Baptism of hire
The emergence of the furniture rental market, worth an estimated $742m in the US market alone last year, can be attributed as much to modern-day economic necessity as to shifting consumer attitudes.
The transient living arrangements of `Generation Rent' (the 40% of 25 to 34 year-olds who are not able to afford their own property) creates an increasing need for flexible home re-fitting. There are also those who prefer the convenience, flexibility and sustainability of renting furniture, over outright purchase.
The breadth of appeal of the furniture rental market is shown in the varied market positioning of the brands currently operating within it. There are three brands in particular we think are notable, each with its own very distinct proposition and target customer.
The most high-profile company to enter this market is Ikea, who announced earlier this month that they would begin furniture leasing in 30 core markets, with a primary focus on establishing a more sustainable model of homeware production and usage. The move comes as part of the wider company strategy to give all products `circular capabilities' by 2030, by which furniture items have some use beyond disposal.
Rather than focusing upon the environmental virtues of furniture leasing, New York start-up Mobley (one of its sofas is seen above) offers supreme flexibility and control to the end user. Residents of the city's five boroughs are able to select individual items or pre-curated `packages' to lease over a period of three to twelve months, after which the customer has complete freedom to choose between having the items taken away, renewing the lease at a discounted rate, exchanging for a new selection, or paying off the residual value and keeping the pieces.
Finally, with a more premium position in the market, London-based platform Harth acts as an intermediary for customers to track down individual pieces from private lenders, whilst offering personalisation to each customer in the form of `a bespoke styling and interior design service … with experienced and dedicated design consultants.' Harth takes a share of the monthly lease fee for each item rented through the platform, which features `one-off collectibles, stories pieces and vintage finds.'
Whilst these brands demonstrate very discrete propositions and target customers, they all present benefits to both suppliers and end users not available in an ownership-based model. For consumers, freedom from financial responsibility for depreciating assets and from the obligation to make long-term commitments on style preferences and living arrangements makes a compelling argument for homeware rental.
For suppliers, the opportunity to substitute a one-off transaction for an ongoing lease arrangement allows them to maintain a closer relationship to their customers over a longer period, fostering loyalty and facilitating the sale of auxiliary products and services. Customers are able to rent furniture collections they would not have been able to afford to buy and the prospect of a single piece serving multiple customer over its lifetime maximises supplier margin.
Rental furniture meets many of the key purchase criteria of furniture buyers in the future, with product ownership once again sidelined. The rental model is already well-established in the property, automobile and visual media markets, and likely to go beyond furniture into other retail categories.