The US consumer market is changing. That’s especially true for millennials who are increasingly renting instead of owning.
And not just with homes.
Brett Northart, President and co-founder of Le Tote, a women’s clothing rental business says their customer base started with millennials who are kind of the typical early adopters, but it’s evolved over time.
Le Tote is one of several companies in the billion-dollar clothing space that is expected to grow significantly in the next few years. The company is part of what’s known as the sharing economy where consumers share rent or share goods and services.
It’s not a new concept but it is growing like never before, highlighting a change in the way consumers feel about ownership.
The sharing economy services encompass peer-to-peer transactions that offer benefits to both parties. One person who has some type of underutilized asset can earn money by sharing that asset with someone who needs it. For example, homeowners are renting their living spaces to travelers through online platforms such as Airbnb, Couchsurfing, and VRBO. Fashionistas are renting their designer clothing and accessories out to others at costs that are a fraction of the retail price.
Ride-sharing apps such as Uber and Lyft connect consumers with drivers who offer rides in their personal vehicles whose services cost less than taxis.
“There’s sort of a cultural moment around us minimizing our possessions and attachments which I think is rooted in some really positive introspective, but I think it ultimately shifts a lot of power to the company who controls access to those resources that I think we’re all paying for,” says Aaron Perzanowski, author of “The End of Ownership: Personal Property in the Digital Economy.”
Renting is typically being viewed as a cheaper alternative at least in the short term. It was recently announced that Lord and Taylor, America’s oldest department store would be purchased by Le Tote following a period of declining sales. The entire landscape has really shifted underneath the feet of traditional retailers and while there are many people that grew up in this physical retail world, they’re now seeing massive shifter disruptions like this.
The evolution of the sharing economy is frequently attributed to advanced technology allowing people to rent a dress or a car or a spare room from their smartphones, but experts say other economic factors are at play too.
“In a time where people have less his disposable income as a result of income and wealth inequality, we have people who are deciding to rely on temporary access to resources rather than owning those resources outright,” says Perzanowski.
The sharing economy gives people an opportunity to be self-employed and generate income by using their personal assets, working flexible hours, and taking charge of their careers. Millennials are also burdened with high student loan debt and face stagnant incomes, making it harder to save a down payment or satisfy the income-to-debt ratio needed to qualify for a mortgage. Others may want the flexibility that renting offers and the freedom to move on from a job or city without the burden of having to sell a home or a business.
Millennials embrace gig work at an increased speed and that is forcing corporations to revise their thinking and plans regarding the locations and types of workspace they now need.