The idea of renting furniture is really beginning to catch on and is now also spreading to home appliances and equipment. This is an interesting new business model but for the moment the question remains: is it here to stay and does it really benefit the consumer?
Consumer habits are changing, leading quite often nowadays to the emergence of new business models. Following on from house, apartment and vehicle rentals, the rental business has now spread to household goods such as electrical appliances, DIY tools and even clothing. The need to balance household budgets, greater geographical mobility and new consumer habits are all reasons why many people prefer not to invest long term in equipment for the home. In France a startup called NeoSquat, founded last year, rents out furniture in Paris. Customers choose the length of time they wish to rent and can in the end buy the items if they so wish. The furniture or equipment is rented out successively to different customers, and NeoSquat undertakes to restore it to its original state between rentals. It may be a sofa but equally a refrigerator, as home appliance renting seems to be a promising business with numerous advantages.
The advantages of a tailored rental plan
In addition to saving on the cost of installation and any necessary repairs, renting a home appliance can enable the consumer to obtain a tailored service. Netherlands-based startup Bundles seems to have spotted a market niche here. Bundles specialises in high-value home equipment such as washing machines. The service it provides is similar to the laundromat approach but its business model consists of renting out a single machine, in partnership with a leading manufacturer – Miele in the case of washing machines. The company takes care of delivery, installation and maintenance, and also allows the customer to buy the machine. The rental plan is then tailored to the customer’s practical needs, with a subscription priced and adjusted according to the number of times a month the washing machine is actually used. So who benefits from this arrangement? While it is clear that the rental firm is able to buy in bulk from the manufacturer at a discounted price and then amortise the cost over the life of the machine, it is less clear how far the economics actually benefit the customer.
Competing with the second-hand market?
Renting household equipment in the short term makes most sense for people who are likely to move on fairly quickly and so might prefer not to buy the appliance outright and have to move it around. However, the actual cost saving may be less significant if you are able to re-sell the items when you move. It seems likely therefore that the rental business model will encroach to some extent on the second-hand market. In order to attract second-hand market fans and build market share, rental firms will need to sell the benefits of their offer, highlighting the advantages of renting brand new equipment and/or offering attractive conditions for customers who wish to purchase an item following a rental period. Quite apart from pure economics, however, some consumers will certainly be keen to save time and effort by renting and obtaining the luxury of a full service. So, budget customers so far have the option of buying second hand from the market giants such as eBay or Le Bon Coin, or renting from firms such as Meublicity and Lokéo in France and Rent King in Florida. For the moment at least, it appears that the two business models are able to co-exist.