grams based on sales experience. With displays designed for self service, you can find yourself making more money on what customers suddenly need than what they think they want.

I’m sure many more fictions about ancillary products are making the rounds in the self-storage industry, but I hope I’ve managed to dismiss a few of the more prevalent and encourage everyone to devote more time and attention to retail sales. 

Bob Strenk, president of Supply Side, has more than 20 years of marketing and sales experience. Supply Side, distributor of shipping, packaging, moving and storage supplies, has developed merchandising programs for the U.S. Postal Service, The UPS Stores, Kinko’s, Mail Boxes Etc., Uncle Bob’s Self-Storage, Extra Space Storage and many other leading companies. For more information, visit www.suplyside.com

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