With more Gen Z and millennials becoming part of consumerism, the industry is transitioning towards rental or shared economy. These consumers essentially are students and young working professionals who are woke, see consumption as access and not possession, and are a lot open-minded to choose attractive, fast changing and pocket-friendly options. In the last decade, a lot of renting start-ups have emerged in multiple consumer categories, such as furniture, appliances, transportation, books, designer wear, adventure gear and many such. Thereby giving consumers a plethora of options to choose from, at a fraction of cost and based on usage.
Having said that, renting is not a new concept. Traditionally, it has always been there in fragments. However, some of the trends have led to this concept grow leaps and bounds. And as more big companies entered into the space coupled with rapidly changing consumer lifestyle, this has now taken centre stage across the world. Global online market for clothing rentals alone is expected to grow at a CAGR of 11 percent over the next 10 years.
What is driving the rental economy?
High affinity towards luxurious lifestyle and quirky products. Gone are the days when consumers looked at the product durability for 20 years, they are now much open to experimentation and fast fashion in every aspect. The need for convenience and latest trends has resulted in multiple rental and subscription models across multiple industries.
Fast career switches, increasing city migration and uncertainty for consumers leading to lower return on owning assets. With 40% of the young working professionals being migrant, they are more likely to rent assets than own. Drivezy, Zoomcar, Hype are some well-funded start-ups who have benefitted from this trend.
With the growing concept of conscious consumerism, companies are now focusing a lot on sustainable business models. Renting paves, the perfect path to environment friendliness by increasing the product shelf life and reducing the manufacturing requirements thereby leading to lesser products ending in landfills.
Social networks like Instagram play a big role in renting economy, users are now averse to being seen in the same couture again. Luxury goods being status symbols are making more and more consumers get temporary access to these products.
Misconceptions about renting
Renting is not always cheaper. If you are renting out the same product for a longer period of time, owning the asset might make financially more sense. The higher the product price, the longer the period of ownership will play a role. Eg: a whole year of renting out an appliance might be costlier than purchasing it.
Old, low quality, non-selling products are available for renting. No, infact, it’s the opposite. To increase the life cycle of a rental product to make it more financial sense for the company, they often invest for high quality, latest trends. Which means the consumer gets a win-win by accessing latest trends at a fraction of cost rather than engage in throwaway culture of cheap products.
All in all, rental economy is gaining widespread traction and is no longer a stigma for the society. It is here to stay and grow to build long term value for both consumers and enterprises.