In two recent columns, here and here, I wrote about two of the three consumer economic trends that are and will dramatically change consumer and buyer behavior well into the 2020s.
The third major consumer economic trend will see us move from an ownership to a rental society. This trend as with the prior two will be prevalent primarily in the developed world and then spread globally in a decade or so.
The Shifting Real Estate Market
Four years ago, I started to suggest that in the United States, the reorganizational recession of 2007-2010 might have broken the aspirational, patriotic vision of home ownership. This was a fairly obvious supposition due to the collapse of the real estate market leading the way into the downward economic cataclysm. Not only was the old saying “real estate always goes up in value” blown up, but the inability to sell the home you owned kept millions from being able to move to where they could gain employment. Ownership in an illiquid market also meant unemployment. In many cases this led to bankruptcy – a painful experience due, in part, to home ownership.
This led me to think about what I now see as the third major trend in consumer behavior. We are moving from embracing ownership to embracing renting. We are moving ever more to a rental and sharing economy… and not just in the area of housing.
More Than Just Houses
Think about the phenomenon of the Zip Car and other such companies that allow you to pick up and drop off a car at convenient locations. Use and pay for the car when you need it, instead of paying for a car – and parking space – when you are not using it. Similarly, in big cities around the world, there is the developing phenomenon of renting bicycles to ride from place to place. Ride a bike when and where you want and never have to buy one if you live in one of these cities.
Think about the reality that a young woman in her 20s who buys an expensive purse might not think of it as a lifetime purchase, but rather as something that she can resell on eBay in a year or two. Short-term ownership is very much like temporary rental.
Think about airbnb.com, the web site that allows people to rent out their couches, beds and homes to others, generating revenue. Hundreds of thousands of people have used airbnb.com on both sides of the economic equation, either to generate revenue not previously available or to rent a place to stay at a price lower than a regular hotel room.
Think about all the streaming video and audio sites. They are basically renting content for consumption, not selling content to be owned. They are also allowing one to experience content before buying, which will greatly cut down on the desire or impulse to own. Much of media is – and will – move to subscription models. Subscription is really the renting of content on a monthly basis.
In many major categories of purchase, we are becoming less about owning and more about renting.
A Trend in Trends
Of course, this Ownership-to-Rental trend is closely tied to the Less-is-More trend. We will own less stuff. Having less stuff will allow us to be more mobile. As long as we can connect wherever we are, we won’t need to carry content with us. Having less stuff means that we need less space to keep things. We will rent more stuff than we do now, as then we are not acquiring, but instead using for a period of time. Mobility and the desire for experiences, most evidenced with the Millennial generation (but also the Baby Boomers), will redirect financial resources away from ownership and acquisition and toward experience and movement.
One of the three forces of the Shift Age, the Flow to Global, has created a sense of global citizenship and economic opportunity. As I wrote near the end of “Entering the Shift Age,” the Shift Age will usher in the greatest age of migration in human history. We will work in one place, either a city or a country, for a few months or a few years, and then move on as our connectivity will be constant.
Of course, the concept of ownership will always exist as it always has. However, in the Shift Age, reality of the ever-accelerating speed of change, long-term ownership will seem less secure and stable. In an increasingly resource-challenged world in this the Earth Century, full utilization of what exists will become part of the solution.
Recycle, reuse, reduce and rent. The new ‘Four Rs’ of Spaceship Earth.