“Though beauty gives you a weird sense of entitlement, it’s rather frightening and threatening to have others ascribe such importance to something you know you’re just renting for a while.”— Candice Bergen
“I am in a fabulously lucky position in that I get to wear beautiful, beautiful gowns for functions, which I can then give back. That way, they’re not sitting in my wardrobe with me looking at them and feeling guilty. I love that, and I think when people have a fabulous function to go to, I’d recommend renting.”— Helen Mirren
“In the land of ideas, you are always renting.”— Steven Soderbergh
“Republics decline into democracies and democracies degenerate into despotism.”— Aristotle
The “rental economy” seems to have become a fairly popular topic lately. At least in the stuff I read. Rent rather than buy – almost everything. Um…
Not really. Turns out that we have been “renting” a wide variety of “uses” roughly forever. More on this below. Looking behind the curtain, however, points to a couple of areas – one good, and one possibly not-so-good – where renting is being pursued especially vigorously:
1. Productizing the use of formerly purchased products or systems. An example is cloud computing to replace owned servers and related systems.
2. Making ownership of many things far more expensive than in past. Gasoline prices are making electric vehicles relatively more affordable (at least until fuel price increases show up in electricity costs).
While the first area seems potentially valuable, it is the second area that raises my concerns. Klaus Schwab’s powerful and now global World Economic Forum (WEF) has been promoting the idea that, by 2030, “you’ll own nothing and you’ll be happy”. This sounds to me like being far too pushy and intrusive on personal preferences and habits. In case you haven’t heard this story, here is a brief summary:
You’ll Own Nothing and You’ll Be Happy
“You’ll Own Nothing and Be Happy (originally You’ll Own Nothing and You’ll Be Happy) is a catchphrase originating from a 2016 essay by Danish MP Ida Auken which was included in the video ‘8 Predictions for the World in 2030’ by the World Economic Forum. While the prediction was originally explained as “all products will become services,” it has since been increasingly regarded as a harbinger of dystopian times when the human right to property would be abolished for the benefit of the few. Online, the catchphrase and image macros based on it have been used to comment on sociopolitical and economic issues and developments. … As of 2022, the essay is no longer available on the World Economic Forum’s website.”
“I don’t own anything. I don’t own a car. I don’t own a house. I don’t own any appliances or any clothes,” writes Danish MP Ida Auken. Shopping is a distant memory in the city of 2030, whose inhabitants have cracked clean energy and borrow what they need on demand. It sounds utopian, until she mentions that her every move is tracked and outside the city live swathes of discontents, the ultimate vision of a society split in two.”
Renting the use of costly things has been going on forever
Ancient Romans wanting to travel from Rome to Carthage did not seek to buy a ship and galley slaves but simply “rented” a seat on the next available sailing.
American stagecoaches began service in New England in 1744, but were recorded in England as early as the 13th century. You could travel 60 to 70 miles a day and enjoy physical discomfort, lack of sleep, bad food, and nasty weather. All for just 10 cents a mile, per rented seat.
Steamships crossed virtually every body of water beginning in the early 1800s, with fares for berths (rentals in effect) being far less than buying a steamship and crew (and much other vital infrastructure).
Travel, lodging, meals while traveling, guides, and so much else have been “rented” almost forever. No user wants to own these businesses but simply to rent their use when and for as long as needed.
So, the rental economy has been around since there were things available to rent rather than buy. In this case, what exactly is new about renting today?
Separating use from ownership
Being able to use something without owning it has been an option in so many instances, but what if anything has changed in recent years? This seems to be related to product design in which very costly products or systems are being designed specifically to be sold only as uses (aka rented).
My favorite example is “cloud computing” that, as you of course know, has nothing to do with clouds. It is in fact server-based computing services that are accessed over the internet or private line equivalent. Servers are still fastened to the ground, not to clouds, but are located all over the place. These very costly systems are sold on the basis of usage: storage, server power, data transfer rates, and similar nasty tech stuff. And paid for monthly, just like renting.
This growing business model brings up the idea of looking at almost any kind of system or product as something you use, plus something you own. Separately. And maybe without ownership being sold at all, just usage (renting).
This seems to me both like the real rental economy and evidence of a trend toward separation of use and ownership in product and system design. That’s good yes?
A quick look at the rent vs. own landscape
Klaus Schwab and his helpers may well want us to own-nothing-and-be-happy but the world doesn’t seem to work quite that way. There is a reason for this of course, but first, the existing rent vs. own reality looks something like this:
1. Many things that you can’t rent, and don’t want to rent
A replacement knee is something you have to buy. It is costly but mostly covered by insurance (which you pay for each month even if you don’t need a new knee – yet).
A professional education or skill training is something that you can only buy and own even if you end up paying for it over an extended period (slightly less than forever). Typically very costly, so your purchase payment has to be spread over time through various kinds of borrowings and other financing stuff.
Paying for something via a financing arrangement is of course not renting. You do own your new knee and probably will be reluctant to give it back. Same with education or training, which is yours forever despite an inconvenient need for routine, costly, refreshing.
Renting something means that the something remains owned by someone else, not you. You only get to use the rented something for the period that you pay rent.
Renting is possible only if you can discontinue the use of whatever it is that you rent, meaning that the owner at some point gets the something returned and your rent payments stop.
2. Many things you have to rent because they cost too much to buy
Server farms are too costly for most of us to buy but they sure do have a great variety of subscription (renting) options. This part of the rental economy is just wonderful for us folks who need affordable access to powerful servers and related applications.
3. Many things you want to rent because your need is occasional
If you are among the growing numbers of folks who value locational freedom (aka moving frequently), being able to rent larger items can greatly lighten the moving process burdens and costs.
And then there are roughly a gazillion tools and similar items that nearly all of us rent routinely but prefer not to buy. Home Depot. Taylor Rental. Big list.
We still rent airline seats, cars, hotels, and similar costly items almost always in preference to buying them (Elon Musk and kin excepted). An occasional need but too costly to buy. This part of the rental economy has been with us forever. Nothing new here.
4. Things that you can afford to buy, but can be rented as an option
This category in practice contains a huge number of items, and it is growing steadily as consumers become more comfortable with renting vs. buying. More retailers are developing rental plans that take much of the renting hassle away.
An example is Uber, Lyft, and kin who provide highly convenient versions of what used to be hackneys or taxicabs. Personal transportation is managed by phone apps that are specifically designed to be fast, easy, and flexible. And often more affordable than car ownership, especially in cities where parking is expensive and/or a major hassle. You can buy a car, bike, or e-scooter but Uber works so much better.
Although I presently own a car, I live in a city that has all manner of transportation options. Could I get along without the car and its fast-increasing cost of fuel? Absolutely, even with the loss of flexibility and convenience of an owned car.
Pretty clearly, the rental (non-owning) option for a great many things has been with us since the things were invented. The rental economy, broadly conceived, is not new but what is new is the growing number of formerly buy-and-own-only things.
This is great for consumers and possibly a great opportunity for producers.
Retailers and producers are testing and adding rental options
Offering a rental option has been tested by quite a number of retailers, such as IKEA. Elisabetta Severoni writing for digital transformation services provider Doxee describes the IKEA approach:
“Rental and furniture: the IKEA experiment. In 2019, Ikea began renting furniture as part of a broader effort to build an environmentally friendly business, testing rental within its green and social responsibility initiatives. “
“Starting with office furniture such as desks and chairs for corporate customers, IKEA also plans to rent entire kitchens. This strategy, which we could refer to as ‘leasing,’ is part of an organic effort to promote services capable of extending the life of a product, with a view to designing and selling goods that can be repaired, reused, recycled, or resold. An innovative ‘circular model,’ in the words of Torbjorn Lööf, CEO of Inter Ikea.”
Joan Verdon writing in the U.S. Chamber of Commerce site CO— lays out the rental growth story: “The Rental Economy Takes Flight”:
“Rentals are the hottest trend in retail, with traditional brands and startups offering consumers short-term, commitment-free use of goods without the headaches, cost or ownership.”
“There’s a growing population of consumers who are willing to pay good money for the privilege of not having to own something. For them, short-term access to clothes, furniture, sneakers, sports equipment, camping gear, jewelry and housewares, is preferable to owning, storing, moving, and eventually having to dispose of purchases.”
“Online rental brands like Fernish, Feather, Everset, Rent the Runway, Haverdash, Le Tote, Gwynnie Bee and Joymode — offering goods from clothing and furniture to party supplies and experiences — promise to remove the burden of ownership and, for a monthly membership or subscription fee, supply renters with a rotating assortment of goods. Mainstream brick-and-mortar retailers, including Macy’s, Crate & Barrel, West Elm and Ann Taylor are also jumping on the trend.”
“The shift toward the sharing economy, evidenced by the rise of Uber to Airbnb, now has startup entrepreneurs and traditional retailers looking at rentals as a new source of revenue. Rentals of consumer goods generated $60 billion in revenue in the United States last year, excluding vehicle and home rentals, according to retail analytics firm GlobalData.”
“Bloomingdale’s, Banana Republic and Urban Outfitters have announced rental programs within the past four months, and Macy’s, the nation’s largest department store chain, is preparing to offer one.”
Innovation in renting even during COVID times
Wired in 2020 addressed the impact of the COVID pandemic on renting: “The Pandemic Is Transforming the Rental Economy”:
“Prominent clothing service Rent the Runway laid off retail staff via Zoom, while short-term rental giant Airbnb cut nearly 25 percent of its workforce. The rental car industry was hit especially hard, with more than 2,000 employees losing their positions at Enterprise. Hertz filed for bankruptcy in May.”
“’I thought we were dead,’ says Manny Bamfo, the CEO of room-rental startup Globe. During the early days of the Covid-19 pandemic, Globe—a sharing economy platform for people to rent rooms from one another for a few hours at a time—faced a daunting existential crisis. Its original concept hinged on the idea that travelers or on-the-go professionals looking for a pit stop would find renting a room from a stranger appealing, and vice versa.”
“Despite this, Bamfo claims Globe is thriving. ‘Business has been very, very, very good,’ he adds. Instead of frequent fliers, Globe is now courting newly remote workers who want a respite from quarantined life, who are searching for a quiet place to make a phone call or take a break from homeschooling their children. ‘People have to find privacy,’ Bamfo says.”
What kinds of things do people today rent?
Katie Jones of Visual Capitalist, writing for the WEF, looked at millennials as a major driver of the rental economy: “This is how millennials are fueling the rental economy”:
“It’s long been said that millennials have the power to disrupt and reshape entire industries. Most recently, this effect has been seen in the retail landscape, where millennial spending habits are setting the tone for the market’s future. Not only does the millennial generation demand the convenience of making instant purchases—but they can now rent almost anything they want, anytime, and anywhere.”
“The end of ownership? Despite the common misconception that millennials are driven by emotional needs, the reasons behind why they rent consumer goods are much more pragmatic:
> Test things before purchasing: 57%
> Need a temporary solution: 55%
> Need an item or a service for a short time-frame: 52%
> Less expensive than buying: 43%
> More convenient than buying: 42%
Further, only 6% said that they rent because they do not like owning things. This tells us that the rental economy does not indicate the end of ownership, but rather, provides a strategy for consumers to try before they buy.”
Non-ownership gets more complicated with “sharing” and “circular” versions
Digital transformation services provider Doxee looks at the rental economy as part of the larger sharing economy: “From furniture to fashion: is Rental the new frontier of the sharing economy?”:
“Secrets of success for the rental economy. In 2011, among the most influential trends that were changing business models and consumer behavior at that time, Mintel included different forms of ‘rental.’ Consumers had begun to evaluate whether it was worth taking the risk of buying something – assuming all the responsibilities of ownership, accepting possible maintenance activities, and the commitment of an often considerable financial investment versus the alternative of renting the same product or service. In general, there are different reasons behind the choice to rent, which are determined by the social and economic context, value system, and the concerns and preferences of different audiences.”
Doxee further extends this vision to include a “circular rental economy”: “From product to service: rental and the circular economy”:
“The circular economy is a systemic approach to economic development designed with the primary purpose of safeguarding the environment, creating wealth for society, and providing sustainable growth opportunities for business. In contrast to the linear ‘extract-transform-consume-waste’ model, a circular economy is designed to be self-regenerating and is aimed at gradually separating growth from consumption of finite resources. “
“As we shall see, a circular rental economy, i.e. one that favors a particular form of the so-called sharing economy, focuses on another, no less crucial step, one that shifts the perspective of companies and institutions from product to service. This is a real paradigm shift that has undergone considerable acceleration following the mass adoption of digital technologies.”
“The circular economy also aims to redesign the waste cycle and in doing so, introduces a rigorous differentiation between consumer and durable components of a product. Through the rental business model, the circular economy helps to actualize an equally significant transformation: it replaces the concept of consumer with that of user.”
Non-owning as an option rather than a dictate (are you listening, Klaus?)
While the option of renting rather than owning is expanding to include almost anything, it seems very important to retain the “option” freedom. Some folks seem to be hard at work to make more and more things almost too costly for the majority to buy and own. Think cars, housing, …
A major feature or goal of the WEF’s Great Reset initiative is that ownership will be reduced as a way to improve effective income equality. Make owning more costly while increasing ways to rent or non-own. Possibly a noble goal, at least in principle, but it seems to be getting a bit out of hand. Already.
The WEF’s you-will-own-nothing-and you-will be-happy seems extreme, although there are times that non-ownership definitely has its attractions. Such as moving and downsizing times, when non-owning gets real – by the dumpster-load. A few years ago, we went through this rite of passage and it was so awful that we are now buying as little as possible. We are about 80% (at least) moved toward non-owning. Klaus should be pleased.
So, it is really the implied dictate in the “you-will” (both own nothing and be happy aspects) goal that bothers me. You also, maybe.
Much has been written lately about the joys of the new “rental economy”, which is apparently already upon us. I did not know this. Worse yet, I found that I don’t really have any idea about what it actually means. Is it more than good old car, apartment, and hotel (etc.) rentals that have been around forever? Turns out that it is an emerging subset of these, which seems good. What isn’t so good are the primary drivers here, like the WEF, who seem to be getting more than a bit carried away with their Great Reset and “own-nothing” efforts.
BlackRock CEO and WEF globalist Larry Fink says corporations must work harder to ‘force’ people to change behaviors:
“Now let’s take a look at another WEF power player who operates in the shadows, who boldly seeks to fundamentally transform the world through the ‘Great Reset.’ He is the chairman and CEO of BlackRock, the world’s largest investment firm with $10 trillion in assets, a firm that has at least a partial ownership of almost every major corporation in the world, including the big media and Big Tech companies.”
“’Behaviors are going to have to change and this is one thing we are asking companies, you have to force behaviors and at BlackRock, we are forcing behaviors,’ Fink said.”
Even Apple is working on rentals: “You’ll Own Nothing and Like It: Apple Is Working on Hardware Subscriptions for iPhones”:
“Tech giant Apple is working on turning its iPhone and other products into a subscription-based hardware service sharing some similarities with a car lease. Bloomberg reports that tech giant Apple is developing a subscription service for its iPhone and other hardware products, which could turn iPhone ownership into a subscription service rather than direct hardware ownership. The service would be Apple’s biggest effort so far to enter the automatically recurring sales market.”
Who would rent a bike? Well, it turns out to be a great many folks, even in the weather-challenged Northeast:
“Bluebikes is Metro Boston’s official bike share program, designed to give residents and visitors a fun, affordable and convenient alternative to walking, taxis, buses and the ‘T.’ There are more than 325 Bluebikes stations and over 3,500 bikes across Boston, Brookline, Cambridge, Everett, and Somerville, making Bluebikes the most accessible way to get around and explore.”
“The Single Trip pass includes 30 minutes of ride time to get you anywhere you need to go. Ride to work, meet up with friends, or run a quick errand. Need to ride longer? It’s just $2.95 for the first 30 minutes and $2.50 for each additional 30 minutes.”