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Storing.com, an innovative self-storage solutions provider, identifies some of the challenges and opportunities for self-storage businesses in the current economic climate.
Economic uncertainty
With the economic outlook expected to remain uncertain for some time to come with high levels of inflation and high energy costs due to the ongoing conflict in Ukraine, this is likely to have a continuing impact on the self-storage sector along with many other business sectors.
Households and businesses will have less to spend on, for instance, home renovations and new equipment. This could have a knock-on effect on the number of self-storage units being rented. However, the inherent strength of the self-storage business model – with low-cost premises and long-term customers – is well-placed to weather this economic uncertainty.
Fewer senior staff relocations
Many self-storage businesses have typically benefited in the past from senior employees being relocated by their organisations, either internationally or nationally. Storage for senior staff either temporarily or permanently moving to a new location has been a significant proportion of the customer base at many storage facilities.
The self-storage industry is still being impacted by these lower relocation levels in the wake of the COVID pandemic, which triggered one of the worst jobs crises since the Great Depression of 1929 – 1939 according to the OECD (Organisation for Economic Co-operation and Development).
Increase in remote and hybrid working
Remote and hybrid working poses challenges to organisations in all industries keen to retain experienced employees, but there is still uncertainty about whether the hybrid working trend will continue and for how long. Especially as there is already evidence that the majority of Gen Z employees (born from 1997-2012) would prefer to go to a workplace in order to build essential working relationships, which is more difficult online.
Self-storage companies may have to deal with some staff who want to work remotely and are able to do so (such as back-office staff), but others, such as reception staff or security guards, will not realistically have that option. Creating a fair system that works for all employees and, of course, for the business could be a challenge for some time to come.
Yet, conversely, this challenge also presents opportunities for storage companies because other businesses are also dealing with the same uncertainty around remote or hybrid working. Office-based businesses may have the opportunity to downsize office space to cut costs but may not yet be ready to wholeheartedly embrace remote working.
Businesses may, therefore, want to place office furniture and equipment in storage until it becomes clearer whether remote or hybrid working becomes a permanent feature of the workplace. So self-storage facilities are ideally placed to securely store furniture and equipment until a permanent decision is made about office space and the current trend for remote or hybrid working becomes more entrenched in the workplace (or not).
Supply chain constraints
There are still supply chain problems impacting a variety of consumer goods as a hangover from the pandemic. Any number of factors are causing these problems: rising energy costs, staff shortages at key points in the supply chain such as at ports and also a shortage of truck drivers. These challenges in the wider economy have minimal impact on self-storage businesses in general but they do present an opportunity.
When certain non-perishable goods are freely available retailers can build up their stocks and store the excess in self-storage units as an alternative to more expensive and less flexible warehouse space. Then readily have stock available to meet future demand when bottlenecks in the supply chain appear.
There are undoubtedly challenges ahead for the self-storage industry,, but it’s clear there are also opportunities. There has already been an increase in global business travel, which could well see senior staff relocations return to pre-pandemic levels. And, whilst, house prices are expected to fall, which may not be welcome for everyone, it could boost the property market as more young people are able to buy their first home and others are able to trade up. Both of these situations would have a positive impact on the industry.
