The Rise of the Renting Economy

Trend-Monitor-The Rise-of-the-renting-economy

News this week that appliance giant AO World has begun a trial of an appliance rental service in the UK came as no surprise. The retail landscape is changing and, if consumer behaviour is anything to go by, ownership is increasingly overrated.

The changing consumer mindset regarding ownership is set to disrupt the appliance retail landscape as renting rather than owning encourages appliance rental services #generationrent Click To Tweet

AO has partnered with housing associations in England and Scotland and is proposing renting out white goods for as little as £2 per week, with that sum set to include insurance, repairs and the recycling of any old appliances.

After five years, customers will be able to replace an appliance with a new one, and have the old one sent for refurbishment or recycling.

This is not an entirely new concept. In 2014 Marcel Peters set up Dutch appliance rental service, Bundles, in partnership with Miele. Bundles offers the consumer the chance to subscribe to use high-quality washing machines, tumble dryers and dishwashers in an arrangement that can be cancelled at any moment, unlike a contract with a mobile phone company.

Subscribers can either pay a fixed monthly fee or a usage fee, depending on which works out best for them when it comes to how much the they use the appliance. It is also possible to order detergent, energy and dishwasher tablets.

An added bonus of this business model is its sustainability. Miele products have been deliberately chosen because of their high quality (as opposed to cheaper throwaway models), as well as the fact that they are made from sustainable materials, are efficient to use, and can also be reused.

Bundles connects the appliances to the internet to offer personalised tips on how to use the appliance more efficiently, which increases the lifetime of the product, and it will also replace or repair the appliance if necessary, and reuse the materials in it if it proves impossible to repair.

Consumer and behavioural futurist Will Higham believes that the Generation Rent mindset is significant.

“The sense of the importance of ownership itself is starting to ease away. This is a generation that grew up with constantly upgrading their mobile phone, and now you can rent things, download things, subscribe to them – I can access a car but I don’t need to own one.”

Will Higham, Behavioural Futurist

There is plenty here for clued-up manufacturers and retailers to mull over. Ikea is focusing on staying nimble in the face of this developing trend, and trialling strategies such as renting out office furniture, with a view to potentially renting out kitchens in the future.

BMW Group has formed a partnership with vehicle subscription service Drover to offer all-inclusive monthly payments on a selection of its cars.

The rental or subscription business model offers consumers access to the latest and best products without the associated headaches of ownership. But in return, it also enables brands to have access to a demographic that would otherwise not necessarily purchase one of their products. After having tried and tested them, who knows how this might influence their purchasing behaviour in the future?

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