Why a growing number of retailers are jumping into the rental biz
SMITH BRAIN TRUST – Earlier this year, Swedish furniture giant Ikea announced a plan to rent furniture to customers as part of a pledge to go green. When their rental period ends, customers will return their desks, beds or sofas to the retailer and Ikea will resell or recycle the used items.
Ikea, the world’s largest furniture seller with 424 stores in 52 countries, joins a growing number of retailers jumping into the rental biz. West Elm is gearing up to rent bedding and other home textiles through a partnership with Rent-the-Runway. Urban Outfitters announced in May a plan to rent clothing. And furniture rental startups Fernish and Feather are expanding and attracting big investments. All are claiming their efforts are part of a sustainability push aimed at keeping furniture and clothing out of landfills. But getting people to rent instead of buy their sofas and T-shirts isn’t going to save the Earth, says Rachelle Sampson, associate professor of business and public policy at the University of Maryland’s Robert H. Smith School of Business. Instead, she says, consumer product companies need to completely alter the way they do business.
Cradle to cradle
“What companies really need to do is adopt a full lifecycle approach to their products, where they take everything back that they manufacture,” Sampson says. “This will lead to a revolution in terms of redesign, keeping stuff out of landfills, and will have a massive sustainability impact.”
It’s called “cradle-to-cradle” strategy, or circular manufacturing. It requires companies to take back products when consumers are done using them and recycle the components or reuse them to make new products. Sampson says this is the most effective way to reduce what’s ending up in landfills and to shrink the environmental impact of creating new products from raw materials. According to a recent EPA report, nearly 9.7 million tons of Americans’ furniture and soft furnishings, and another 8.2 million tons of clothing and footwear ended up in landfills in 2015.
For rental programs to have environmental impact, people must change their behaviors . And Sampson questions whether consumers will be willing to pay rent repeatedly for things they might otherwise buy outright.
“For it to truly make an environmental impact, people who could afford to purchase need to adopt furniture rental in lieu of purchase,” she says. “Otherwise, the rental option could just be making products available to people who would not otherwise be purchasing the items.” And that wouldn’t necessarily keep stuff from ending up in landfills.
Sampson says it’s young adults and urban dwellers – people already comfortable with the sharing economy – who are most likely to try renting, rather than buying, home furnishings.
“Then it becomes a study in consumer preferences and behavior and how that might be changing over time,” she says.
If most companies taking products back were reusing and recycling, the environmental impact would be immediate. “It requires a different way of thinking and a redesign not only of products themselves, but also of logistics and infrastructure so that firms have the ability to take these things back.”
Circular manufacturing in action
Companies are starting to put circular manufacturing into practice in limited ways. In April, Adidas announced it will start manufacturing a recyclable running shoe that, at the end of its usable life, can be returned to the sportswear maker to be remade into new shoes. Interface FLOR, which makes modular carpet tiles and flooring, takes back used carpet and recycles it into new carpet tiles. Office furniture maker Herman Miller makes some chairs whose components can all be reused, composted or fully recycled, with nothing ending up in landfills. (However, the company doesn’t currently have processes in place to take all chairs back). Adventure clothing maker Patagonia, meanwhile, will take back and recycle all its textiles.
Still, the reality is these efforts are such a small part of the market, they aren’t having any noticeable impact on landfill volume, Sampson says.
Right now, companies lack significant incentive to change their practices, because most don’t bear the waste removal expenses of used products. “It’s going to take some pressure from an outside force, whether it’s consumer pushback or government regulations, to make companies take products back and dispose of them themselves,” Sampson says. “If that happens, I promise you everything will be redesigned. It would be so costly for them to take everything back that they would figure out other ways and other business models.”
She points to recent scrutiny of the fashion industry over textiles ending up in landfills or, in some cases, an ash heap. Consumer outcry on social media has helped influence the behavior of some companies. “That’s really the only incentive that exists right now,” she says.
If companies don’t face pressure to change their practices, real environmental action boils down to people just consuming less, says Sampson. And that could be part of the motivation behind companies introducing rental programs, she says.
“You could view what Ikea and these other companies are doing as kind of a response to the threat of that,” she says. “If people start really taking seriously reduction of consumption, because it’s bad for the environment, then that hurts these manufacturing companies. If instead, you have an option to rent, then it provides a more consistent income stream for the firm and they don’t have to worry that consumers are just not going to update their furniture as often. Consumers will be on this rental agreement and as long as they need a sofa, they’ll be paying the firm.”
Still, Sampson is skeptical that the new rental programs themselves will have much of an environmental impact.
“I think initially these programs won’t have a big market share,” says Sampson. “But it’s an initiative they can point to – experimenting with different business models. I think that’s fine. It’s often the first step to these other, more meaningful sustainability measures.”
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