More full-service, concierge-style storage services – which pick up, store and return people’s belongings with a click or call — are popping up in urban markets across the country. They’re trying to take a piece of the expanding $25 billion U.S. self-storage industry. Revenue is actually expected to climb past $30 billion by 2018.
Can this new, often high-tech, on-demand model coexist with traditional self-storage? Should traditional operators be worried? Do they even directly compete with each other?
“Right now, they’re in their own niche market, and they won’t ever get as big as traditional self-storage,” said Marc Goodin, president of Storage Authority, a self-storage franchisor in Fort Lauderdale, FL.
MakeSpace has emerged as one of the successful full-service storage companies to date.
Outside the mainstream
“There are so many different ones coming up. Some are going to fail – no question — and others are going to succeed. And others are going to succeed outside of the regular self-storage mainstream,” Goodin said.
Goodin pointed to PODs as an example of a storage company that coexists with the self-storage industry. That company sold last year for more than a $1 billion.
“Even though PODS is only a tiny part of the self-storage industry, there’s a need for that service. It’s going to be the same for these on-demand services,” Goodin said.
Millennials and boomers
Startups like MakeSpace, MyPorter, Clutter, Box Butler, and Red Bin are targeting millennials and downsizing baby-boomers, who are living urban lifestyles and are tight on space.
Full-service companies are positioning themselves as hassle-free storage for people (many who don’t have cars), who don’t want to rent moving trucks and store items themselves at storage facilities. Many offer free pickup through smartphone apps. Customers also can take and manage photos of their items via apps and request to have select items delivered anytime (for a fee). Hot markets include Los Angeles, Chicago, Atlanta and New York City.
MakeSpace stores customers’ items inside warehouses, which are not publicly accessible.
Serious business
Goodin believes there’s room in the self-storage industry for this new niche market and traditional operators should wake up and take them seriously.
“’Somebody’s going to give me all these boxes and they’re going to take them back to the warehouse and bring them back whenever I want them? That’s for me! I’ve got the cash available.’ We all know we get to a point in life where sometimes time is just as valuable as money,” Goodin said.
Goodin said savvy storage operators should consider incorporating these new on-demand models into their regular storage business. They can offer traditional self-storage, on-demand/concierge storage as well as “portable on-demand storage” like PODS or ZippyShell.
Related: Boxbee pivots to power full service storage for providers
Goodin said that by offering customers more options, traditional operators can generate more traffic and more revenue.
“It’s going to be super slow because the self-storage industry is very stubborn,” Goodin said, “That’s where the self-storage industry is missing out.”
Both concepts have a place
“Absolutely both can coexist,” said Anne Ballard, president of marketing, training and developmental services for Atlanta-based Universal Storage Group.
“I think each targets a different audience,” Ballard said.
Ballard believes the success of on-demand storage companies will depend on how successfully they market to millennials, who have grown up with technology that has enabled them to get what they want, when they want it.
“I do think they fill a need in urban locations,” Ballard added. “We will wait and see on the rest.”
MyPorter founder Jason Kay said he was exploring ways to partner with traditional self-storage operators.
Clear differences
Jason Kay, founder of Atlanta-based startup MyPorter, recognizes his on-demand service isn’t for everybody—especially for people who want access to their storage units whenever they want.
“Some people, if they hear they can’t access their stuff — which we don’t allow for security purposes — will either hang up or say ‘no thanks.’ So that’s a big differentiator,” he said.
However, Kay, who’s growing MyPorter through franchising, believes there are ways to successfully partner with traditional storage operators.
“We could provide the door-to-door pickup to fill their empty void if they have that last 5 percent of space unrented,” Kay said. “So if they give us a rate, we would go run to their customers for them and fill these spaces up, because basically we do the same thing. They just don’t have the convenience factor. We’re trying to find a way to pair that convenience with these ma-and-pa self-storage facilities, which would be a big benefit for both of us.”
Kay has spoken with people about possible partnerships and received feedback but hasn’t implemented anything yet.
“It’s on the backburner, but there’s definitely potential there,” Kay said.
“There are a lot of opportunities because of how segmented the self-storage market is. It’s ripe for either disruption in the way of partnership or in the way of technology. Or whatever way you want look at it, there are ways the industry has a whole can be shaken up.”
