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Full circular: The future of retail is shared via rental

The sharing economy is growing at warp speed, fuelled by a new generation of consumers demanding rental options on almost everything. Are you ready to be part of the change that moves retail forward?

Here's a picture. Uber to your Airtasker job, Avis to your Airbnb weekender, rental ski gear, delivery cocktails with friends, carshare back to your (rented) home for Deliveroo on your also rented couch. The sharing economy is all around us. And if you think about it—libraries, taxis, apartments, cars, co-working spaces, even the neighbour's kid mowing your lawn—we've been sharing products and services between peers and businesses since forever. And now, the rate of tech advancements in our 24/7, on-demand-everything, highly digitised world is allowing businesses to redefine the bounds of accessibility and convenience.

The sharing economy isn't going anywhere (except up).

Now picture this. By 2025, it's estimated 75% of the workforce will be Millennials, who increasingly want accessibility to experiences rather than the accumulation of material things. BCC Research is tipping the global sharing economy to reach an estimated $1.5 trillion by 2024 (up to $374 billion in 2019). That's an annual growth rate of more than 30% over the five year period. Efficiency is the currency of this emerging generation of consumers. They're after simple, flexible, short-term rental options—and the market is responding.

Instant, seamless, premium: the mantra of a new generation.

'Faster, better, cheaper' was once the credo of businesses everywhere. But as purchasing clout shifts from Baby Boomers and Gen-Xers to Millennials and Gen-Zers, so too there's a monumental shift in values that's changing the ways people shop.

More and more, consumers are sick of cheap goods that end up in landfill. Or mountains of expensive gear that doesn’t fit in their limited storage space or with their on-the-move lifestyle. Having rental options on premium gear means lower costs, reduced waste, and a bigger, better rack of stuff to choose from. Consumers get access to the experience they’re looking for without the burden of paying full purchase price on things they hardly ever use.

And it means that broken, unwanted or unused gear isn’t piling up in homes, in landfills – or in mum and dad’s garage.

Sharing by the numbers:

70% of Millennials and Gen-Zers are on board with the sharing economy.
94% of the US population have already tried rental vs. retail in some shape or form.
37% of Millennials live in smaller homes with less storage, and 70% of them prefer to fill their lives with memorable experiences rather than filling their homes with things.
57% of consumers are willing to change their purchasing habits to help reduce negative environmental impacts.
54% of Gen-Zers say they’re willing to spend an incremental 10% or more on sustainable products, with 50% of Millennials saying the same.
• ‘Recommerce’ – including resale, rental, and subscription – market share is forecast to double by 2024 to a whopping 14% of the apparel, footwear and accessories market.

New frontiers for products, services, retailers and brands.

As the sharing economy gathers steam, consumer demand is proving that rental needn’t be limited by product, service or category. In a survey of 1,500 shoppers, JLL found that more than half of consumers are willing to rent on-trend, well-made products, and around 20% are open to leasing clothes, jewellery and electronics. In response to a growing thirst for rental options on tools, tech, furniture, gaming, surf & snow gear, appliances, bikes, toys – you name it – innovative businesses are taking sharing into bold new territories.

As popular as it’s becoming, it’s unlikely sharing will spell the end of retail as we know it. In fact, a study from market researchers Lab42 revealed the most common reason for renting is to test items before purchase (57%). So, by offering rental alongside retail, businesses are opening their physical and digital doors to an ever-growing market. That’s more eyeballs on products and more opportunities to engage with new customers and grow their brands.

Sharing is caring for the environment.

The environment is another key consideration for Millennials. Because sharing products via rental generates more uses per item, it helps prevent overproduction and keep goods out of landfill. Consider clothing: around a third of all garments produced end in landfill within a year of production. The fashion sector alone was responsible for some 2.1 billion metric tons of greenhouse-gas emissions in 2018 – that’s about 4 per cent of the global total. So every item rented, resold, repaired, or refurbished plays a small role in addressing an enormous problem.

While environmental considerations alone might not be enough to tip the scales towards rental over purchase (yet), almost three-quarters of Millennials say they’re prepared to pay more for sustainable products. So, savvy businesses are already offering rental options to boost their green credentials. And by reducing waste generation through reduction, recycling and reuse, they’re even making contributions to initiatives like the United Nations Goal 12 for the planet. Good news stories they’re happy to share with their customers.

Sharing is caring for bottom lines, too. Rental inventories that pay for themselves.

Of course, business is business. So for retailers looking to add a rental business to their existing store, the numbers have to stack up – which they do. Here’s a basic example: sell something once, and retailers get their 40% cut. Rent it out again and again, and over the product’s lifetime, they can make up to 500% profit. So, rental inventories not only pay for themselves but also accumulate profit. And when it’s time to let an item go, online marketplaces offer thriving second-hand-buyer communities.

Get ready to share in retail’s future.