Earlier this year, IKEA announced they were dipping their toe into the rental market by testing a range of subscription-based leasing offers in all 30 of its markets in 2020.
The rental pilot was driven by a recognition that many of its customers change homes more frequently but can’t afford new furniture every time they move.
And the Swedish mega home brand are joining an ever-growing list of companies who are entering something called the “sharing economy.”
The sharing economy is a system in which products or services are shared between private individuals, usually for a fee. Think of the likes of Airbnb and Uber for example.
According to The Telegraph, the sharing economy is set to be worth £255 billion by 2025, up from just £12 billion five years ago.
And the driving force behind this boom in the renting economy is the 20- and 30-somethings, who face the prospect of renting property for the rest of their lives due to the current housing market.
Used to renting their housing, the idea has spread even further and now consumers are renting products and services in every aspect of their lives.
Freedom & flexibility
Handy, flexible and environmentally friendly, the renting economy affords consumers the freedom to use products and services at their own leisure; ending their subscription or sending back products when they’re done.
Spotify was one of the first major subscription services that made it successfully into the mainstream (last year just over 60% of British music revenue came through the app!), followed by Netflix (sorry Blockbusters, RIP) because they provided a convenient and cost-effective way for users to consume their content.
Rather than filling their homes with DVDs and CDs that take up valuable space and might not get used so frequently, consumers can access an unlimited catalogue of content for a fixed monthly fee – with the option to cancel at any time.
Speaking to the Telegraph, Roddy Clarke explains: “When you’re renting property and move house, you end up lugging around huge amounts of stuff. It’s pointless and becomes a burden.”
And in the short term, renting services can also work out cheaper than buying outright, a major draw to those with little disposable income after paying rent. (Millennials typically spend around 45% of their income on rent).
Sustainability has also been a big reason for the growth in the renting economy.
As a society, we’ve seen a dramatic rise in sustainable-focused ways of living. People are more conscious of what they eat, how they travel and the types of products they buy, and more importantly, how all these things impact the environment.
And the fashion industry is no different.
The Guardian reported that: “Consumers are beginning to wake up to the effect that cheap, throwaway fashion is having. A damning parliamentary committee report recently outlined the contribution of the fashion industry to climate change. The findings were stark: the textile industry creates 1.2bn tonnes of CO2 a year, and is responsible for the consumption of vast quantities of water, while 35% of the microplastics in the ocean come from synthetic fibres in abandoned clothing.”
With fast-fashion falling out of favour with many shoppers, there has been an increase in rental clothing companies offering people a sustainable way to shop. Even Urban Outfitters are getting with the programme.
Samantha Dover, senior retail analyst at research firm Mintel highlights the wide range of benefits that come with renting clothing: “Not only can renting clothes be a more environmentally friendly alternative to buying into fast-moving fashion trends, but consumers can also save space in their homes. Fashion rentals can fulfil temporary fashion, such as clothing for women during pregnancy, while some fashion rental companies are tapping into demand for more niche and everyday fashion products such as streetwear.”
Despite not being strictly “renting,” food subscription boxes such as HelloFresh have also gained popularity for their convenience and lack of waste produced because they give you the exact amount you need per dish.
The millennial way of living
There’s also been a bit of a culture shift. Owning things isn’t really seen as a status symbol anymore whilst documentaries such as Minimalism: A Documentary About the Important Things and de-clutter champions such as Marie Kondo, have opened people’s eyes to a different way of living.
Now, you can rent furniture, cars, music, TV, films, tools, handymen and even pets by the hour. It’s the savvy way to live. Because of that, there’s a real chance for companies to increase brand loyalty and engagement with their audience by providing them with eco-conscious and flexible & convenient products and services.
Consumer behaviour has always dictated how brands must operate to stay relevant and compete successfully so this isn’t anything new. But if brands are smart, they’ll capitalise on this.