As Gen Y leans towards renting furniture, appliances, jewels...

What does the rise in the renting culture say about Gen Y's lifestyle?

Considering the fickle-mindedness of youth today and with the rise in disposable incomes, it wouldn't be out of place to say that they are uncertain of their next move. From switching jobs to changing curtains, it all depends on their current state of mind. One fine evening, they could be confident enough to give up their monotonous corporate life in Delhi and move to the city of dreams aspiring to be the next viral stand up comedian. On a lazy Sunday afternoon, the idea to redecorate their living space with new furniture and a larger television set for the upcoming soccer game is definitely not a big deal. And this unpredictability is a boon for the online rental market (furniture, appliances, house, jewellery, clothes, etc).

A report by the Economic Times that quotes data by consultancy EY sees the size of the India's sharing economy touching nearly $20 billion in five years. Another one published last month reveals the furniture business in India grew at a healthy rate during 2017- 2024, and this market is expected to increase by $800-850 million from its current size.

One might be a little short of options to choose from at any of the renting sites – Rentickle, Fabrento, Furlenco, GrabOnRent, RentoMojo, Eves24, Rentjewel - but one can get free installation and delivery along with annual cleaning, easy relocation, easy upgradation and sometimes even a free trial period.

While we agree that the concept of renting clothes and jewellery (especially during wedding seasons) in tier 3 cities and that of renting houses has been prevalent in society for long, we take note of renting furniture and appliances (clothes and jewels too) becoming the new norm in metros. While Gen Z may not favour renting and appears more inclined toward owning, the players in the category are targeting mainly the Gen Y. “New generation (millennials) are coming forward while their parents are still resistant,” clarifies Rahul Banka, founder and CEO, Eves24 – a jewellerry buying and renting service.

At Eves24, jewellery is available on usage basis - the usage fee is about three to four per cent of the value of the piece. One can rent it for a minimum of one day to a maximum seven days - under certain exceptions, it can go up to 12 days. In case of any damage, the cost of replacement (if any, of diamond / gold etc) and repair is charged to the client. We asked Banka about how the brand acquires these ornaments. “Ours is an asset light business model similar to OYO, wherein our store partners bring in their inventory for all the aforesaid services,” he explains.

Elaborating on the business model, Banka points out that heavy necklaces, say those worth Rs 10 lakh, are rarely worn, perhaps just a few times in its lifetime. “For them math, let’s say it is used once in three years. If, instead of buying this necklace set, this money was invested elsewhere, say in a bank fixed deposit, it would have earned about Rs 2.25 lakh as interest for three years. The usage fee on this necklace set charged by us would be about Rs 35,000 (including taxes). Thus, a client would have earned Rs 2.25 lakh interest and spent Rs 35,000 on usage fee, resulting in net earnings of Rs 1.9 lakh just by not buying the necklace set and still indulging in it. To add to this, the entire investment of Rs 10 lakh will be in liquid cash, viz, substantially depreciated value of investment when they buy a necklace set.”

Sidhant Lamba, founder, Fabrento – a furniture renting website, tells us that it has been hard to penetrate into the over 40s age category. “They are more fixed in their ideas and have collected plenty of home décor in their life.” He tells us the rental market is constantly growing in India and it currently stands at an estimated $800-$850 million. “Even a decade ago, renting furniture was a ‘never heard before’ concept for many consumers and they were sceptical about it. But with widespread awareness and first-hand experiences, they have also agreed that renting furniture has its major perks.”

At Fabrento, one can rent any furniture ( beds, wardrobes, sofa sets, dining sets, lamps, storage cabinets, refrigerators, TV units, coffee tables, kids’ furniture, art and accessories and more) for three to 12 months. The charges for the products change depending on the city, tenure and the kind of furniture the customer wants to rent. It has its own set of designers and its sister company has a state of the art manufacturing unit in Kala Amb, Himachal Pradesh.

He shares, “Today’s millennials shift homes multiple times across the country, within short periods of time, due to their careers and studies. Some customers need furniture for special occasions or for guests, for a short while. Start-ups, offices, and businesses prefer to rent furniture for their short term conferences, meetings and projects. Furniture renting also keeps the repair and maintenance headache away from our clients.”

He adds, “The prices are always too high and there is no or meagre resale value of used furniture. Then there is the problem of additional time, labour and money spent on moving bulky furniture from one city to another.”

What does this say about changing lifestyles? Samir Datar, head of strategy, Hakuhodo India, feels the days of living in one city for an entire life, are over. Hence the need to have a permanent home and therefore spending money on acquiring the so called assets is also over. So, a rented house with rented furniture and appliances is gradually becoming the norm.

Speaking of the category, he mentions that so far it has largely been addressing the basics in terms of what the rental companies offer and communicate. Perhaps it is the function of nascency and getting people used to the idea (a larger population doesn’t like the idea of renting), he says. “Moving forward, the category must communicate to the consumers seeking constant change. Or the ones who want the best without having to sell a kidney or an arm and a leg. Choice and ability to change anytime must be something that should drive the category communication. More than rental, perhaps subscription will drive the category."

He is of the opinion that like all other categories, this category too will move from basics to premium and from pre-defined packages to customised ones. This segmentation should also lead to differentiated communication, he believes.

Harsh Shah, senior vice president - account management, Dentsu Webchutney, feels Indians have swiftly moved from story-telling to ‘story-living’. “It’s an experience first lifestyle that India is leading. More and more Indians believe a renting model helps them to do a lot more with their money. Indians today believe that their money has many roles in their lives and buying things resulting into big fixed investments will lead them to miss out on something else that they could do. We are looking at an Indian who doesn’t want to miss out on things and wants to live the Instagram life,” he says.

He is of the opinion that sale or a communication strategy for brands in this segment needs to be focused towards the consumer. We asked him how can the brands in the category break the clutter? He responds saying, differentiation can come in three levels.

i. Product: The brands have to be in agile state all the time. Product will differentiate the brand more than ever. Make the process as easy as possible for a consumer. Keep reminding yourself the core requirement of the consumer that the brand is serving.

ii. Service: Considering we are talking to the consumer that puts convenience over permanency, service levels will play a big differentiating role for the brands in these category. The process and everything that comes post-renting, needs to be user friendly and easy to go through.

iii. Communication: This is the consumer who believes in experiences and is willing to experiment. Hence, the typical communication funnel might not work. Renting consumer durables brings independence and hence it is an easier decision to make. Communication strategy will have to take into consideration the impulsive nature of the consumer and hence be ready to cater to any and all touch points.”

About what will drive competition in the segment, he says, “Range and service offering will drive competition in this segment. This means identifying more and more needs and catering to those needs. And catering to those needs at the right moment will be marketing’s role. Marketing will have to identify potential touch points to beat the desire for purchase. Tricky part here would be that, while you are pushing the product in the consideration set, you need to ensure the consumer starts looking at renting as an option and not make a purchase. This will be a bigger challenge for lower ticket items. Remarketing will be a big factor driving competition. And competition doesn’t only include other renting services but also market places. One of the potential marketing hack would be to enable easy renting. Technology enablers such as voice and AI will make a break the clutter and give an edge to any brand.”

Aniruddha Khandekar, senior vice president planning, Leo Burnett, opines that renting has been the 'Shudra' code of urban Indian culture. Ownership has been the way of the Brahmins. Ownership symbolises core coding of the world that just went by yesterday. A world of responsible living and long-term commitments.

He says, “Ownership calls for sacrifice which is antipodean to modern-day value systems. It also triggers off commitment-phobia because it is seen as a threat to freedom and the transient priorities which symbolize the world of today. Ownership is routine. Renting is chaos and today, the world loves chaos. So why own when you can rent?”

About what should be the communication strategy for the brands in the segment, he feels brands have to be aware of how this opportunity works for them. There is no single formula which works across categories. Renting a home is different from renting a Mercedes which is different from renting an AC which in turn differs from renting jewellery

“It’s important to frame the opportunity correctly because its only then that businesses will be able to actually maximise opportunity. For e.g., when it comes to furniture, the narrative will change from 'renovation' to 'refreshing'. Imagine a world where people can change their furniture basis utility, moods and occasions! The mantra here is not just décor but also service. All you have to do is choose and the rest will all be done while you are away on an extended brunch on a Sunday afternoon,” he quips.

He goes on to add, “Brands which are able to string together an opportunity journey for consumers will have a lion’s share of the renting market. Think of it as cross-selling in the language of today. When I sell you one dream, I create an opportunity for another. How about I sell you that dream as well, and the next one, and the one after that? It’s not the business of renting but the business of opportunity aggregation!”