At a recent roundtable event, attended by senior representatives from the country’s top home improvement brands and suppliers, we met over dinner to share perspectives and debate around a range of key industry topics. One such subject being the continued growth and influence of trend Generation Rent.
All recognised the reality of numerous factors that today exist – smaller living spaces, the increase of shared living, changed generational perceptions – as some of the key shifts that present real consumer change dictating a rise in the prominence of Generation Rent to the home improvement market. Consider the fact that last year alone 1.35 million home moves were by those who rent (vs. 1.2 million home owner moves).
Success, we agreed, would be rewarded to those businesses that recognise and understand the need to adapt accordingly to capture this valuable demographic. In regions where renters are prevalent, for example, retailers must stock their stores, not based on store size alone, but also by the relevant products and unique needs of the consumers living within their catchments. Of course, ‘unique needs’ will mean different things in different areas of the country by different consumers.
Whilst there are clearly challenges to be faced, for instance by businesses that focus attention to a perceived ‘owned market heartland’, relying on repeat sales of high value items; there are equally benefits to be gained by those who can successfully strike the right balance. Generation Rent should not be dismissed as a short-term trend, less deserving of investment.
How retail can adapt to Generation Rent
Take the electrical goods sector; we know that some retailers in this market are seeing around one third of all revenue generated from the rental of TVs and white goods. Familiar subscription models, once applicable to only our mobile phones, now apply to a number of products and devices throughout our homes. In part, a change surely fuelled by huge and rapid changes in technology and today’s ‘upgrade itch’ mind-set; but arguably also by consumer willingness to embrace a growing rental culture.
In the case of home improvement, in addition to the big ticket items now available for rent, the market in this sector suggests a focus towards soft furnishings and home accessories, as well as some furniture and painting & decorating products. Whilst there still exists an aspiration and motivation by some consumers to own their own home, this is not generally felt by younger generations, and increasingly by some older consumer groups, who have accepted the benefits that renting can bring as a lifestyle choice.
Types of consumer & customer segments for retailers
With some brands already taking advantage of this trend, there’s clearly an interesting transition period playing out in this sector currently. We might consider some new models now emerging as potential routes to market to reflect the rise of Generation Rent. Where do your consumers and the marketing for your business sit on this spectrum?
- The traditionalists: consumers who buy products and keep them.
- The short-termers: those who buy products but only keep for a short period of time.
- The renters.
- The shared owners.
With some of the bigger, household name brands proving slow to react to these changes, disruption from online competition and new start-ups should be observed more closely than ever before, particularly given the development to other behaviours closely linked to Generation Rent; trending consumer attitudes such as ‘Do-It-For-Me’ and ‘I-Want-It-Instantly’.
Ultimately, certain products and services in the home improvement space will consistently be demanded by consumers, regardless of tenant or home owner status. The challenge for the retailer is to innovate to changing demand from these distinct segments to ensure lasting relevance in today’s marketplace.
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