When I was in my teens and twenties vintage was the way to go. It was affordable, unique and provided a great story behind treasured finds in my native home Toronto’s Kensington market. And while upcycling and recycling are still in fashion (think high-end resale sites such as 1stdibs.com or one of my favorites, Lara Spencer’s Flea Market Flip on HGTV, today’s Gen Y and Gen Z are trading in ownership for “NOwnership.” Why buy it when your friend, next-door neighbor (or a stranger on the other side of town) has it already and might not be using it that day?
It’s a simple idea:
I own an item that I may only use 10 times a year, so I’m going to ‘rent’ this item out for a small fee. I win by making some extra money. The renter wins by paying only a fraction of the amount to borrow the item.
It’s not a new idea. In fact, it’s a very, very old idea – one that was a necessity before we had an established currency economy.
The new idea is the items that are being ‘rented’:
• 500 square feet in an apartment that someone is currently living in – AirBnB
• The car that is sitting in a driveway – RelayRides
• An extra room in a house not for tourists, but for their pets – DogVacay
• A drill that only gets used on weekends – SnapGoods
• A dress for a night out – StyleLend
Everyday items that vary widely in value and accessibility are being traded, rented, swapped and barrowed online every second by Generations Y and Z who have no interest in owning things when they can simply borrow them.
These groups of consumers have grown up with streaming video, free music downloads and unlimited access to information. So why would they buy a car, a house or a hammer when they can borrow one by the minute?
The Economic Impacts
This idea of the share economy has shifted from an interesting trend to a very real economy that across America is estimated to be worth $3.5 billion this year according to Forbes, and according to the e-book, The Rise of the Share Economy, worldwide, it is worth an estimated $110 billion.
What’s more is that sites and apps are popping up every day to help facilitate this new form of commerce. As we’ve seen in the past with many new trends in shopping some will come and go quickly, but other, more established brands – and make no mistake, with accommodations available in 192 countries and 34,000 cities, AirBnB is a brand – are making their mark on the industry.
How Some Brands are Responding
• The Home Depot as had a tool-renting service for years.
• GM has invested in a peer-to-peer technology to match people with cars
• H&M has recently launched a used-clothing collection program
• The GAP have launched denim trade-in days
• Avis Budget Group has purchased ZipCar for $500 million
It’s a Symbiotic Relationship
Someone has to the buy the item in order for the other person to borrow it. So when recent polls like the one in The Huffington Post come out to reveal that the average woman has $550 of unworn clothing in her closet, it’s no surprise where this excess of items is coming from. If Generations Y and Z are ready to borrow, it’s because Generations X and their Boomer predecessors were only too willing to buy it.
What Retailers and Brands can Do
• Think of a new lifecycle for your products. Especially if your brand makes what shopper refer to as ‘disposable’ fashion, furniture or accessories.
• More users means more chances to influence people by your brand. What can you build into your products that will rub-off on the ‘borrower’ to make them a believer and eventual owner?
• Your product no longer has one owner. With multiple homes, build in the quality to allow it to stand the rent-test.
• Facilitate the peer-to-peer trading of your products. Much of the success of these start-ups is that they have no inventory to manage; they simply manage the transaction.
• Look at this new economy as a one big sampling event and make sure that the brand experience for the borrower is equal to that of the owner.
• Set up a forum for these new customers to share their brief experiences with your brand with you. What can you learn that you can incorporate into new product launches? Are there alternative uses for your product that the market is talking about? What was their barrier to purchasing?