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A Look Inside London’s Self-Storage Business-Customer Boom
A Guest Installment by Matt Cook, ABC Selfstore
Business customers are taking a larger share of unit occupancy in the U.K self-storage market, up from an average of 36 percent in 2010 to 41 percent in 2012, according to the most recent survey data collected by the Self Storage Association of the United Kingdom. With the average stay for business customers about a third longer than residential tenants—and contract value significantly higher than occupancy share—this growth in business accounts should be good news for operators.
There are a lot of factors driving the proportional increase in business sales of self-storage in the U.K., including government encouragement of low-cost entrepreneurial startups, the meteoric rise of “low overhead” Internet-based retail, the shrinking of business corridors, and a need for flexible low-cost space. But before you rush to invest in a new suite of high-stakes business-to-business marketing collateral, it’s worth doing your homework on your local demographics.
Understanding who lives and conducts business in the areas you serve can help you shape your promotional offers and sharpen the focus on where to target your sales efforts. “We’ve got three stores in London, each with very different customer profiles, each in a different London borough and each with a very distinctive character,” says David Milton, managing director of ABC Selfstore, which celebrated its 20th anniversary last year.
The company’s first location opened in Camden in 1993 and today has a business-to-residential customer split of around 26 percent to 74 percent, respectively. The key takeaway there is those business tenants are worth 45 percent in sales value. “It’s clear, then, that any trend that indicates a growth in the business market can only be good, and is perhaps evidence that savvy businesses are cottoning on to the cost-effective and flexible proposition that self-storage offers them,” Milton explains.
According to 2011 U.K. census data, Camden is second only to Westminster as the London borough with the most businesses per capita, drawing 25,197 enterprises for a population of approximately 225,000. Contrast those numbers with Southwark, home to ABC Selfstore’s second location, in which there are 12,500 registered businesses and a population of 288,300. That’s 28 percent more people but only half the number of enterprises compared to Camden.
Not surprising, those figures are reflected in the store’s customer profile. “Our Southwark facility has a business contract ratio of 17 percent, which is 9 percent behind Camden,” notes Milton. “We’d expect that though, as there are half the businesses per head of population in the borough. What’s really encouraging is that we’re not seeing our business-market ratio halved, which means our proposition remains strong.”
As you can see, business-tenant occupancy at ABC’s Camden and Southwark locations follow a pattern of available business per capita of local population. However, at ABC’s third store in Wandsworth, things are quite different. Wandsworth represents the ABC group’s biggest borough, with 308,000 people but just 13,000 businesses. Of the three locations, it has the greatest dilution of businesses per capita, but on proportion of sales value, it gives Camden a close run for its money.
“We’re not completely sure why Wandsworth performs so well,” confides Milton. “It could be less about the number of available businesses and more about what those businesses do and the square footage they require. We’re eager to understand it and will be doing some more analysis over the next few months. If we can learn the right lessons from Wandsworth, we can apply them at our other two stores.”
If ABC’s experience is anything to go by, it is clear that (in the U.K. at least) increasing your sales ratio of business customers is a strategy that is good for profits. That, and there’s always more to learn.
Matt Cook is a representative of ABC Selfstore, a U.K.-based self-storage operator with three London facilities. Founded in 1993, the company is a family-owned, independent business. For more information, visit www.abcselfstore.co.uk.
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