How brands are responding to the Millennial & Gen Z rental rage _
3 motivations for Gen Z rejecting ownership & how brands are adapting to this cultural shift
Upon the first Millennials entering the consumer market, there has been an increased preference for rental. It is a preference which grew exponentially in popularity as more and more Millennials entered the market with this generation now making up a third of all UK consumers (Experian, Millennial Growth Report).
With this preference for rental gaining traction further still as Gen Z enters the consumer market and, too, expresses a preference for rental, brands are having to seriously think about their current business models and how they are going to have to position themselves to respond to this macrotrend.
MEET THE REGENIZENS
Interestingly, this shift in consumer attitudes is no longer just generational, but rather it is a movement which has become intergenerational with people of all ages starting to rethink and reframe their relationship with consumption.
3 Motivations for Gen Z Rejecting Ownership
MOTIVATION #1: WEALTH (OR LACK THEREOF)
ONE IN FIVE UK BABY BOOMERS IS A MILLIONAIRE – FINANCIAL TIMES
With each generation seemingly worse off than the last, for some Millennials ownership is simply not an option.
And whilst the Bank of America suggests that Gen Z will be the “most disruptive generation ever” predicting that their income will surpass that of Millennials by 2031, there is no evidence to suggest that wealth will return to the same levels enjoyed by Gen X, let alone Baby Boomers.
When we consider that 453,000 people are predicted to move from car ownership to car rental in 2021 (Smart Transport), and that the proportion of UK home renters has doubled in the last 20 years (Buy Association), it is clear that this preference for rental is no longer just a trend of the times but a cultural shift that has been occurring over several years in line with generational wealth.
By this logic, some brands are beginning to adapt to this up-and-coming rental culture by making their products, which are arguably imperative to modern living, available for consumers to rent. This is particularly true for homeware brands as consumers have increasingly expressed a desire to borrow rather than possess furniture, appliances, and accessories.
This is understandable when we consider that renters move to a new house every 4.1 years on average (LettingAgentToday) with each home clearly requiring different furniture and appliances depending on its shape and size, and what’s already included. Does the new accommodation have a built-in wardrobe rendering the standalone wardrobe causeless? Or maybe the shape of the new living room doesn’t allow for the corner sofa?
TARGETING GENERATION RENT
Targeting ‘Generation Rent’, John Lewis joined The Sharing Economy just last year by launching a Furniture Rental Service in collaboration with the world’s largest product rental marketplace, Fat Llama. From desks to sofas, consumers can rent furniture for a period of three, six or 12 months, with the option to buy the furniture outright if they so wish with any payments made up to that point contributing to payment for the product.
Similarly, Ikea has been testing the waters with kitchen and furniture rental via its subscription-based leasing programme allowing the Swedish giant to maintain ownership of its products and reuse them as many times as possible – proving mutually advantageous for the brand, the renter and the planet.
BRINGING APPLIANCE-SHARING TO HOME RENTERS
Also adapting to this ‘preference’ for rental over ownership is Tulu – a “smart platform that provides tenants with on-demand access to appliances, grocery staples, micro-mobility devices, and much more” via renting these household items out to urban tenants for temporary use.
RENT A CHRISTMAS
Following research suggesting that nearly half of UK Millennials were looking to rent something festive in December, Westfield London went as far as inviting shoppers to rent a range of Christmas products via their “very rental Christmas” pop-up. This pop-up concept which was curated by Laura Whitmore and a team of interior designers stocked everything from Christmas trees to Christmas jumpers from several highstreet brands, including Next, Marks and Spencer, H&M, Zara, and West Elm. What’s more, this click & collect Christmas rental pop-up donated all proceeds to Save the Children as part of the charity’s Christmas Jumper Day campaign.
THE RISE OF THE HOME ENTHUSIAST
For reasons not limited to saving money, younger generations are embracing DIY to create the ‘perfect’ home on a budget. This, paired with a preference to rent rather than to own high-value items has created a market for tool rental, to which brands are beginning to respond.
Targeting consumers trying their hand at DIY projects, Don för Person challenges the hardware store concept that we all know by inviting people to browse and reserve tools online and pick them up from their unbelievably Instagrammable Stockholm store.
MOTIVATION #2: EXPERIENCES OVER POSSESSIONS
ACCESS, NOT OWNERSHIP
Considering that 73% of Gen Z and Millennials value experiences over products (Savvy), it is not absurd to think that Gen Z and Millennials might prefer to spend more money on experiences than on possessions, making renting products a more financially viable option in some regards.
Taking this further, it could be argued that having temporary access to something via its rental, itself, constitutes an experience (whether it is something that a person can afford to own or not).
Granting limited access to high-value items through rental so that consumers can (afford to) experience the item and all that goes with it, if only for a short time, is a notion that many luxury brands have understood. What’s more, rental is a sure way for luxury brands to appeal not only to the most affluent members of our society, but to the masses.
Promoting luxury circularity, Breitling is set to launch #BREITLINGSELECT – a watch subscription service that invites subscribers to choose and enjoy three Breitling watches from a unique selection over a 12-month period, with the option to buy one of the watches at a discounted price, if they so choose. Alternatively, if it is luxury sneakers that you want to experience, then LSWOP is an online subscription company that rents top designer sneakers to its members for a flat-rate fee. A rental service for luxe sneakerheads, if you like.
If going on holiday isn’t experience enough, consumers with higher disposable incomes will be pleased to know that Rent the Runway and W Hotels joined forces to offer a Closet Concierge at selected hotels to further elevate the ‘get away’ experience. Through this exclusive partnership, W Hotel guests can browse Rent the Runway’s unlimited closet and have orders delivered directly to the wardrobe of their destination.
In the knowledge that in Britain, people throw away over 300,000 tonnes of reusable furniture every year, Harth is a brand that has created a rental service for eco-conscious luxurians so that they can experience several high-end interiors whilst contributing to a more circular economy. With a mission to “bring the circular economy to interiors and encourage a new system that delivers better outcomes for people and the environment”, the Harth marketplace makes it possible for people to rent nearly new, pre-loved and vintage pieces from trusted sources.
This brings us nicely onto our next motivation for Gen Z rejecting ownership and expressing a preference for rental….
MOTIVATION #3: RENTAL IS RESPONSIBLE
62% OF GEN Z SHOPPERS DEMAND SUSTAINABLE RETAIL (FIRST INSIGHT, INC.)
On top of this figure, it seems that young brits are embracing thriftier habits and opting for sustainability over fashion trends, especially where footwear and apparel is concerned. Whilst there are several avenues that a brand can take to become more responsible as far as reducing its impact on the planet, offering product rental is a sure way to prolong a product’s life (as well as the subsequent joy that it sparks!).
Like Harth, Ganni’s rental service, too, targets eco-conscious luxurians. The high-end fashion label launched a sustainable initiative last year – Ganni Repeat – which invites shoppers of luxury fashion to borrow clothes (from one to three weeks) to prolong the life of the clothes and promote fashion circularity.
But while rental services have for some time been a feature in the business models of many luxury fashion brands, it is only recently that we are seeing clothing rental move from high-end fashion to the highstreet.
FAST FASHION: A DYING MODEL
As more and more brands and retailers look to move away from their fast-fashion credentials in response to consumers growing increasingly concerned about the impact that these business models are having on the environment, we are beginning to witness some of these brands joining The Sharing Economy.
More recently, for example, H&M launched its ONE/SECOND/SUIT initiative which aimed to boost people’s job prospects with 24 hours free suit hire – so that you can “walk tall into your next job interview”. Inviting you to choose your jacket, trouser and shirt size, the process for booking a suit couldn’t be easier and everything is free of charge, including returning the suit to the retailer after its use. Whilst suit rental is currently free, we can’t help but wonder whether the affordable fashion brand might extend this rental model to a wider range of its garments going forward, but this time, at a cost.
Affordability is no longer the only motivator for choosing rental over ownership as consumers are increasingly favouring sustainability over price, and experiences over possessions.
Therefore, as consumer attitudes continue to change in this way, and as more and more Gen Zs enter the consumer market, we have no doubt that The Sharing Economy will continue to go from strength to strength.
As fast-fashion brands seek a solution to becoming more sustainable, we think that more than a few brands will adopt a rental model to respond to the cultural shift in consumerism that we are witnessing.
In fact, we might go as far as saying that a move to rental by just a handful of brands could transform the fast-fashion industry as we know it.
What’s your rental retail identity? Get in touch to discuss how we can help you to forge a disruptive identity for your brand’s contemporary rental services.