Self Storage During a Recession

During a recession, companies downsize, many people lose their jobs and disposable incomes tend to decrease. Taking this into account you would think that businesses would suffer as a result and this is true in most cases. Due to a decreased demand for goods and services, a recession can become a downward spiral. However, there are certain businesses that actually benefit from a recession and one particular industry is that of self storage.

Businesses that tend to do well during an economic downturn are unsurprisingly those that benefit from people having less money to spend. For example, cheaper brands can experience an increase in demand as people choose to downgrade their choices from more expensive brands. In supermarkets, more people will choose own-brand products instead of brands that specify in a certain type of food.

An increase in demand for self storage facilities comes from a number of factors. Due to a fall in income, some people will find it necessary to move into a smaller home with less space to store possessions. Using a storage facility gives the owner the freedom and flexibility to store something away from home, yet have access to it on a regular basis.

In a recession, there will not only be people who experience falls in their income but many will actually lose their jobs entirely, as companies struggle with wage bills and falling demand. If these people are unable to find a job with a saturated labour market, they will be forced to consider several options. Without the money for rent, many will move in with friends or family on a temporary basis. However, unless they have large homes, they will be unable to store all of their possessions, which leads to the need for storage.

In America, self storage companies benefit further from people who are unable to pay the rent for their storage unit by having auctions to sell their possessions. This is quite a strange practice but if a customer refuses to pay or collect their possessions, the company would then be storing the items at no cost. Self storage auctions are quite popular, especially amongst traders who are looking to pick up bargains that can be sold for a profit.

As shown by the example above, money can be made during a recession but it is not always easy. Increasing demand whilst incomes are falling is quite tricky but if you’re in the right industry it is possible.

Avery Stephens