Much has been written about the millennial generation’s impact on the economy in general and retail in particular. Studies and sales figures bear out the fact that, generally speaking, millennials value experiences more than material goods. It is also true that millennials value access to goods and services more than ownership of those goods or services. Today’s sharing economy is largely the result of that trend. Why own a car, for example, when you can use Zipcar to access a vehicle for two hours of shopping or a day in the country?
The desire for access and convenience versus ownership has inspired ride-sharing services Lyft and Uber. Space-sharing services such as Airbnb (instead of a hotel room) and WeWork (instead of costly office space). Even public lending libraries have benefited with an increase in users.
As much as e-commerce has changed the landscape, the sharing economy is having an impact on retail. With services such as Rent the Runway, you can rent the latest style of formal dress rather than spend hundreds of dollars on a garment you’ll only wear once or twice. Designer handbags can be rented via Web sites like Bag Borrow or Steal. Fitness equipment like treadmills can be rented. Maternity clothes can be rented. There are even e-commerce sites where parents can rent good quality children’s clothes that are then returned when the child outgrows them—to be rented again by another family.
With greater access to rentable goods, consumers are finding fewer reasons to buy. Add to that the growing popularity of e-commerce sites and it’s apparent why retailers are scrambling to stay relevant. One response has been to develop stores with smaller footprints. Metro client, Target, for example, has had success placing small format stores in urban areas. With a smaller format they can stay relevant to customers by offering stop-in convenience and shelves stocked with essentials the local community wants. Many retailers are also exploring the idea of subscriptions. Sephora, for example, offers a subscription service that sends trial size samples every month, along with special subscriber-only events and exclusive how-to videos. It’s all part of an effort, not just to stay on the consumer’s radar, but to nurture brand loyalty.
To date, high-end retailers are sitting out on the sharing or subscription service sideline. However, luxury brand Volvo now offers a “subscription” service as an alternative to buying or leasing its cars, and you better believe other luxury retailers and brands are paying attention. The only thing certain these days is that the retailers and brands that manage to evolve and adapt will be the ones left standing.