KSS October eKourier

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FEATURE

Not long ago, everything indicated that prices were going to sharpen and margins to tighten. A fiercer competition, greater pricing transparency, a stagnant demand, and the consolida- tion of the industry by the main players made us suspect that the golden years may have been – temporary – gone. RATES: WHAT TO EXPECT

T he Covid-19 crisis has resulted in the digitisation of every aspect of daily living. From remote work to online classes and contactless shopping, digital is the new normal. In the era of social- distancing and prolonged lockdowns, technology has played a particularly important role in the way businesses function, with traditional businesses being forced to have an online presence. Studies show that companies across the world have accelerated the digiti- sation of their front-end and back-end operations by almost four years, in just a matter of weeks. Further, the proportion of digitised products offered by these companies has accelerated by seven years. This pandemic-induced growth in digital adoption has been received well by consumers, with many trying different shopping behaviours. For instance, In Latin America 13.1 million consumers made their first online purchases. Consumer sentiment surveys reveal that the dependence on digital transac- tions and contactless services is likely to increase in the long haul given the convenience, efficiency and safety associated with e-commerce shopping. The exponential growth of digitisation in the marketplace must be leveraged by businesses to achieve increased traffic flow to websites and strong virtual presence. Digitisation also serves as an excellent source of vast amounts of behavioural data that must be utilised to identify target groups, offer personal- ised consumer experiences, and design appropriate marketing campaigns. DIGITAL ADOPTION IN THE AGE OF THE PANDEMIC With uncertainty around the next phase of the pandemic, businesses and marketers must continuously adapt and innovate digital marketing strategies to ensure they're prepared for the next new normal.

S urprisingly and fortunately, we were wrong. Since July 2020, after a brief dip in the market, due to initial Covid lockdowns, rates rebounded and consistently kept growing until now. An unexpected surge in demand, driven by local migration, telework, and changes in household formation, pushed our occupancy to historical levels and our rates +20% ahead of last year. Regional locations benefited from the growth, while metro sites consolidated their positions. M e d i u m - t e r m , borders will reopen, and greater mobility should boost demand. Interstate migration, international students, and ex-pat profes- sionals will resume and business activity will pick up Hence, the question remains: what should we expect moving forward? While prices have stabilised in the recent months, the following points may enlighten us. The competitive environment will most likely intensify. Top players will keep consolidating, while local, and even international investors will try to get a share of the pie. The good news is that self storage is still in a growing phase in our country, meaning there is a lot of room for additional capacity. Compared to the U.S, we only have a third of their square metres per person.

A greater inflation, due to an excess of cash in the economy, the govern- ment supports and lower interest rates could also encourage price growth. Additionally, GDP is expected to grow a generous 5.4% in 2021 (low base though) and 3.4% in 2022. In the short run, with the vaccina- tion progress and the ease of restric - tions, we may experience a similar lift to what we had in Q3 2020. Consumer confidence is still low but trending upwards and above the previous year. Medium-term, borders will reopen and greater mobility should boost demand. Interstate migration, international students and ex-pat professionals will resume and business activity will pick up. Unemployment rates are expected to drop next year (5% to 4%) and household income increase (~3%). Although, we may still encounter some of our customers experiencing financial hardship. And entering the historical high season should lift our game. It’s worth keeping in mind, that everyone is getting savvier pricing-wise. New Revenue Management systems are emerging and price visibility across companies is increasing. That could play out either way, keep growing prices while activity soars or spiral down if things get a bit tighter. It's a fine line. Alltogether, the balance looks positive. A revitalised demand (organic and circumstantial) should keep rates healthy. But as we know, anything could happen!

Source: rba.com.au

Deepa Chirayath Digital Marketing Coordinator

Javier Perez Revenue Manager

16 Kennards Kourier Oct 2021