Tuesday, August 28, 2012

Squirrel Away Profits from Discard Reluctance

Millennials, senior citizens, and many in age cadres in-between aren’t able to keep all that they buy close by them. This has opened up a market for retailers who store the stash for a fee.
     With Millennials, one reason for the storage shortage is a desire to live in city areas, where housing prices often dictate small quarters. For the seniors, there’s often the need to downsize.
     The Economist reports that one in every ten American families uses a self-storage facility. Share prices in self-storage firms Public Storage, Extra Space, and Sovran have increased between 30% and 140% since fall 2007.
     One reason for the robustness of the self-storage business is that facilities generally are sited on low-priced real estate. This fact leads to a consumer psychology hint for succeeding in the self-storage business: Be sure you and your staff show that you treasure the treasures being left with you for safekeeping. In run-down areas of town, prospective customers may be concerned about break-ins. This worry will build if the shopper sees open gates left unattended. The prospective shoppers will like 24/7 access abilities, even though they might never come at night. But if they see poor security or poor lighting, they might decide not to trust you.
     Another consumer psychology angle on the robustness of self-storage businesses is the reluctance of people to discard their belongings. Some years ago, researchers at University of Utah, University of Arizona, and Northwestern University wrote about the ways in which individuals come to consider many of their belongings as “sacred,” valuing the items in ways reminiscent of the valuing of religious artifacts.
     Given all this, why do the Millennials continue purchasing stuff? Well, there’s evidence they’re not, and that opens up markets for another retailing endeavor—renting. A Fast Company posting says “ownership” is going extinct because Millennials want to spend their money to connect to values and to others, not for possession.
     An intriguing analysis, to be sure. Still, I’m quick to admit that the article’s author, who “helps leaders design work environments” may have generated more psychobabble than even I, as a consumer psychologist, could get away with. If so, these propensities to be a renter might recede. The first comment added by a reader to the Fast Company posting was from “Gina,” who wrote, “In all honesty, I think my generation isn't buying products because we can't afford them.”

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