Furniture rental startups boom as home ownership declines among young consumers
“Younger generations are no longer buying as many homes or cars, they’re renting clothes, they’re used to this notion of subscribing, that’s what we do”
Subscribing to leased furniture is the new Ikea.
Startups that let people rent beds, sofas, dining room tables and home décor delivered straight to their doors with no assembly required are gaining traction as more consumers prefer to lease their living essentials instead of own them.
More furniture rental startups have emerged to attract consumers who are buying homes later in life.
“Customers enjoy the flexibility given that they’re moving very often for work and in life,” Shashank Shankaranarayana, co-founder of CasaOne, a San Francisco-based home and office furniture rental company, told FOX Business. “Younger generations are no longer buying as many homes or cars, they’re renting clothes, they’re used to this notion of subscribing, that’s what we do.”
The company, which started in 2017, raised $16 million in a Series B round of funding in November led by WeWork, co-working office space company; HNI, one of the largest office furniture manufacturers; and investment firms Quiet Capital, among others. It plans to launch internationally in London in 2020, Shankaranarayana said, and the company has grown seven times in revenue since last year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HNI | HNI CORP. | 56.65 | +0.38 | +0.68% |
MORE MILLENIALS PLAN TO NEVER OWN A HOME. HERE'S WHY.
It’s a sign that more businesses are implementing leasing models in an effort to be more sustainable and appeal to consumers who may not be able to afford or care to invest in expensive furniture. Renting can also help consumers save thousands on moving costs, which total around $4,300 on average for those moving to another state, according to North American Moving Services.
CasaOne shoppers can spend as little as $79 a month to fully furnish a studio apartment or one-bedroom for a 12-month period. Two bedrooms range between $250 and $30 for up to 16 pieces of furniture. CasaOne’s demographic ranges from renters aged 25 to 35 living in cities like New York, Chicago, San Francisco, Seattle and Washington, D.C., among others around the country.
“You get everything essential for your home,” Shankaranarayana said.
FOR MILLENNIALS, IS RENTING ACTUALLY SMARTER THAN BUYING A HOME?
Homeownership among millennials is down compared to Baby Boomers and Generation X. People aged 25 to 34 are buying fewer homes than other generations, according to a 2018 report from the Urban Institute. Delayed marriage, increased student loan debt, rising rents and people raising families later in life are all factors that impact the lower homeownership rate.
What's more, around nine million homes are slated to hit the market between now and 2027 as Baby Boomers age out of their homes, according to data from Zillow as reported by the Wall Street Journal. However, a number of these homes are located in ZIP codes that are not appealing to Millennials or Gen X in locations such as Florida and Arizona, according to the report.
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And the trend stems from a younger, eco-conscious consumer. Indeed, 60 percent of Generation Z – aged 7 to 22 years old – spend money on brands that are ethically conscious, according to a report from the National Retail Federation.
Other companies, such as Feather and Fernish, also promote affordable alternatives for furniture. Shoppers pay in monthly installments instead of outright, and users have the option to buy any items they rent after the lease is up.
Ikea, the Swedish DIY furniture giant, began testing out its leasing program this year in Switzerland that would let shoppers rent out office furniture like desks, chairs and kitchen items. The move is an eco-friendly effort for the brand to recycle, with plans to source all of its wood for furniture from more sustainable sources by 2020, the company pledged.
And other furniture retailers are also implementing leasing models. West Elm launched a partnership with designer clothing rental company Rent the Runway to rent out blankets, pillows and other home goods.