Whether it be clothes, cars, furniture or gadgets, consumers are opening up to the idea of renting rather than buying them, says Sakshi Sharma
A stressed economy doesn’t mean that you have to compromise your lifestyle choices. You can still wear designer clothes, swank up your home and get a fancy car without buying them. Simply rent them. The millennial way of life is all about putting your money in the right places, with no strings attached. Or so it seems going by a recent report that says the global rental market is expected to reach $335 billion by 2025. Although the rental industry in India is highly fragmented, it comprises about 10 per cent of the global figure. That’s because it offers the convenience of living without the responsibility of maintaining or upgrading them.
Why is renting trending?
The urban millennial workforce switches between major cities frequently, says Ajith Mohan Karimpana, founder and CEO of Furlenco, a furniture renting brand. With every relocation to a new city, they need furniture and appliances. “However, they would incur a lot of expenditure if they buy new assets or even in transferring their furniture from one city to another. This is besides the damage done during the shifting process,” he says. The newly acquired furniture and appliances can also become a logistical issue each time one shifts. Rental options not only free you from the financial burdens of mounting debts but also let you indulge in mega experiences without guilt.
Sanchit Baweja, co-founder at Stage3, apparel renting brand, believes that India is embracing “sharing economy” across sectors with the emergence of platforms like Uber, Netflix and AirBnB. New-age consumers are turning towards shared services as a smart and convenient way to focus more on experiences. “Collaborative consumption has enabled people to differentiate between what they want and what they can afford. This enables people to experiment with fashion without having to worry about the commitments to a particular garment,” says he. Moreover, with sustainability being the talk of the town, there’s never been a better time or need to rent clothes. This promotes the idea of a conscious closet.
Greg Moran, CEO and founder of Zoomcar, car rental company, points out that India’s growing preference for rental options is a part of an overarching paradigm shift towards easy consumption and on-demand accessibility instead of ownership. He says, “Previously, owning assets was a beacon of one’s social status, however, users today have shunned such notions. From property to office spaces, furniture and more, the users today are more inclined to access such assets for a little while and then switch to something else. The shift in consumer behaviour also stems from the socio-political and economic forces at large.”
Greg agrees with Sanchit that the current state of economy along with rising aspirations are influencing Indian consumers to rent the best experiences possible within the given constraints. He adds, “When we consider the hassle of taking loans and EMI or the looming job insecurity of salaried professionals, renting seems to be a pragmatic alternative.” Another factor that we must consider is the that we live in a world of rapid advancements, with new models hitting the stores every few days. Renting, thus, gives users the liberty to sample different options instead of being stuck with one for long.
Sunil Gupta, MD and CEO, Avis India attributes this rising shift towards the changing consumer sentiments. They wish to enjoy the comfort and prestige attached to driving cars but are averse to using their savings to make a down payment for one or salaries for EMIs.
WHAT ARE THE Challenges?
For apparels, Sanchit says that the biggest challenge in the Indian market is the psychological barrier of “renting” an outfit. People usually don’t prefer clothes that have been worn by others even if they are drycleaned. This deep-seated perception against renting might take a lot of work to be dispelled.
“We have opened stores that allow customers to touch, feel and rent. This is rapidly changing mindsets especially among the young. They are open to rentals given that occasion wear has high social obsolescence,” says he.
Furniture renting has challenges which are specific to it. For instance, Ajith says, “Fundraising is tough in this sector since this business is asset heavy. Besides, when we compare the industry to China or the US, it is still in a nascent stage. There is a need to infuse confidence in stakeholders, which is a bit tricky since the market is still evolving.”
While the vehicle market has to deal with the concern around the safety of passengers. Sunil says, “To combat this, all our vehicles are comprehensively insured and come fitted with GPS devices. This enables us to track our cars at all times. They are fitted with a speed governor which tracks the speed at which the car is being driven and alerts the driver in case he is overstepping the speed limit.”
MILLENNIALS RULE IT
It is quite obvious that these options are usually preferred by millennials because of its ease, financial constraints and commitment issues. Sanchit says, “With social media playing a pivotal role in today’s world, our platform appeals primarily to millennials. They are aware of the latest trends.” Also, the youth always wants to be seen in new, trendy outfits and don’t like to repeat them, especially if they post a picture on the social media while wearing them — all thanks to celebs. Rentals, thus, save money, time, storage and maintenance headache.
Same is the case with cars. Greg says that youngsters have shown a higher proclivity for such services. However, Sunil points out that car rental bookings are not restricted to consumers of a particular age group. “For instance, customers between 40 and 50 years comprise the strongest user base for our chauffeur driven and luxury rental categories. On the other hand, millennial customers between 25 and 40 years go for our self drive service.”
Furlenco’s target audience, too, are millennials. Ajith says, “India has one of the largest population of youngsters and they are now entering their prime spending age. There has been economic growth and we will further see the earnings and lifestyle aspirations of this generation rise and look forward to new experiments and global lifestyles. Over 85 per cent of our subscribers belong to the millennial category.”
Buy OR RENT?
Though renting is a good option but in certain instances, like beds and tables, renting the asset might cost more than the actual price of the product in the long run. A customer, Sonal Singh, who has taken a bed on rent feels that she should have bought it instead. “It has been a year since I have rented a bed for which I pay Rs 1000 per month. Now after paying Rs 12,000, I feel I could have easily bought one.”
We need to understand that modern consumers have very different preferences from their preceding generations, basically they value fulfilling experiences over material possessions. The very fundamentals that our society works around is now based on the concept of shared mobility or collaborative consumption, marking the advent of the age of accessibility. Increasingly, the economy is being shaped by the idea that we don’t really need to own things to be able to use them. Millennials swear by this as this concept fits perfectly into how they live their life — no frills attached, being able to move around freely, and not hoard things everywhere they go.