Accommodating A Growing Millennial Market
If you’re tired of hearing about Millennials–the generation born between 1981 and 1997–and their impact on segments of the economy, including the portable storage business, you’re out of luck. The generation will be influencing business for a very long time.
According to the U.S. Census, Millennials outnumbered Baby Boomers last year 75.4 million to 74.9 million. Their age, 20 to 36 years old, makes them a prime demographic as homebuyers and the next generation that needs to store their stuff.
However, this isn’t your Baby Boomer or Gen X consumer, says Will Diaz, vice president of USafe and ValStor in Chicago, Ill. “They’re looking for efficiencies,” says Diaz. “They don’t want to spend their Saturdays digging through a self-storage unit; they want their stuff picked up and brought back, and they’re willing to pay a slight premium for that service.”
Nevertheless, Diaz doesn’t think the traditional self-storage is going away anytime soon. “There will always be a need for self-storage, but portable storage adds to consumer need,” he says.
The Evolution Of Portable Storage
Portable storage is a relatively new industry, having gained traction in just the past 25 years, according to Kaylee Ferguson, operations manager for the National Portable Storage Association in Kansas City, Mo. The organization estimates there are at least 1,500 companies that are involved in portable shipping container businesses, and there are around 350 companies that rent containers as portable storage. Ferguson estimates it is a $1.5 to $2 billion per year industry.
In the early years, the portable storage industry was strictly made up of shipping containers, which were loaded onto a truck at a company’s facility, taken to a home or business (typically a construction site), dropped off until the customer no longer needed it or asked the company to pick up, and taken back to their facility for long-term storage.
The typical portable storage customers typically fell into these categories:
- A homeowner cleaning out a garage who needs temporary storage
- A homeowner doing renovations or additions to the home
- A homeowner who’s moving and needs a place to store short term while waiting for another home to be built or closed
- Families moving overseas
- Homeowners who need storage after a disaster such as a flood or fire
- Commercial construction sites to store tools and equipment during the building process
As the industry began to grow throughout the early 2000s, many companies sought to make improvements on their products, making sure the steel containers they were delivering were of higher quality and were leak-proof.
Go Mini’s Moving and Portable Storage, based in Semi Valley, Calif., began its business in 2002, offering three sizes, as opposed to the typical one-size fits all storage container, and advertises them to withstand extreme weather conditions. The company used a purchase model until 2012, when it began a franchise model.
“Since 2012, we’ve grown tremendously,” says Valerie Sanchez, franchise development manager for Go Mini’s. The company had 45 franchise agreements that year but has grown to 80, with several hundred locations throughout the United States and Mexico. Each franchisee has 200 to 300 containers but can start with as few as 100 and build the inventory on the company’s purchase plan.
The franchise model allowed the company to streamline its consumer message and marketing. For example, the company is able to ensure each of its locations rank high in local search engine results—an important element for the modern storage industry. Sanchez states that the company is expected to expand by four to five new operators this year, with each of those adding two to three new locations each.
Sanchez says the operators still count on the individual homeowner’s business and the fact that the average person moves at least a dozen times during the course of a lifetime. However, the commercial business is also a segment that continues to grow as well.
Peter Nemiroff, president of Universal Storage Containers, LLC in New Canaan, Conn., says that overall, the portable storage industry saw a 10 percent increase in business last year. “With the success of the larger portable storage operators over the last 10 years, this service has become increasingly popular with the consumer,” Nemiroff says. “There has also been a shift from within the moving and storage industry towards portable containerized storage due to the efficiencies of using containers. All of these factors have contributed to an increase in demand for portable storage, which is a tremendous opportunity for new businesses to enter the market.”
Nemiroff states that there were many new players entering the market last year as costs started to decrease. “There were a lot of consolidating by REITs buying existing locations, expanding markets into commercial applications, and many state-of-the-art innovations in products are just a few trends,” says Nemiroff. Although he didn’t say what kinds of products and features his company is currently working on, “We have some new products and features currently in the R&D process that we are introducing in 2017.”
Out Of The Box
Approximately 10 years ago, John Smith, president/founder of the Store Anything Fast & Easy Company (better known in the industry as SAFE Co) in Saskatoon, Sask., Canada, saw a need for portable storage that could be moved into tight urban places easier, as well as accommodate homeowners in the suburbs who either didn’t want a shipping container located on the property or had homeowner association rules that prohibit them.
He developed portable containers that can be rented or sold and can either be assembled prior to delivery or shipped flat and assembled quickly on site. They also are purchased outright by the customer or rented. The options don’t end there; they can either be kept on site or taken back to the site for self-storage.
One of the most obvious trends Smith has seen in the business that is driven by Millennials is the need for keeping up to date with technology. “There has been a huge shift in technology and you have to adapt or die,” says Smith. He points to some companies that have transitioned to outsourcing to call centers and other companies that use apps that allow customers to make bookings.
Other companies are coming up with and offering more options. “When the industry was in its infancy, you had to take whatever they had to offer for portable storage,” says Smith, who points to at least one company that is offering smaller portable storage options by providing a cargo trailer that has a cage in which a customer’s belongings are stored. The trailer, which can hold several of these cages, is then transported to a warehouse, unloaded, and the cages are stacked and tagged, leaving the trailer available to be loaded again.
In possibly the biggest nod to mostly the Millennial market is the valet storage option. In this model, a business owner has a warehouse and allows people to store as few items as one box or as many as needed for a price per box or item. The storage business provides the boxes, the customer packs them, and the business comes and picks them up, storing them after they’re tagged in the warehouse. When the customer wants a certain box, that box is delivered back to the customer’s home or business. Diaz, who is a U.S. rep for SAFE Co. and owns USafe, will soon open ValStor, a 225,000-square-foot valet storage facility in Chicago; He says these types of businesses will be good in urban markets, where many Millennials live.
A 2014 Nielsen report states that Millennials are living in urban centers in greater numbers than any generation in history; moreover, 40 percent of them want to live in a large urban area in the future. Cities have not seen more growth within their borders than outside of them since the 1920s.
As well, while housing costs are skyrocketing, especially in dense urban centers, wages are remaining flat. This means Millennials have smaller and smaller spaces in which to live. Although this generation has fewer possessions (many news pieces have recounted the fact this generation doesn’t want their parent’s stuff), these smaller spaces still create a need for smaller storage options for off-season clothes, bikes in the winter, etc. Plus, few of those living within urban centers have vehicles, which makes the valet service a perfect fit for this demographic.
“We’re not speaking to the 15 percent of households that already use traditional self-storage,” says Diaz. “We’re speaking to the 85 percent who don’t use it that needs this type of storage for service and convenience.”
Whatever the business model in portable storage, business owners will have to continue to look to Millennials, who, like their predecessors in the other large generation of Baby Boomers, will be setting the bar for consumer expectations for decades.
Kerri Fivecoat-Campbell is a freelance journalist based in the Ozark Mountains. She is a regular contributor to MiniCo’s publications. Her business articles have also appeared in Entrepreneur, Aol.com, MSN.com, and The Kansas City Star.