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WE’LL BRING IT TO YOU!
Mobile Storage Is On Its Way
By Erin Henley 
The mobile self storage industry, still considered to be in its infancy, is growing quickly as new operators set up shop and consumers become more aware of the product.
Mark Johnson, co-owner of Centennial, Colo.-based Johnson Storage and Moving, whose mobile product is called Crate and Store, explains that the portable storage industry can trace its origins back to containerized shipping, used mainly in business-to-business applications. Various companies began applying the concept for consumer use around the mid-1990s, giving rise to the mobile self storage industry.
Today, mobile storage consists of two major business models, according to Steve Wilson, owner of 10 self storage facilities in Southwest Florida, between St. Petersburg and Naples. Wilson’s firm, Hide-Away Storage, operates under the smaller box model, which the company believes gives the consumer more flexibility in packing, greater organization, and less chance of damage to goods while in transit.
The other model followed by mobile self storage providers is the big box model, made popular by Clearwater, Fla.-based PODS (Portable On Demand Storage). Randy Weissman, president of the Mobile Self Storage Association and of St. Louis, Mo.-based Storage Banc, says, “PODS and its clones have revolutionized the industry.” He also notes that PODS’ marketing has helped increase consumer awareness about mobile storage.
New Players Entering The Game
While the mobile storage product itself has changed little from its initial days, the industry has seen a major influx of capital and operators eager to cash in on this growing sector. “It’s a much more competitive business now—there are so many vendors out there,” says Johnson. Wilson agrees. “There are a huge number of players that weren’t there three years ago,” he says. “My guess is that a lot of them won’t be there three years from now.”
Why has mobile storage attracted so many newcomers? Wilson thinks the success of the self storage industry is fueling the growth. “Everybody thinks self storage is the golden calf,” he says, “but it’s hard to get into the self storage business—it’s highly capital-intensive. A lot of people think this is an easy way to get part of the self storage pie without having to ante up the millions of dollars required for facilities. I think there’s truth in that .... In the long run, there are a lot of players that I just don’t think are going to make it.”
In fact, there are already people being forced out, mostly people who don’t understand what they’re getting into. “It’s a costly business,” Weissman says. “It costs a lot more than people think to get into it and make any money at it.”
Johnson agrees, saying, “I think there are probably more losers than winners financially in the mobile storage business at this point. Most of the movers that I know who are into it as a sideline find it to be marginally productive; I don’t know that anyone’s hit a home run. Success depends largely on how they integrate the product with their other moving products. “I still think for a mover to add one more product to their list of goods is probably a good thing,” says Johnson. “Whether it justifies the $100,000 or more investment—I don’t think you can get into it for a whole lot less than $100,000—remains to be seen.”
Weissman hears of many new mobile self storage businesses and fields numerous calls from people wanting to get into the industry, some as franchisees, but many as independent operators. “There’s quite a bit of growth, but just like self storage, a lot of it is independent people with one location,” he notes.
Franchising has been more successful in mobile storage than in traditional self storage, however. “There’s a franchise type of model that looks very appealing on the surface to a lot of storage developers,” Wilson says, “and that was not available with self storage—there’s never been a decent franchise system that really worked.”
A Threat Or A Complement?
The rapid growth in mobile storage contrasts with that of traditional self storage, which Wilson describes as “slow growing” in its infancy. “A lot of investors, bankers, lenders—everybody thought that traditional self storage might just be a flash in the pan,” he says. Now that the self storage industry has proven itself as a successful, profitable business over the long term, mobile storage is having an easier time finding acceptance by investors.
That’s not to say, that mobile self storage is about to overtake traditional storage. “It appears to me that self storage is still a faster growing business,” Johnson says. “I’m sure it’s taken a small share from self storage, but I see customers using this product that may not have even stored in the past.” For example, the industry is seeing a lot of staging of homes for sale, where people want to thin out closets, crawl spaces, or garages to make their homes appear more spacious. “People who are doing things like that probably would not have even engaged in the activity, so I think it has opened markets rather than cannibalized markets.”
Wilson, however, sees mobile storage in a more competitive role with traditional self storage. “I see portable storage becoming an increasingly significant part of the larger self storage pie. It’s going to play an increasingly larger part. The question becomes how much larger. In my more optimistic moments, I say it’s going to play a very, very large part. In my less optimistic moments, I say it’s going to play just a modest part in the overall self storage equation.”
If mobile storage advances to the point where it takes a sizeable share of the self storage market, Wilson sees challenges ahead for the larger self storage operators. “The portable storage guys are really only taking one to two percent of the self storage market in markets where they even exist. They haven’t really dented the market. I suspect that’s going to change, and I suspect that at some point in the future, probably 25 percent of the self storage market will be handled through portable storage options of one kind or another.” So the real question is, for the major players, do they want to cede that 25 percent of the market? If they don’t want to cede that portion of the market, they will have to radically alter their business models because portable storage is a complicated business involving trucks, drivers, and schedules.
“It’s just not the same as ‘build it and they will come,’” Wilson says. “Portable storage is a highly management intensive endeavor.” Traditional storage is highly capital intensive, and these are very different models. “We’re small enough and concentrated enough and management intensive enough that we can play the traditional self storage game and also play the portable storage game,” Wilson says. “We’re in a fairly unique place to do that because of the size of our company and the willingness to apply our energy and capital into portable storage—which we think has a better long-term return outlook to it—instead of building more facilities.”
Also unlike traditional self storage, which began largely as a standalone business and only in the past several years saw notable growth in ancillary products and services, mobile self storage may be more difficult to operate by itself. “It works better in conjunction with other business as a complementary product, versus a standalone product,” Weissman observes.
Operators who own traditional self storage and add mobile storage can take advantage of economies of scale and business experience to make it work. Likewise, moving companies can add mobile storage to their offerings and enhance their businesses. Either of these approaches are much easier than trying to run a standalone mobile self storage business.
“From a full-service mover perspective,” Johnson says, “particularly if you’re using the small containers, if you already have a lot of the necessary infrastructure to do it, it can become an added product line. To not be in an ancillary business and try to get in it is an uphill climb.”
Rising Consumer Demand
Mobile self storage consumers have not yet come to see the product as an essential, unlike users of traditional self storage, many of whom have come to see storage as a necessity. However, much as in traditional storage, consumer knowledge about mobile self storage has increased quickly due to marketing efforts and word of mouth—the more educated consumers become, the greater the number of people we’ll see using mobile storage.
“We don’t have to educate our customers much,” Johnson says. “We ran focus groups about a year and a half ago to refine our marketing, and I was amazed at the difference in just two or three years in consumer awareness. They know this product’s out there and they understand.” Convenience is likely the major factor driving consumer demand for mobile storage. Most people who use mobile storage instead of a truck for a local move are those who need to store their goods for a long period of time. However, the convenience factor is making mobile self storage a viable alternative to truck rentals for many consumers. What effect it will have on the traditional moving truck business remains to be seen, but it appears to have at least become a strong competitor. “We offer the one thing the one-way truck people can’t,” says Weissman, “getting people out of the worst part of renting a truck, which is driving it.” Wilson agrees. “Putting the things in a container in your driveway and having the container delivered across town or across country, that is really catching on big time,” he says. “Although we’re a storage business, a much higher percentage of the customers understand this moving option with the container.”
The popularity of mobile storage for city-to-city or cross-country moves is fueling the industry’s growth. “What everybody’s trying to do is get enough critical mass so that if you want to move from Tampa, Fla., to Richmond, Va., for example, there’s a way you can be received in Richmond,” Wilson says. To capture this market, a mobile storage provider must either have another franchise location in the destination city or must work out a partnership with a mobile self storage provider in that location.
Legal Issues Coming Into Play
Local government regulations are challenges for mobile self storage operators just as they are for traditional self storage. self storage developers routinely face challenges regarding design and location, and mobile self storage operators must deal with similar issues in regard to zoning and land availability.
Finding a good container storage location is one of the biggest challenges. “You have municipal ordinances prohibiting the containers from being in certain locations,” Johnson says, “and when you get into the tighter urban areas, just finding a place to put the containers legally is really tough sometimes.”
Legal challenges and issues come with any business, and mobile self storage is no exception. Just as the evolution of traditional self storage gave rise to new laws and regulations, so will the growth of mobile storage. “Similar to a self storage lien act, you may have a mobile storage lien act, some of those things that make it possibly easier to operate,” says Weissman. Increased legislation will follow the increased popularity of the product.
One area of concern for both traditional and mobile self storage operators is that of not knowing whether customers are storing stolen goods or other illegal items in their units. Johnson expresses particular concern about customers placing hazardous materials in portable storage units. “We are involved in a product that allows customers to fill it up,” he says, “and while we have them sign affidavits that they haven’t put any hazardous or prohibited materials in the unit, as an industry we’re certainly vulnerable to those types of issues, I think more vulnerable than a full-service mover.” Full service movers generally pack the containers and know what is going in.
Johnson says that, while hasn’t yet heard of any incidents in which hazardous materials were stored in a portable storage container, he expects that such an incident will occur—and bring with it increased expenses and new security measures.
“I’ve not heard of any horror story yet, but I suspect that one will come eventually—not necessarily a terrorist act, but rather that hazardous material that should have been disposed of in a proper fashion, instead, was put into a storage container because that was a cheap and easy way to get rid of it. It could be a fairly sizeable amount of money for someone to rid themselves of the problem.”
What Changes Are Ahead?Many questions remain unanswered about the future of mobile self storage. While it won’t take the place of traditional storage, it’s likely to take a larger share of the market while at the same time, increasing demand for storage. Also unknown is the depth of competition it will provide for moving truck rentals. Security and legal concerns will surely come into play, lending to new regulations that will affect operators.
The traditional self storage model has evolved over the past few decades, although the basic product—a place for people to store their goods—has not. In the same way, although the mobile self storage product will likely change very little, the ways in which the business is operated and marketed are likely to go through some evolution.
“We’re still using the same kind of box with the same cover, but we’re learning a huge amount,” Wilson says. “I wouldn’t say that massive changes are occurring, except that the changes are reflective of our learning. It’s still the beginning. The jury remains very clearly out on how mobile storage will evolve in the future.” Although the distant future can be foretold, there is little doubt that the immediate future for mobile self storage looks bright.
Erin Henley is a business writer and editor based in Gilbert, Arizona. She is also the Research Editor of the 2007 Self Storage Almanac and a frequent contributor to Mini Storage Messenger magazine.
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