Consumer behavior is changing – access is becoming more important than ownership.
More and more people are turning away from owning things and rather choose to have access to or, if put simply, rent them out.
In a recently published survey with 13,000 respondents from 12 countries, 74% of respondents replied that they think they will own fewer products in five years, and rather rent or subscribe to them as a service.
One of the main reasons for this mindset shift is that people are increasingly more aware of the negative impact of uncontrolled consumption on the environment. Also, growing in popularity is the economy of sharing that promotes reusing or leasing of goods.
As a result, more businesses around the world start offering rental services to their customers. From the rental of vehicles, tools and equipment, to the rental of seasonal clothes, sports gear and musical instruments.
Most industries are, or will be, affected by this strong mega-trend.
How do you keep up or stay ahead of this mega-trend?
Here are 5 ways your company can adapt and benefit from the Circular Economy, both helping save the planet and make a viable business.
1. Offer Rental or subscription service as part of your product.
If you are a retailer or a retail brand, adding a rental service comes with both beneficial revenue and synergies towards your existing business.
In the United States, new and innovative services are being launched to meet the needs of the consumers. You can be both sustainable, while at the same time covering the need for personal satisfaction.
Recently major brands like Nike, Banana Republic, Macy’s and Bloomingdale launched subscriber concepts for their products. According to the consultancy subscrybe this trend will continue emerging the upcoming years.
Nike’s shoe subscription offers not only access to the physical product, but experiences for the whole family through the Nike Adventure Club, which are reserved for subscribers.
Macy’s, on the other hand, offers a subscription to cosmetics for $15 per month.Move from transaction, volume and promotions to Relationship Providing products as services also entails a different mindset compared to the basic financial assessments.
Attention is shifted from margin of individual sales, to an emphasis on lifetime value of customers. You go from transaction to relationship.
There are several other factors that companies enjoy when they go from a transaction-based to a relationship-based economy:
- You get a long-lasting and financially valuable relationship with your customers.
- Good opportunities to learn more about the customer’s behaviour, which provides the basis for adapting products, prices and services.
- Utilization of the customer relationship and customer data for the development and sale of brand new products.
The change in the retail market is based on several factors; new e-commerce players with a good digital position, a generally increased focus on sustainability, younger generations’ struggle against global warming and new low-cost concepts that have established themselves successfully.
2. Combine your loyalty program with rental and subscription services
By combining your existing customer loyalty program with a new rental or subscription service, you create value to your customers, and at the same time use collect data for optimizing your service.
By using existing data to market your new service it also gives a low cost entry and a lot of useful feedback from your existing customers.
3. Launch totally new rental services
The shift from buying stuff to disownership opens up for a wide range of new services.
The term “disownership” refers to a paradigm shift from a traditional economy based on a chain of production, buying, spending and finally throwing away, to an economy basically based on the physical products around us being offered as services.
The Norwegian Company Tooler recently launched their tool rental service offering Tools delivered at your doorstep.
In a more and more urbanized society it is obvious that not all of us need tools and machinery such as big drilling machines and furniture vacuum cleaners.
Tooler designed and launched their service based on more than 100 interviews on the optimal customer journey.
Read more about Tooler and their Rental service.
4. Transform your niche inventory to an additional revenue stream
A central piece of the circular economy is sharing the same resources,being among consumers and products such as sports and tools, or among companies sharing tools and heavy machinery.
In Sharefox, we experience that some construction and machinery companies operating in inches with a lot of specialized tools and spearhead expertise now open up rental services.
Along with their ongoing projects and assignments, they exploit their inventory in specialized tools for others to rent and use. – often along with operating resources and personnel.
This is a smart way to utilize spare capacity and your inventory.