military moves on storage

There have been concerns for some time that the military was going to build self storage facilities on its bases to compete with the storage facilities off base. Many of us thought that as soon as the storage association members would raise their concern with military representatives that a reasonable understanding would develop. Most of us have felt that the trend in recent years was for the government to NOT compete with private enterprise.

But now we have seen that a meeting between Self Storage Association representatives and members of the military did not go well. The military wants to compete in self storage. They apparently see a great opportunity to get a cherry deal from operators who are willing to lease a facility on base. There will of course be people who will sign the lease and run the units.

What will this do to the businesses around the bases? It will make it tough to compete. Will this give other government entities the idea to get into the storage business? You bet! I can see airport authorities creating self storage space on the airport properties, advertising enhanced security from the TSA personnel who work in the airport.

Wait a minute. Don’t we have a big enough challenge on our hands competing with each other and competing against non-consumption? I imagine everyone in our business will try to rally their local law makers into a coalition to stop the government agencies and the military from hurting private enterprises in this way. But will it succeed?

Just in case it is not successful, we better think about how to compete. If you will need to draw customers off base to store their goods, you will need something on site to attract them like a barber shop, a pool hall, a taco stand or a beer hall. You’ll have to offer something to make it unattractive to rent the cheaper unit on base. Maybe for a small additional fee, you do the laundry of you customers every week. Perhaps you give a free airline ticket to everyone who signs a year lease on a 10×10 or bigger. Maybe you give a pair of Kevlar gloves with each new rental.

You could probably defend yourself against the Airport Storage venture by selling a more convenient location. Most people will not want to drive around to the back of the airport and fight airport traffic, when they can just turn into your place as they drive by on their way to work or shopping.

The people who will be running these facilities will likely be leasing the property from the military or the airport and will not have an ownership stake. This will make it hard for them to raise enough capital or raise enough courage to compete against you if you do NOT compete on price. Staying out of a price competition can be difficult. Your occupancy may suffer a hit after “The Storage place on base” opens up. You may have a hard time keeping up your monthly new rental goals. But price matching is not always the way to go. If you can rent a lot more units by cutting price, you can make up for the shortfall. But if all you do is destroy the market in your area and make the standard rates 30% lower than what they used to be without dramatic long term increase in occupancy, you have shot yourself in the foot. Ouch! Usually out-marketing your opponent is more effective.

How many cheap colas are there? Sam’s cola is cheap and easy to get. And Sam’s sells a lot of it. But Coca Cola’s numbers keep rising. They market the heck out of their drinks, some of which are just water, and they are making money.

When you out-market your competition and out-do them in customer service and sales performance, you can lose some occupancy without long term suffering. You will regain ground after word of mouth has let people know that your place is a good value and a great place to store. A good value that is a great experience always beats the cheapest offering for probably 75% of the consumers in that market place. You can let your competitor have the people who will only take the cheapest deal. They are hard to make happy and not great referrals sources anyway. The people who will spend an extra few dollars to get a good experience are the people you want anyway.

I’m not saying that the military is doing you a favor by setting themselves up in the storage business. But I am saying that they will not be as tough a competitor as you might think. Time will tell. Hopefully the military will find that too many congressmen and women are getting harassed by their constituents for this grand storage plan to every take shape.

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Disclamer: This entry is intended to promote our partner StorageMart and some or all participants received compensation.

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