Collaborative consumption: Buzzword or business imperative?
by Jonathan Hurvitz. Collaborative consumption, manifested through the sharing and rental goods economy, is a positive reaction to concerns about consumption sustainability.
by Jonathan Hurvitz. ‘Mine, yours and ours’ could be the mantra for collaborative consumption, a model whereby consumer goods and services are shared by a group of people, thus removing the need for outright ownership. Collaborative consumption, much like the rental goods market, takes its cue from the sharing economy that is turning notions of ownership on its head. Investopaedia describes ‘collaborative consumption’ as a model whereby “multiple people have access to product and bear its cost. A common example is ridesharing, whereby multiple people have access to transportation and pay for it, not just the owner of the car”.
The end of ownership
The burden associated with ownership is increasingly well understood and documented, with collaborative consumption offering a viable alternative. A collaborative consumption model, just like the rental goods economy, advocates for access over ownership, effectively removing the burden associated with the ownership – and thus the care, repair and maintenance – of goods. These range from electronics to furniture, clothing, leisure equipment and more. So prevalent is this trend that the US Chamber of Commerce has noted it as a “growing population of consumers who are willing to pay good money for the privilege of not having to own something”.
As far back as 2010, the Harvard Business Review recognised collaborative consumption as giving “people the benefits of ownership with reduced personal burden and cost and also lower environmental impact… as a compelling alternative to traditional forms of buying and ownership”.
This is the essence of what the rental goods economy offers consumers – the ability to easily and flexibly access the goods and services they need, without the responsibility and cost of outright ownership – which offers at least some suggestion that we’re likely to see the continued growth of these models as viable alternatives to more traditional forms of ownership.
A new frontier for brands and retailers?
Sharing services such as Airbnb disrupted the hospitality industry in ways that were once unimaginable; and it’s more than likely that the rental goods economy and a growing customer preference for a collaborative consumption model will do the same to the retail industry.
Rather than shy away from the trend, retailers need to embrace the opportunities inherent in it. One of the most effective ways of seizing the opportunity inherent in any disruption is looking at how the fundamental value to the customer can be exploited.
For retailers then to embrace the rental economy, it starts with understanding that access is simply the new ownership. When a brand defines its value proposition in terms of what the consumer wants and needs, ownership becomes just one vehicle through which that need can be met. Access through rentals is thus another vehicle.
International brands like H&M, Ikea and the UK’s John Lewis have already added a rental component to their offering, as a demonstration of a commitment to offering customers a flexible alternative. Yes, it requires a strategic and operational shift in thinking and doing for brands, but it far beats being left behind due to a reluctance to rethink and reimagine the way consumers can access goods and services.
For the greater good
Collaborative consumption, manifested through the sharing and rental goods economy, is also a positive reaction to concerns about consumption sustainability. A Market Business News article reckons “consumers and society as a whole seem keener than ever to find more efficient ways to use resources and products”. Sharing and collaborating is a notable step in the right direction; while for brands and retailers this means extending their offering to ensure they meet the fundamental needs of the consumer.
Main image credit: Pixabay.com.
Jonathan Hurvitz is the Group CEO of online retailer Teljoy and a registered Chartered Accountant in South Africa.
– Receive the Retailing Africa newsletter every Wednesday • Subscribe here.