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Exploring the Potential of the Rental Economy

Sharefox - rental software / Blog / Exploring the Potential of the Rental Economy

By Fred Kihle, CGO Sharefox.

– Circular economy principles can help retailers face the recession

The reduction in disposable income and the mixed feelings of pessimism and uncertainty among consumers have affected businesses as well. Companies have experienced increased costs, which they often pass on to consumers. Retailers report a decline in sales of durable goods and economic slowdown. However, is this also an opportunity? Will consumers, whether they are individuals or businesses, turn to a model that offers low upfront costs and flexibility? Especially among younger generations the conscious consumption and sustainable purchasing trend is clear.

On the other hand we see companies transitioning into circular business models and constantly lowering their carbon footprint. According to a McKinsey study, the Circular Economy represents a potential for new value creation at NOK 46 billion just in Norway  (Source: Switch). McKinsey points to the circular economy as one of the ten most important future industries. We see new rental and subscription models to be a significant part of this,- allowing retailers and retail brands to innovate and transform towards new business models. 

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“A recession can be a challenging time for retailers and retail brands, (producers), it can also present an opportunity to launch rental services and make better use of existing inventory. 

Contents

Rental as alternative model for inventory utilization

The times of an economic slowdown or recession can be a difficult time for retailers, as consumer spending tends to decrease during economic downturns. However, for retailers with large stocks or inventories, a recession can also present an opportunity to launch rental services.

Rental services allow consumers to borrow items for a set period of time, rather than purchasing them outright. This can be particularly appealing during a recession, as many consumers may be looking for ways to save money while still being able to access the products they need or want.

Retailers can offer rental services for a wide variety of products. This can help to generate additional revenue and make better use of existing inventory, which may be difficult to sell during a recession.

Additionally, rental services can also help to attract new customers, as well as a loyalty aspect among existing ones. This can be especially important during a recession, when many retailers may be struggling to keep their doors open. A rental service may therefore complement other initiatives and current business with extra sales of consumption articles, rent with option to buy, or rent with selling out the inventory stock at end of season, with a combined revenue per unit that is higher than traditional sales.

Get going – learn along the way

  1. Develop a plan for the service, including what products will be offered and at what price points.
  2. Research the market to see what other rental services are available and what sets yours apart.
  3. Create a GoToMarket plan to promote the service to potential customers. While you should think big, identifying  pilot areas for fast learning is very important.
  4. Establish a rental specific system for bookings, availability control, payments,  tracking inventory and managing rental orders.
  5. Efficient operation is crucial and the rental software is a key element in this to save time per order. Also plan operations in general and train staff on how to handle rental order and customer service for rental service.

 

 

 

 

 

“Circular economy can add $4.5 Trillion in additional economic output by 2030 according to Goldman Sachs (2022)

A $4.5 Trillion opportunity

Parkdressen

Circular economy can add $4.5 Trillion in additional economic output by 2030 according to Goldman Sachs (2022). While a recession can be a challenging time for retailers and retail brands, (producers), it can also present an opportunity to launch rental services and make better use of existing inventory.

In Sharefox, we are now seeing this development accelerate. Take rental initiatives like Outdoor sports equipment from FENIX outdoor and their brand Partioaiotta (Fjällräven in Finland), rental of garden tools by retailers such as Felleskjøpet, and subscription models for e-bikes and childrens parkas, e.g. Parkdressen from Norway. 

By developing a solid plan, researching the market, and promoting the service effectively, retailers and retail Brands can attract new customers and generate additional revenue. Maybe this can be a catalyst for change and investment in sustainable solutions for both governments and businesses. How does this fit your transition towards a circular economy and sustaining viable business models? 

Partioaitta

 

Fred Kihle
Fred Kihle, Chief of Growth, Sharefox

What are you going to do now?

When you are ready… Here are 4 ways we can help you expand your rental business! 
  1. Do you want to grow your business today? Try Sharefox rental system for free – or book a demo and get a personal expert to analyze your company’s situation, come up with solutions on how you can streamline your methods and create a more profitable company.
  2. To learn more about the Sharefox rental system, read about trends and news for free, visit our blog or visit our resources section in the main menu. Here you can download guides and e-books that we also share with our customers.
  3. If you want to work with the circular economy and Saas and want to be part of the Sharefox team or find out why we are one of the fastest growing rental platforms in the rental industry, see our job postings here.

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