Millennials’ tendency to rent instead of buy is turning the retail industry upside down.
“Battered by student loan debt and the Great Recession, Millennials place less emphasis on owning and more on sharing, bartering and trading to access coveted goods,” Jilian Mincer of Reuter report.
“These behaviours have propelled businesses such as car rental service Zipcar, taxi service Uber and home rental site Airbnb.”.
And the trend is extending into clothing.
Apparel retailers are threatened by rental startups like Rent the Runway and Bag Borrow or Steal, Grace Ehlers writes on industry website The Robin Report.
Renting has also spread to the music and hospitality industries with companies like Spotify and Airbnb, Ehlers writes.
“Never mind buying a second home when you can rent a chateau in France on Airbnb for $US200. Why hire a chauffeur when they don’t come with an app that tracks their relative location to yours, like Uber?” she says. “Even owning the latest album of your favourite band feels a lot less appealing when you can stream it immediately on and offline with a Spotify pro membership, without taking up any space on your hard drive.”
Rent the Runway has even started an unlimited subscription service for accessories and handbags.
Ehlers says that traditional retailers have missed an opportunity to accommodate millennial tastes.
“Why do retail brands depend so heavily on dispersed outlet locations to unload this season’s collections when they could rent them?” she asks.
The younger generation is increasingly “looking for less expensive alternatives to ownership,” Doug Stephens, author of the blog Retail Prophet, writes.
Millennials, defined as 18- to 34-year-olds, are increasingly living in small, urban apartments rather than sprawling suburban houses. As a result, they don’t have room for as many goods.
On top of that, younger people have discriminating taste as a result of exposure to online reviews.
“Sharing is here to stay,” he writes.
Stephens writes that traditional retailers can adjust their businesses to acquiesce to this trend.
He cites outdoor clothing company Patagonia, which created an online marketplace where customers can resell the brand’s items.
Sales increased 16% after the move, which made customers feel like the clothes were a good value.