The sharing economy is one of the topics that will be debated at Retail Week Live in March. We look into what the trend means for retail.
More than half of millennial shoppers have used the sharing economy on a purchase or service in the past year – what should retailers be doing to cater to this trend?
“If you’d have told me 10 years ago I’d pay to get into a stranger’s car, or to be staying in the house of someone I’d never met in a city I’d never been to, I wouldn’t have believed you”
Rikke Rosenlund, BorrowMyDoggy
“If you’d have told me 10 years ago I’d pay to get into a stranger’s car, or to be staying in the house of someone I’d never met in a city I’d never been to, I wouldn’t have believed you,” says Rikke Rosenlund, co-founder of BorrowMyDoggy, a platform that connects those who have dogs with those who enjoy looking after them.
However, that’s increasingly what today’s consumers are doing. Whether it’s sharing an Uber home or booking an Airbnb for a weekend away, the sharing economy is growing at pace.
The shift away from ownership to splitting service costs and purchases is particularly prevalent among millennials – 53% have used the sharing economy over the past 12 months compared with just 16.2% of shoppers over the age of 35, according to the ’New Shopping Trends for the Millennial Generation’ research carried out by Verdict Retail on behalf of property specialist Hammerson.
Verdict Retail consulting director Joseph Robinson says: “The higher financial insecurity of younger shoppers, combined with high expectations around convenience, aligns strongly to the sharing economy trend.
“The fundamentals of what drives usage of these businesses is consistent with general demand drivers, with affordability and convenience being the two most prominent drivers.”
For Rosenlund, who speaks at Retail Week Live in March, the power of the sharing economy lies in its possibilities to galvanise communities and drive loyalty.
Many might have thought putting a poster up in Hampstead Heath offering to match dog-lovers with dog owners would be a risky move – however, Rosenlund did just that four years ago and has ended up with a successful business. BorrowMyDoggy now has over half a million members.
“Technology has absolutely triggered our ability to optimise this space – I do think we’re monopolising on behaviours we had in the past but we didn’t have the technology to make efficient,” she says.
“What the sharing economy is doing is creating large communities that have a strong following and loyalty with great word-of-mouth marketing.”
How will it impact retail?
A variety of retailers are going beyond simply selling products. The likes of Halfords and Dixons Carphone have invested in offering services, from fitting windscreen wipers to installing washing machines, to drive customer engagement and sales. Catering to the sharing economy be an obvious next step.
“In the same way that retailers have been forced to respond to evolving shoppers’ habits over the last couple of decades, any increase in traction of sharing economy businesses in retail will undoubtedly necessitate a response”
Joseph Robinson, Verdict Retail
Robinson says the sharing economy could be an area of investment for retailers.
“In the same way that retailers have been forced to respond to evolving shoppers’ habits over the last couple of decades, any increase in traction of sharing economy businesses in retail will undoubtedly necessitate a response,” he says.
“In addition, there may well be opportunities for investing into this area as a strategy to drive demand from younger shoppers – especially in categories such as DIY.”
Music and video, sports equipment and DIY are cited as the most popular product categories for millennials to rent, and 70% of 18- to 24-year-olds said they would consider renting products through the sharing economy,
However, fashion is another sector that could be disrupted by the non-committal consumer habits of millennials.
“The growth in rental is testament to that change and also highlights consumers’ growing preference for experience over ownership”
Anna Bance, Girl Meets Dress
Girl Meets Dress was founded in 2009 to allow female shoppers to rent designer gowns affordably, and co-founder Anna Bance tells Retail Week the business is well-placed to cash in on changing shopper behaviour.
“When Girl Meets Dress launched back in 2009, the recession mindset dominated. It meant that cost per use was a huge driver, as being smart with money and where to spend it was highly regarded,” she says.
“But it was also clear that people have since realised that experience and time are the most precious commodities we have, and that consequently ownership is becoming more irrelevant than ever before.
“The growth in rental is testament to that change and also highlights consumers’ growing preference for experience over ownership.”
The possibility of losing out on outright sales to the rise of the sharing economy may be a worry for some retailers – but Rosenlund argues it might provide additional insight into shoppers.
“Eventually there might be an interesting opportunity for retailers to tie up with start-ups as a means of better understanding their market,” she says.
The full impact of the sharing economy on retail is yet to be seen, but with millennials set to become the demographic of consumers with the biggest spending power, ensuring your offer accommodates this trend will be crucial.
And if a poster in Hampstead Heath can snowball into a customer base of over half a million, the potential of the sharing economy to boost retail is not to be sniffed at.