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How Singapore’s SMEs Can Benefit From Self Storage

In News flash on August 21, 2014 by Lock+Store Tagged: , , , , , , , , , , ,

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Self storage is a thriving, competitive business in Singapore. Based on market research undertaken by Colliers International, the local self-storage industry has grown rapidly over the last 10 years. There are now an estimated 41 self-storage facilities in Singapore supplying over 25,000 self-storage units and more than 1.8 million sq ft of leasable self-storage space islandwide, as of December 2013. The three key factors propelling the industry’s rapid growth are, namely, shrinking apartment sizes, growing affluence (which has led to an increase in the number of hobbyists such as art and wine collectors) and the rising trend of businesses switching to self-storage amid rising rents and office space constraints in Singapore.

According to a survey of 300 current users of self-storage at Lock+Store, 40 percent of storers are businesses (start-ups, blogshops, SMEs and MNCs) compared with 30 percent in 2011. The remaining 60 percent are personal/household storers. Self-storage operators are seeing more start-ups, blogshops and SMEs, especially those in the retail sector, using storage space to store their inventory. With SMEs largely bearing the brunt of Singapore’s rising business costs, they form the bulk of the corporate customer base. According to the survey results, SMEs form 57 percent of the corporate customer base, followed by start-ups (about 16 percent of business users), MNCs (about 15 percent of business users) and blogshops (about 12 percent of business users).

Here are three ways in which Singapore’s SMEs can benefit from self storage:

1. Rising commercial property rental rates have squeezed profit margins and reduced competitiveness amongst Singapore’s retail sector. Self-storage allows SMEs to do away with a storefront and reduce their operating costs. They can then focus on growing their business through e-commerce

2. According to the Urban Redevelopment Authority, on average, rentals for warehouse space have risen by 15 percent while prices of warehouse space have risen at a higher rate of about 35 percent in the past two years. High warehouse costs are a huge barrier to SMEs expanding their businesses. The self-storage industry distinguishes itself from traditional warehousing in terms of how we help businesses manage their operating costs with our flexible lease terms. Businesses can store with us from a minimum of two weeks to as long as they wish. Business users can take advantage of the flexibility to tailor their storage usage according to seasonal demand for their products. With storage space available from 10 sq ft – 500 sq ft, SMEs can up-or downsize at any time as their businesses expand or contract

Self-storage facilities also offer the flexibility of accessing the storage unit 24/7, state-of-the-art security, air-con, use of pallet trucks and flatbed platform trolleys, and onsite customer service. Ancillary services such as onsite collection and delivery allows retail SMEs to distribute their goods to their customers quickly and affordably.

3. There are no hidden costs such as lawyers’ fees, utilities fees and stamp duty in self-storage. These could easily double the monthly rental

4. Self-storage helps to free up office space for more efficient use. Apart from inventory, SMEs also store office documents as they are required by law to keep their financial records for five years. They can put the office documents into self-storage to free up office space or downsize to a smaller office. Some SMEs in the service industry do away with office space by using the self-storage facility as a meeting/debriefing point for their technical crew who are outstationed most of the time.

SMEs should take advantage of the plethora of self-storage offerings in Singapore to find a solution that best fits their needs. In an increasingly crowded industry that sees new entrants with new business models every year, self-storage operators will have to innovate to meet the evolving demands of their SME storers beyond basic self storage. This can only be to the storers’ benefit.

by Helen Ng, Chief Executive Officer, General Storage Company (Lock+Store Singapore & Malaysia, The Store House Hong Kong)

 

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