Why you might be leasing not buying your next couch
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Before eventually moving to California, the grandson of one of interior designer Phyllis Harbinger’s wealthy clients who had just graduated from college opted to rent furniture rather than buy it for an apartment he and his girlfriend had found in the New York area.
“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, who is the assistant chairperson of the Interior Design Department at Fashion Institute of Technology. “This generation is very much into that reuse, repurchase mentality to save the planet for them and their kids.”
Renting office furniture has a long history, but demand for renting home furnishings has been growing — particularly among younger consumers who favor a more mobile lifestyle than was common for older generations.
Online furniture start-ups such as Feather and Fernish offer customers the ability to rent furniture for as little as three months at a time, with the option to swap pieces during or at the end of a contract period if they’re in the mood for something different.
Appealing to a young, mobile customer
Feather and Fernish are “responding to the need of people who have plenty of money but no time to go shop for furniture and perhaps also no desire to commit to ownership of large, bulky furniture because they expect to be moving again — and that’s a younger demographic,” says Susan Inglis, executive director of the Sustainable Furniture Council.
The rent-to-buy option that these start-ups offer also appeals to people who don’t have enough money to buy immediately but would like good quality pieces that they can start living with immediately, she said.
Feather’s customers tend to be in their 20s and 30s, living and working in cities. The service is well-suited to people who have just moved or are about to move, live with roommates and move every six months to a year, Ilyse Kaplan, the company’s president and chief operating officer, wrote in an email.
It’s also more affordable for people moving to a new state, which can cost between $4,300 and $4,800, or even moving down the street in most cities, which averages $1,250, Kaplan said. Feather customers “can get set up in a basic studio apartment for as little as $105 a month, or a basic 1-bedroom apartment for $150 a month.”
Feather cited “significant growth” in new residential leases since the start 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 have seen dining room items decrease in exchange for more functional home-office pieces,” Kaplan said.
Renting furniture to be more sustainable
Brick-and-mortar furniture brands like IKEA are also exploring leasing models. For the Swedish retailer, experimenting with renting is part of a grander plan to transition to a circular business model by 2030, with the aim of eventually using only renewable or recycled raw materials, improving design principles to allow for less wear and tear when products are assembled and disassembled, and refurbishing and repurposing 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, Kicki Murbeck, circular business designer on Ingka Group’s circular innovation team, wrote in an email. Ingka Group is the main franchisee of the IKEA brand with retail operations in 32 markets that represent about 90% of IKEA’s total retail sales.
Building on previous tests in several European countries, the company introduced a limited roll out of a B2B edition called IKEA Rental in six markets during 2021: Finland, Sweden, Demark, Norway, Spain and Poland. Having tested several contract options, including contract lengths, and banking partners, IKEA is evaluating the results before deciding on the next steps, Murbeck said.
Inglis sees the interest in renting higher-quality furniture as a backlash against the growing popularity in recent decades of “fast furniture,” which relies on cheaper materials to cater to a more nomadic lifestyle and often ends up in landfills.
“People are tired of throwaway junk, and the furniture industry as a whole did itself a disservice years ago by trying really hard to move towards furniture that one would throw away,” she said.
Feather, which currently serves ten major markets across the U.S. including New York, Washington, D.C., San Francisco, and Los Angeles, lets customers switch furniture items even during a lease period if their space, needs, or aesthetic preferences change, offering one free swap to each residential customer, and additional changes with a fee. Roughly 14% of its customers currently use the swap option.
“We’re actively working to keep furniture of all kinds out of landfills” by refurbishing and redeploying every item multiple times, Kaplan said, noting furniture currently accounts for roughly 7% of all landfill waste.
While Feather’s furniture is designed with durable materials and a component part system to aid that process, “when pieces are deemed no longer viable for the next customer, our first step is to work with our like-minded partners at FloorFound to find the furniture a new home. If we can’t resell an item, we will donate it via our partnership with Habitat for Humanity,” Kaplan said.
Inglis said she expects the trend of retailers offering refurbishing services to grow dramatically in the coming years.
There are customer perception challenges to solve before furniture leasing gains more in popularity. IKEA has heard customers seeking longer-term rentals express concern about how to care for products and what the terms and conditions are if something breaks or isn’t treated well. That needs to be clear for both parties.
IKEA is finding that the mind shift needed to fully understand a subscription model is easier for younger consumers to make than for older ones. Gen X and older consumers tend to associate subscriptions with the rent-to-buy model, which historically has made them pay more than when buying upfront but also excludes the total scope of repair, maintenance and return services that retailers are now providing.
IKEA franchisees also will need to develop a digital product tracking system to be able to move away from a linear sales model and circulate products from one customer to another, and scale up the subscription service.
IKEA already sells refurbished and repurposed products in certain markets and plans to expand this as a key element of its circular business makeover. It also opened a second-hand pop-up store in November 2020 in a shopping mall in Eskilstuna, Sweden, dedicated to retailers that sell reused, organic or sustainably produced products. More than 30,000 IKEA products were given a second life at the pop-up store during the first year of the test period and in December 2021 IKEA extended the program for another year.
“The circular furniture subscription service that we are testing isn’t only about the products as such, although they are of course very important, but is also about understanding what the customer needs and wants and to be able to meet those needs that might change over time,” Murbeck said.
—By David Bogoslaw, special to CNBC.com