Strategy

With the opening of 17 new stores since August 2016, and the acquisitions of 31 stores through the purchases of Space Maker in July 2016, Alligator in November 2017, our Heathrow store, Fort Box in London and OMB in Barcelona in 2019, we have established and strengthened our market-leading portfolio in the UK and Paris and have entered the Spanish market. We have a high quality, fully invested estate in all geographies and, of our 161 stores as at 31 October 2021, 100 are in London and the South East of England or in Paris, with 57 in the other major UK cities and four in Barcelona. In the UK, we now operate 48 stores within the M25, which represents a higher number of stores than any other competitor.

Our MLA¹ has increased to 6.96 million sq ft at 31 October 2021 (2020: 6.86 million sq ft). At the current occupancy level of 84.5% we have 1.1 million sq ft of fully invested unoccupied space (1.8 million including the development pipeline), of which 0.8 million sq ft is in our UK stores and 0.3 million sq ft is in Paris. In total, this unlet space is the equivalent of circa 27.5 empty stores located across the estate and provides the Group with significant opportunity to grow further. We have a proven track record of filling our vacant space so we view this availability of space with considerable optimism. We will also benefit from the operational leverage from the fact that this available space is fully invested and the related operating costs are essentially fixed and already included in the Group cost base. Our continued focus will be on ensuring that we drive occupancy to utilise this capacity at carefully managed rates. Between the full financial years 2013 and 2021, occupancy of the stores in the portfolio in 2013 that remain in the Group today has increased from 63.1% to 86.0% i.e. an average of 2.9pptsper year and equivalent to a total of 2 million sq ft
 
There are three elements that are critical to the optimisation of our existing portfolio.

• enquiry generation through an effective and efficient marketing operation;
• strong conversion of enquiries into new lets; and
• disciplined central revenue management and cost control.

Digital marketing expertise – UK Number 1 Self Storage Brand
 
Awareness of self storage remains relatively low with 50% (FY2020: 52%) of the UK population either knowing very little or nothing about self storage (source: 2021 SSA Annual Report). In the UK, many of our new customers are using self storage for the first time. It is largely a brand blind purchase. Typically, customers requiring storage start their journey by conducting online research using generic keywords in their locality (e.g. “storage in Borehamwood”, “self storage near me”) which means that geographic coverage and search engine prominence remain key competitive advantages.

We believe there is a clear benefit of scale in the generation of customer enquiries. The Group has continued to invest in technology and in-house expertise which has resulted in the development of a leading digital marketing platform that has generated 63% enquiry growth for the Group over the last five years. Our in-house expertise and significant annual budget have enabled us to deliver strong results. Safestore is the UK number 1 self storage brand as it moves in more customers per year than any other brand.

The Group’s online strength came to the fore during the various Covid-19 lockdowns and has since continued to support customer acquisition growth. Online enquiries in FY2021 rose to 89% of our enquiries in the UK (FY2020: 88%) and 85% in France (FY2020: 79%). Approximately 64% of our online enquiries in the UK originate from a mobile device (excluding tablets), compared to c. 60% last year, highlighting the need for continual investment in our responsive web platform for a “mobile-first” world. We continue to invest in activities that promote a strong search engine presence to grow enquiry volume whilst managing efficiency in terms of overall cost per enquiry and cost per new let.  UK enquiries increased by 25% whereas costs per enquiry decreased by 23%. Group marketing costs as a percentage of revenue were 3.7% for the full year (FY2020: 4.5%).

During the year, the Group demonstrated its ability to integrate newly developed and acquired stores into its marketing platform with successful new openings at Birmingham Middleway and Paris Magenta. The joint venture managed by the Group in the Netherlands expanded its coverage beyond Amsterdam and Haarlem with the acquisition and integration of stores in The Hague and Het Gooi, north of Hilversum. The Group also completed the integration of OMB (Spain, acquired December 2019) onto the Safestore platform with uplifts seen in both enquiry generation and marketing efficiency. Spanish cost per enquiry, for example was reduced by c. 60% although the number of enquiries more than doubled. With the integration of OMB, the Group has now completed the on-boarding of all of its managed brands onto its Digital platform.

In February 2021, Safestore UK won the Feefo Platinum Trusted Service award for the second time. The award is given to businesses which have achieved Gold standard for three consecutive years. It is an independent mark of excellence that recognises businesses for delivering exceptional experiences, as rated by real customers. In addition to using Feefo, Safestore invites customers to leave a review on a number of review platforms, including Google and Trustpilot. Our ratings for each of these three providers in the UK are between 4.7 and 4.8 out of 5. This way, wherever customers look for trust and reputational signals about Safestore, they will see an impartial view of our excellent customer satisfaction. In France, Une Pièce en Plus uses Trustpilot to obtain independent customer reviews. In FY2021, 93% of customers rated their service experience as “Excellent” or “Great” resulting in a TrustScore of 4.6 out of 5. In Spain, OMB collects customer feedback via Google reviews and has maintained a score of at least 4.8 out of 5.
 
Motivated and effective store teams benefiting from improved training and development
 
In what is still a relatively immature and poorly understood product, customer service and selling skills at the point of sale remain essential in earning the trust of the customer and in driving the appropriate balance of volumes and unit price in order to optimise revenue growth in each store.

The impact of the Covid-19 pandemic has been fast moving and uncertain but our teams created and implemented our plans quickly. The health, safety and wellbeing of our colleagues and customers is of paramount importance and all sites were operated in accordance with UK government guidelines in providing a Covid-19 secure workplace. We consulted our colleagues about managing risks associated with Covid-19, which included collaborating with them about key decisions we made during this time. The decision was taken not to access the UK government’s Covid-19 related support schemes including the job retention scheme. Our colleagues received their full salary entitlement, irrespective of whether they were working reduced hours or were unable to work because they were self-isolating.

Our enthusiastic, well-trained and customer-centric sales team remains a key differentiator and a strength of our business. Understanding the needs of our customers and using this knowledge to develop in-store trusted advisers is a fundamental part of driving revenue growth and market share.

Safestore has been an Investors in People (“IIP”) organisation since 2003 and our aim is to be an employer of choice in our sector as we passionately believe that our continued success is dependent on our highly motivated and well-trained colleagues. Following the award of a Bronze standard accreditation in 2015 and our subsequent Gold standard accreditation in 2018, Safestore was awarded the “we invest in people” Platinum accreditation in February 2021, the highest accolade in the Investors in People scale. Shortly after our Platinum accreditation, we also made the final top ten shortlist for the Platinum Employer of the Year (250+) category in the Investors in People Awards 2021. This nomination further endorses the high standard of our teams and the people development programmes that drive our skill and talent retention.

The Investors in People Awards firmly place Safestore in the top 2% of accredited organisations in the UK. The accreditation panel commented: “There are real gains on all of the indicators and individual themes compared to the survey conducted three years ago, and the response rate of 93% is excellent Safestore are a fantastic example of sustained great practice.” – Matthew Filbee, IIP Practitioner.

IIP is the international standard for people management, defining what it takes to lead, support and manage people effectively to achieve sustainable results. Underpinning the standard is the Investors in People framework, reflecting the latest workplace trends, essential skills and effective structures required to outperform in any industry. Investors in People enables organisations to benchmark against the best in the business on an international scale. We are proud to have our colleagues recognised to such a high standard not only in our industry but also across 14,000 organisations in 75 countries. This sustained people development focus is an essential component of our continuous improvement mentality.

We are committed to growing and rewarding our people and tailor our development, reward and recognition programmes to this end. Our IIP recognised coaching programme, launched in 2018, and upgraded every year since, continues to be a driving force behind the continuous performance improvement demonstrated by our store colleagues.

The last 24 months provided a challenging environment requiring us to operate in some new and innovative ways. Our online learning portal, combined with the energy and flexibility of our store colleagues, allowed us to not only continue to deliver our award-winning development programmes but also to capitalise on the strength of our IT platforms. In the first half of 2021 we rolled out our annual sales refresher programme to every store colleague online, utilising some innovative technologies along with more common communication tools such as Microsoft Teams to once again raise our performance bar. As the restrictions in the UK relaxed through the second half of the year, we were able to combine our newly created technology communication skills with our tried and tested face-to-face training sessions. In preparation for the start of our new trading year, early September saw us deliver a newly created “impact” sales refresher, further strengthening our charge into 2022.

We recognised the changing needs and demands of our customers, not only through the challenging times of 2020/21 but through the newly emerging demands and requirements that late 2021 brought. Combining new, along with tried and tested solutions and systems, we are further able to support our store colleagues allowing them to continue to fulfil the needs of our customers.

The day-to-day training and development of our store and customer-facing colleagues is an essential part of our daily routines. Due to the restrictions created by the Covid-19 pandemic, our learning and development programmes have been continually delivered online via our Learning Management System and the use of the digital platforms mentioned above. This allowed us the flexibility to continue with high-quality delivery of our core sales and development modules without the need to meet face-to-face. To support a safe working environment this Learning Management System also provides the opportunity for team members to receive rigorously enforced health and safety, fire and compliance training, ensuring that our colleagues are up to date in relation to their technical knowledge and continue to operate a safe environment for both our colleagues and customers. These tools, systems and resources have allowed us to effectively communicate changes quickly and manage compliance robustly. The onset of a national lockdown in March 2020 did not stop the continued development and training of our colleagues. Our training, developmental, welfare and compliance training modules can all be remotely accessed. Along with our online-learning portal and the adaptation of our face-to-face training programmes into a video-linked Microsoft Teams format, we delivered a continuous seamless learning experience for all our colleagues. The relaxation of the restrictions in mid-2021 has seen us take a blended approach to our training and coaching utilising the best of both remote and face to face engagement.

All new recruits to the business benefit from enhanced induction and training tools that have been developed in-house and enable us to quickly identify high-potential individuals and increase their speed to competency. They receive individual performance targets within four weeks of joining the business and are placed on the “pay-for-skills” programme that allows accelerated basic pay increases dependent on success in demonstrating specific and defined skills. The key target of our programme remains that close to 100% of our Store Manager appointments are internal hires via our Store Manager Development programme, and we are pleased with our progress to date.

Our internal Store Manager Development programme has been in place since 2016 and is a key part of succession planning for future Store Managers. The fifth intake are well underway on their programme for 2021/22, and along with the necessary skills and attributes they need to become a Safestore Store Manager, delegates have the opportunity to gain a nationally recognised qualification from ILM (Institute of Leadership & Management) at Level 3.

Our Store Manager Development programme demonstrates the effectiveness of our learning tools. In a spirit of constant improvement, our content and delivery process is dynamically enhanced through our 360-degree feedback process utilising the learnings from not only the candidates but also from our training Store Managers and senior business leaders. This allows our people to be trained with the knowledge and skills to sell effectively in today’s market place. December 2019 also saw the inaugural launch of our Senior Manager Development programme (“LEAD”) which focuses on developing our high performing middle managers aimed at preparing them for more senior roles within the business. This programme is built on the foundations of our Store Manager Development programme and includes Level 5 accreditation from the Institute of Leadership & Management upon successful completion. Our LEAD group delegates are already delivering performance-enhancing projects to our wider business and are fast heading towards their graduation day.

Our performance dashboard allows our store and field teams to focus on the key operating metrics of the business providing an appropriate level of management information to enable swift decision making. Reporting performance down to individual employee level enhances our competitive approach to team and individual performance. We continue to reward our people for their performance with bonuses of up to 50% of basic salary based on their achievements against individual targets for new lets, occupancy and ancillary sales. In addition, a Values and Behaviours framework is overlaid on individuals’ performance in order to assess team members’ performance and development needs on a quarterly basis.

February 2019 saw the launch of our “Make the Difference” forum when 15 of our colleagues were voted to be the “People Champions” and attend our people’s forum. This initiative allows our champions to be the representative voice for each of the twelve Regions and Head Office in order to influence change and drive improvement for “Our Business, Our Customers and Our Colleagues”.

People Champions:

• Consult and collect the views and suggestions of all colleagues that they represent.
• Engage in the bi-annual “Make the Difference Forum”, raising and representing the views of their colleagues.
• Consult with and discuss feedback with management and the leadership team at Safestore.

2021 saw our people’s forum representative positions up for election after they had successfully completed their 2-year tenure. After a strongly contested election, our 15 new members were elected and they are already delivering high quality contributions to our business.

Our Values and Behaviours framework concentrates our culture on our customers. Customers continue to be at the heart of everything we do, whether it be in store, online or in their communities. In 2021 we further improved our customer ratings when we were awarded the Feefo Platinum trusted service award. Later in the year, we became the only Self Storage provider in the UK to have a 5 star TrustPilot rating. Along with our strong Google ratings, these independent assessments further reflect our ongoing commitment to their satisfaction as the number one storage provider in the UK.
 
Central Revenue Management and Cost Control
 
We continue to pursue a balanced approach to revenue management. We aim to optimise revenue by improving the utilisation of the available space in our portfolio at carefully managed rates. Our central pricing team is responsible for the management of our dynamic pricing policy, the implementation of promotional offers and the identification of additional ancillary revenue opportunities. Whilst price lists are managed centrally and are adjusted on a real time basis, the store sales teams have, from time to time, the ability to offer a Lowest Price Guarantee in the event that a local competitor is offering a lower price. The reduction in the level of discount offered over the last five years is linked to store team variable incentives and is monitored closely by the central pricing team.

 Average rates are predominantly influenced by:

• the store location and catchment area;
• the volume of enquiries generated online;
• the store team's skills at converting these enquiries into new lets at the expected price; and
• the very granular pricing policy and the confidence provided by analytical capabilities and systems that smaller players might lack.

 We believe that Safestore has a very strong proposition in each of these areas.

Costs are managed centrally with a lean structure maintained at the Head Office. Enhancements to cost control are continually considered and the cost base is challenged on an ongoing basis.

ESG Strategy (Sustainable Self Storage)

Our purpose - to add stakeholder value by developing profitable and sustainable spaces that allow individuals, businesses and local communities to thrive – is supported by the ‘pillars’ of our sustainability strategy: our people, our customers, our community and our environment. In addition, the Group and its stakeholders recognise that its efforts are part of a broader movement and we have therefore aligned our objectives with the UN Sustainable Development Goals (“SDGs”). We reviewed the significance of each goal to our business and the importance of each goal to our stakeholders and assessed our ability to contribute to each goal. Following this materiality exercise, we have chosen to focus our efforts in the areas where we can have a meaningful impact. These are ‘Decent work and economic growth’ (goal 8), ‘Sustainable cities and communities’ (goal 11), ‘Responsible consumption and production’ (goal 12) and ‘Climate action’ (goal 13).

Sustainability is embedded into day-to-day responsibilities at Safestore and, accordingly, we have opted for a governance structure which reflects this. Two members of the Executive Management team co-chair a cross-functional sustainability group consisting of the functional leads responsible for each area of the business.

In 2018, The Group established medium term targets in each of the ‘pillars’ towards which the Group continued recent progress in FY2021.

Our people: Safestore was awarded the prestigious Investors in People (IIP) Platinum accreditation and was in the final top ten shortlist for Platinum Employer of the Year (250+) category in The Investors in People Awards 2021. The Group’s pandemic response in particular has had a profound impact on trust in leadership and colleague engagement and motivation. This year, more than ever, our people have truly made the difference.

Our customers: The Group’s brands continue to deliver a high quality experience, from online enquiry to move-in. This is reflected in customer satisfaction scores on independent review platforms (Trustpilot, Feefo, Google) of over 90% in each market. The introduction of digital contracts during the pandemic offer both customer convenience and a reduction in printing, saving an estimated 156,000 pieces of paper each month.

Our community: Safestore remains committed to being a responsible business by making a positive contribution within the local communities wherever our stores are based. We continue do this by developing brownfield sites and actively engaging with local communities when we establish a new store, identifying and implementing greener approaches in the way we build and operate our stores, helping charities and communities to make better use of limited space and, creating and sustaining local employment opportunities directly, and indirectly through the many small and medium-sized enterprises which use our space.  During the year, the space occupied by local charities in 226 units across 102 stores was 18,266 sq ft and worth £636,945.

Our environment: Safestore is committed to ensuring our buildings are constructed responsibly and their ongoing operation has a minimal impact on local communities and the environment. It should be noted that the self storage sector is not a significant consumer of energy when compared with other real estate subsectors. As a result, operational emissions intensity tends to be far lower. According to a recent report by KPMG & EPRA1, self storage generates the lowest greenhouse gas emissions intensity (5.75 kg/m² for scope 1 and 2) of all European real estate sub-sectors, with emissions per m² less than 30% of the European listed real estate average (19.5 kg/m²) and notably 21% of the emissions intensity of the residential sub-sector (27.0 kg/m²). Reflecting the considerable progress made on energy mix, efficiency measures and waste reduction to date, Safestore’s emissions intensity (3.9 kg/m² in 2020) is considerably lower (-32%) than the self storage subsector average. In FY2021, the Group continued to progress with a further 12% decline in absolute emissions despite continued portfolio growth and greater utilisation of stores compared to 2020. Safestore’s absolute (location-based) emissions are now 53% below, and emissions intensity 65% below the 2013 baseline level despite significant growth in portfolio floor space. Moving forward, the Group has a commitment to be operationally carbon neutral by 2035 with a medium term target to reduce operational emissions (market-based) by 50% compared to the level in FY2021 by 2025. The total investment to achieve carbon neutrality should be around £3 million.

In addition to the IIP award and the customer satisfaction ratings, the Group has received recognition for its sustainability progress and disclosures in FY2021. Safestore has been given a Silver rating in the 2021 EPRA Sustainability BPR awards. The Global ESG Benchmark for Real Assets (“GRESB”) has once again awarded Safestore an ”A” rating in its 2020 Public Disclosures assessment. MSCI has awarded Safestore its second-highest rating of “AA” for ESG in 2021. The Group has also been awarded the highest rating of five stars by Support the Goals, recognising Safestore as the third member of the FTSE 250 to achieve this level.


1 – MLA is Maximum Lettable Area. At 31 October 2021, Group MLA was 6.96 million sq ft (FY2020: 6.86 million sq ft).