‘Tis the Season to Embrace Your Self-Storage Competition
By Nick Lackner
Let’s start with an important statistic, courtesy of the national Self Storage Association: There is 7.3 square feet of self-storage space for every man, woman and child in the nation. Every American can stand—all at the same time—under the canopy of self-storage roofing.
In the self-storage boom years, demand greatly outpaced supply. Occupancy rates were high, and the industry was flush with cash. Sophisticated investors and real estate investment trusts, sensing an opportunity to make a lot of money, moved in and consolidated their positions. More and more inventory came on the market, fueled by the insatiable desire of Americans for self-storage.
Like all efficient markets, however, the industry has achieved some measure of equilibrium. Demand and supply now converge at a price point where the price the consumer is willing to pay equals the price the self-storage operator is willing to offer.
Well, almost efficient.
The actual definition of an efficient market is one in which all pertinent information is available to all participants at the same time, and where price responds immediately to available information. Efficiency is relative. Stock markets are generally considered to be highly efficient markets. The used-car business was a model for an inefficient market … that is, until the Internet and CarMax came along. Now they are a model of efficiency!
What does this have to do with the self-storage industry? Well, a lot, as it turns out. Many, many websites have sprung up looking for ways to “arbitrage” the inefficiency out of our market. These online directories are open forums for self-storage operators to share pricing and inventory. Provided you’re willing to pay something—on the front end or back end—you can secure a listing, expand your reach and potentially gain more customers. These are examples of “pay to play” sites. Because you have to pay, not every self-storage operator signs up.
And that, folks, leads to inefficiencies. Consumers who rely on these websites don’t necessarily get a full picture of the storage available in their area.
We saw this firsthand in our market in Pittsburgh. Many local operators subscribe to these sites, but many more do not. We didn’t think that served our market very well, but what could we do?
We know that having a good reputation will help us stand out and attract business, so we focus on making sure anyone who comes into contact with us has a great experience, even if they don’t end up storing with us. So we went ahead and created a free, complete directory of all self-storage facilities in the Pittsburgh-metro area. We even created an easy-to-search map to help prospective customers quickly find the facility closest to them with the right features. I checked Google Analytics recently, and the directory is one of our top five page views.
We recognize convenience is a key to storage and our location may not be convenient for everyone. Much like Kris Kringle in “Miracle on 34th Street,” we often send a prospect to a different location (not Gimbels, and not for skates!). However, we expect we’ll pick up more than our fair share of customers by way of the increased number of visitors to our guide, in which we fit the bill perfectly.
Of course, you don't have to compete on price. You can compete on location, features, even the friendliness of the staff and the quality of your reviews on social media sites. Embrace competition! It’s the only path to sustainable success.
What's your policy for handling the competition? If you don't have a size or service at your facility, do you mention the operator down the street? Share your thoughts by posting a comment below or on Self-Storage Talk, the industry's largest online forum for self-storage professionals.
Nick Lackner is the general manager for City Center Self Storage in Pittsburgh. A Pittsburgh native, Lackner graduated from John Carroll University and joined CBRE, one of the nation’s largest real estate service companies. In 2006, he received an advanced degree from Columbia University in real estate studies and development. To reach him, e-mail firstname.lastname@example.org . For more information, visit www.citycenterselfstorage.com .
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