In mid-September, U-Store-It Trust, a real estate investment trust focused on owning and managing self-storage facilities, announced it was changing its brand and company name to CubeSmart. The $8 million change will roll out by market, with all facilities expected to be re-branded by mid-2012. Inside Self-Storage caught up with company CEO Dean Jernigan to discuss why a change was in order, what it means for the company, and CubeSmarts plans for the future.
What motivated the brand and name change?
The name U-Store-It is so descriptive that we had a lot of confusion in the marketplace. We did a survey in our largest markets and found that about 60 percent of our properties competed with another property we didnt own but had a similar name. Sometimes it even had the exact spelling of our name. We had no protection from the U.S. Patent and Trademark Office or even at the state level. If someone wanted to use our name or something similar to our name, we couldnt do anything about it.
As we rely more on capturing business through the Internet, we lost a lot of business. We quantified it to the point that we think we were losing up to $2 million a year in business because of the name confusion. Customers would go online and make a reservation with us, and not show up. Wed follow up and find out they rented from a facility with a derivation of U-Store-It in the name. It was maddening.
There were other times where wed have a U-Store-It facility right down the street from us, and we knew for sure people would be trying to get to us but find the other facility. We have one in Tucson, Ariz., thats right next door to us. The name is spelled exactly as ours. Their manager thanks us all the time for sending business his way. He has no marketing budget and captures nothing on the Internetwe do, and he ends up with the rental.
Weve been focusing on a lot of changes for this company. In the last five years, weve had a massive overhaul of people, systems and properties. Weve sold about $240 million in properties and bought another $350 million. Weve been all about improving the quality of our assets. In June, we rolled out our Superstore concept. With all of that, it was time to get the name changed.
How will the company roll out the new branding?
We have a very detailed process. We will roll out the new brand by market. The most important markets will go first. In the Chicago market where we have a lot of properties, all of the signs will go up at the same time. It will take us between now and next March to get all of the new signs up around the country.
Whats the approximate total cost of the rebrand?
Eight million is the cost of our re-branding across the country. The majority of that is in our signage. That will all be invested by the end of first quarter next year.
What does the name CubeSmart mean to the company? The word storage is absent from the new name. Why remove it?
There was a whole lot of thought put into that. We used three different consulting firms to help us with this. Of course, we used focus groups and interviews. We went through this very long and complete process. Everything was put on the table and considered. The answer kept coming back: customers know what business were in, we dont have to tell them what the storage business is. In the 70s, it was worthwhile to say were in the business of storage or storage space and say it in your name. Thats no longer the case. People are very aware of what storage is and how its to be used.
Were going to start renting cubic footage instead of square footage. For the next couple of years, well use both. Its important our customer can stack their goods in our storage units. So we think its important to let them know how high they can stack and what the cubic footage is.
The term unit is interesting. A unit can mean any number of things. The customer doesnt really understand what a unit is. Many of our friends in the business use the word rooms. Thats a more descriptive to me than unit. We look at the shape of our rooms, or our units, and for the most part, theyre in the shape of a cube, especially our most prevalent-sized unit, a 10 by 10, which is roughly 10 feet high. We think its interesting to start talking about cubes rather than units.
As far as smart, thats our direction with our new Superstore concept and all of our new additional services. We want to get away from passive storage. We dont think thats what our customers want nowadays. We want to be considered the smart provider of storage spaceand that being active space with nice amenities and features.
How are competitors reacting to the new name?
We announced it at a storage conference. The immediate reaction was extremely positive. I had many competitors tell me they liked it and understood the need for it. So many operators in our business are entrepreneurs and real estate developers, and they havent thought a lot about marketing over the years because they didnt need to. Things have changed in the last few years.
We no longer need to tell our customers what business were in. Sixty percent of our customers shop with us on our website before they come rent with us. The other 40 percent are referrals or people who are returning or drive-by customers. Of course, we will have storage in our taglines, but we felt it was really important to get away from hitting the consumer over the head with what business were in. So far, our competitors are saying very nice things.
Whats your plan to attract more commercial customers?
Twenty percent of our list of customers rent 30 percent of our space. We want that number to be higher. We want to take the seasonality out of our business where we ramp up in the summertime and do our best to hold on for the rest of the year. With a higher concentration of commercial customers, we will take the seasonality out of the business. Those customers are far more valuable than the person storing for a short period of time during a move. Were certainly going to go after people who are moving, but we also have our eye on the longer-term customer, that being the commercial customer.
What about other future plans for the brand?
We believe our CubeSmart brand supports our strategic objective of providing innovative solutions to satisfy our customers ever-changing needs and requirements.
What advice would you give other operators in todays competitive climate?
I would encourage them to seriously consider ways to distinguish their facilities from the guy down the street. With the advent of the Internet and most of us putting our pricing online, totally visible to the consumer, were quickly becoming a commodity. If all we do is compete on price, then we become nothing better than the gas stations down the street. Thats a very slippery slope.
When its all about price, your margins deteriorate, your profitability deteriorates, your return on your investment deteriorates. As an industry, we dont want to go there. We need to focus on providing better customer service with more services and really steer clear of being a provider of passive storage space. Then youll distinguish yourself from the competitor down the street, and you can afford to get better pricing than the competitor down the street. Its an important message we need to consider in our industry today.