Millennials are saying no to homeownership as if their buying habits can't get any more baffling. Why would a demographic with the highest disposable income compared to other generations not invest in real estate?
A quick observation of how millennials live and work may hint at their position towards owning property. With more millennials living lightly, having fewer children, and traveling more than ever, permanent ownership can hinder a location-independent lifestyle.
But if they're not buying, how are millennials satisfying their needs?
Easy– they're turning to rentals, leases, and subscriptions. They often rent items with long-term commitments, like cars and houses, and subscribe to flexible, as-a-service solutions. Some examples are entertainment-as-a-service in the form of Netflix and Amazon Prime and furniture-as-a-service through Homebound and Live Light.
Millennial parents are doing away with expensive first-year purchases by renting more baby equipment such as strollers, clothes, and toys than the generation that precedes them.
Although rentals have been around for centuries, the subscription economy gained most of its momentum along with the millennial generation.
What millennial consumers value?
Regarding how certain purchases impact the environment, millennials tend to be very conscious of the brands they support. Surveys have shown that environmental friendliness is top-of-mind for this market which, more than ever, is opting for sustainable means of ownership.
Millennials don't want to be confined to the limitations of purchasing big-ticket items. As a result, they are gradually doing away with permanent ownership. They are replacing what they can with rentals or subscriptions.
For this demographic, great customer service is key to loyalty. Millennials are likely to patronize brands and companies that can guarantee satisfaction over companies whose only value proposition is that they sell cheap products.
Millennials can be impatient, which is why this demographic is likely to pay for faster shipping or subscribe to services that can guarantee such, a good example of which is Amazon Prime.
Who are the Millennials?
Depending on who you ask, millennials are either born between 1977 and 1995 or 1980 and 1996. In 2022, that would put the oldest millennial at 45 years old, and the youngest at 26, meaning millennials at both ends of the spectrum are nearing or have arrived at their peak income age.
Regarding their purchasing habits, they tend to support companies big on sustainability, environmental friendliness, and other social efforts.
Millennials are outspoken against animal testing, with over 70% saying they gravitate towards cruelty-free products. They are also more likely to purchase products that are locally made or ethically sourced.
The growing desire to preserve the environment has given rise to new age concepts like the circular economy, which emphasizes that products must be used as much as possible before they are recycled or reused to create other products.
But buying new often defeats the goal of being environmentally friendly, especially when its production fails to offset waste emissions. What millennials find too unsustainable to buy, they rent instead.
Innovations in the subscription industry make it possible for environmentally-conscious consumers to access a commodity by renting or subscribing to it.
Sustainability's Biggest Advocates
In a move that may be likened to hitting two birds with one stone, Millennials are turning to sustainable means of ownership to save money and the environment. Lately, these three groups of Millennials have become the most visible advocates of the sustainability economy.
- Millennial remote workers have become the driving force behind workspace-as-a-service, home-office-as-a-service, and other subscriptions for work equipment due to the convenience and savings they offer.
- Millennial parents are some of the most environmentally-conscious buyers around, with 42% saying they support companies that care about the environment. This mindset has led to more parents supporting baby-equipment rentals and ethically-sourced baby clothing.
- Finally, millennial entrepreneurs are gaining ground in the global market with their sustainable innovations not just because it's high time for earth-friendly solutions but because today's biggest shoppers are increasingly supporting a sustainable lifestyle.
Why Do Millennials Like the Subscription Economy?
No other industry operates in line with Millennial values as much as the subscription economy.
To millennials, access to a necessity is more appealing than ownership. Rather than own an item outright, they are likely to seek options that will allow them to get the job done at a fraction of the cost and effort.
As a demographic heavily exposed to the internet and the instant gratification it affords, millennials also prefer services that can be accessed quickly.
In other words, millennials are drawn to how easy-to-use and predictable most subscription services are: if they've subscribed to a meal kit delivery, they know when their next meal is ready. If they have a Netflix subscription, they know they can watch a movie when they open the app on their phone or Smart TV.
Anyone who puts a premium on the flexibility of choice, personalization, authenticity, and sustainability will appreciate the freedom and convenience of subscription solutions.
Just about anything can be subscribed to these days. A few common examples of subscriptions that have hit the mainstream are:
- Entertainment-as-a-service, like Netflix, Spotify, Amazon Prime, and Youtube Premium
- Journalism-as-a-service that allows readers to access more news articles on Forbes, Guardian, or Harvard Business Review
- Software-as-a-service, like Adobe Creative Cloud, Canva, and other apps
- Product-as-a-Service, such as furniture subscription, service, micro-mobility subscription, device-as-a-service, and stroller-as-a-service.
The subscription industry has since expanded into product as a service, where products are provided to the consumer on a subscription basis. Some examples include strollers-as-a-service, device-as-a-service, car-as-a-service, and many more.
Why Millennials Rent Furniture
Although not as popular as other as-a-service solutions, furniture-as-a-service is making waves among Millennials because of how convenient, affordable, and flexible it is.
Millennials are not shy about chasing economic opportunities. Surveys have shown that millennials move at least once every two years and those that choose to stay close to family are likely living at least 10 miles away from their childhood home.
In their quest for freedom from the confines of an office, more millennials are opening up to remote work or the digital nomad lifestyle. This has resulted in the rise of workspace-as-a-service and home office-as-a-service.
Millennials have no qualms about downsizing, either. Minimalism and tiny house trends are rising in this demographic, who are also increasingly saying no to having children. Child-free and minimalistic, they are likely to swap large properties for smaller, most affordable homes.
Mobility can be difficult if it entails lugging around a lot of belongings, which is why Millennials are doing away with purchasing items that can make their next move difficult. As an alternative, they are turning to furniture rentals, where furniture companies often handle the delivery and removal of rented home goods. Sounds pretty convenient, right?
Necessity isn't the only reason why this demographic rents furniture. For many millennials, their personal space is a canvas that they can adorn to their liking. Redecorating a home can be expensive if a single couch, on average, costs €1,500 in today's market, but imagine how easy it would be if you only had to shell out €19.99 dollars to rent furniture for the living room.
What is Furniture as a Service?
If you've heard of furniture leasing before, it'll be easy to visualize how furniture as a service works under the hood.
Furniture-as-a-service is akin to leasing on a subscription basis. As the lessor, you retain ownership of products on your site or catalog, but you grant customers access to the item within a certain period for a small, recurring fee.
You may introduce varying subscription rates that you can lock into rental or leasing periods, or you can affix a subscription fee to every item in your catalog.
To illustrate, you may lease all flat-pack furniture in your catalog at a rate of €10/month, payable annually, while products made of other material may be leased at a higher rate, say €20/month.
Alternatively, you can create membership packages that your customers can sign up for. For example, Package A, priced at €5 per month, allows customers to rent at least 1 piece of furniture from your entire catalog. In contrast, Package B, priced at €10 per month, allows them to rent two. Package A may not come with free delivery. Still, you might add free deliveries as a benefit for subscribers to Package B.
As the service provider, your pricing strategy is entirely up to you.
Who Provides Furniture-as-a-Service?
As the world becomes increasingly conscious of the need to be sustainable, companies are popping up offering furniture as a service. This is a great way to get high-quality, long-lasting furniture without adding to the landfill problem. Live Light and Swaap are two companies leading the way in this new industry.
Here are some of the companies that disrupt the furniture industry that uses circuly's subscription management software for their FaaS offerings.
Live Light offers furniture as a service, as a way of making their business a circular one. It means they have complete control of their product's life cycle and can refurbish and reuse items rather than simply throw them away. This helps to reduce the pressure on natural resources and makes their furniture more affordable.
Swaap, a Switzerland-based furniture rental company, is another disruptor shaking up the furniture industry with its furniture-as-a-service model. Swaap allows customers to rent or swap their furniture, so they're never stuck with something they don't want. This flexible approach means that people can always have the latest and greatest furniture without worrying about where it will end up when they're done with it.
Homebound, a UK-based furniture business, believes that contemporary interior design should not come at the expense of our planet. Every year, an average of 22 million pieces of furniture are discarded in the UK alone. Homebound is working to change this trend by creating a circular economy—one that minimizes upfront costs, offers more flexibility, and never compromises on style, quality or values. This is a great way to get good quality furniture at a fraction of the retail price.
A well-established family furniture business based in France, Orangelo has been providing innovative and sustainable furniture options for professionals that spans three generations. Their mission is to make the layout of all workspaces simpler and more efficient. They offer design, sustainable, and ecological furniture from France and the rest of Europe that can be purchased or rented through their Furniture-as-a-Service model.
Another one in the pipeline is Rentchester, a start-up that offers furniture as a service. They have a wide range of furniture available for rent, so you can try out different styles before you commit to buying. This is a great way to get the furniture you want without breaking the bank.
With more and more companies offering furniture as a service, it's clear that this is a growing trend. And as we become more aware of the need to be sustainable, this trend will likely continue to grow. So if you're looking for a way to get great furniture without harming the environment, furniture as a service is the way to go.
Start Offering Your Furniture as a Service
The furniture-as-a-service industry is expanding. Now would be a good time to start if you haven't introduced flexible subscription options to your sales strategy.
Scaleable furniture rental software allows furniture companies to offer subscriptions alongside furniture sales. Offering your products on a subscription basis will not harm your normal operations; it may even give you a new, recurring income stream.