Why you is likely to be renting not shopping for your subsequent sofa

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Before eventually moving to California, the grandson of a wealthy client of interior designer Phyllis Harbinger, who had just graduated from college, decided to rent furniture instead of her for an apartment he and his girlfriend found in the New York area to buy.

“They said, ‘We don’t know what we want to do. We don’t want to be married to anything and we want to be sustainable,'” said Harbinger, vice chairman of the department of interior design at Fashion Technological Institute. “This generation is really into that reuse and buyback mentality to save the planet for them and their kids.”

Office furniture rental has a long history, but the demand for home furniture rental is growing – particularly among younger consumers who prefer a more mobile lifestyle than was typical for older generations.

Online furniture startups like Feather and Fernish are offering customers the chance to rent furniture for as little as three months at a time, with the option to swap parts during or at the end of a contract period if they fancy something different.

Appealing to a young, mobile customer

Feather and Fernish “are responding to the needs of people who have lots of money but don’t have time to buy furniture, and maybe don’t want to commit to owning large, bulky furniture because they expect to move again – and that’s a younger demographic,” says Susan Inglis, executive director of the Sustainable Furniture Council.

The hire-to-own option offered by these startups also appeals to people who don’t have enough cash to buy now but want good pieces they can live with right away, she said.

Feather’s customers are typically in their 20s and 30s and live and work in cities. The service is well-suited for people who have recently moved or are about to move, live with roommates and move every six months to a year, wrote Ilyse Kaplan, the company’s president and chief operating officer, in an email.

It’s also more affordable for people moving to a new state, which can cost anywhere from $4,300 to $4,800, or even moving down the street in most cities, which costs an average of $1,250, Kaplan said. Feather customers “can set up a basic studio for as little as $105 a month or a basic 1 bedroom for $150 a month.”

Feather cited “significant growth” in new residential leases since the onset of Covid-19 and the onset of remote and hybrid work, greater financial uncertainty and the need for more flexible living arrangements. “As living conditions have changed in response to the pandemic, we’ve seen dining room items decline in exchange for more functional home office items,” Kaplan said.

Rent furniture to be more sustainable

Stationary furniture brands such as IKEA are also examining leasing models. For the Swedish retailer, experimenting with renting is part of a broader plan to move to a circular business model by 2030, with the aim of ultimately using only renewable or recycled raw materials and improving design principles to allow for less wear and tear on the products assembled and dismantled as well as the refurbishment and reuse of used goods or their components.

IKEA began testing a circular furniture subscription model in 2019, but its progress has been somewhat delayed by pandemic-related restrictions, wrote Kicki Murbeck, circular business designer on Ingka Group’s Circular Innovation Team, in an email. Ingka Group is the main franchisee of the IKEA brand, with retail stores in 32 markets, accounting for approximately 90% of IKEA’s total retail sales.

Building on previous tests in several European countries, in 2021 the company introduced a limited launch of a B2B edition called IKEA Rental in six markets: Finland, Sweden, Denmark, Norway, Spain and Poland. After testing multiple contract options, including contract lengths, and banking partners, IKEA is evaluating the results before deciding on next steps, Murbeck said.

Inglis sees interest in renting higher quality furniture as a backlash to the growing popularity in recent decades of “quick furniture,” which relies on cheaper materials to accommodate a more nomadic lifestyle and often ends up in landfill.

“People are fed up with throwing away trash and the furniture industry as a whole did itself a disservice years ago by really trying hard to create furniture that would throw away,” she said.

Currently serving ten major markets in the US, including New York, Washington, DC, San Francisco and Los Angeles, Feather allows customers to change furniture pieces even during a rental period if their space, needs or aesthetic preferences change , and offers one free swap to every retail customer and additional changes for a fee. Around 14% of customers currently use the swap option.

“We are actively working to keep furniture of all types out of landfills” by renovating and repurposing each item multiple times, Kaplan said, noting that furniture currently accounts for about 7% of all landfill waste.

While Feather’s furniture is constructed from durable materials and a system of parts to aid in this process, “our first step is to work with our like-minded partners at FloorFound to find the furniture when parts are no longer useful for the next customers will be deemed new homes. If we are unable to resell an item, we will donate it through our partnership with Habitat for Humanity,” Kaplan said.

Inglis said she expects the trend towards retailers offering refurbishment services to increase dramatically in the coming years.

Before furniture leasing gains popularity, customer perception issues must be resolved. IKEA has heard customers looking for longer-term leases raise concerns about how they care for products and what conditions apply if something breaks or isn’t treated well. This must be clear to both sides.

IKEA finds that the shift in thinking needed to fully understand a subscription model is easier for younger consumers than older ones. Generation X and older consumers tend to associate subscriptions with the rent-to-buy model, which has historically made them pay more than buying upfront, but also the full scope of repair, maintenance, and return services excludes that retailers are now offering.

IKEA franchisees also need to develop a digital product tracking system to move away from a linear sales model and distribute products from one customer to another and expand the subscription service.

IKEA already sells refurbished and reused products in certain markets and plans to expand this as a key part of its circular economy transition. Also, in November 2020, the company opened a second-hand pop-up store in a shopping center in Eskilstuna, Sweden, targeting retailers selling reused, organic or sustainably produced products. More than 30,000 IKEA products were given a second life in the pop-up store during the first year of the trial period, and in December 2021 IKEA extended the program for another year.

“The circular furniture subscription service we tested is not only about the products as such, although of course these are very important, but also about understanding what the customer needs and wants and being able to to meet these changing needs over time,” Murbeck said.

– By David Bogoslaw, specially for CNBC.com