Hollie Wright spotted an opportunity. Working in property management, she came across a company that needed to furnish a home for an employee moving in for a few months. What if they could rent everything from one place and pay a subscription?
Two decades later, her business, Instant Home, allows people to pay a monthly rent starting at £220 for the basics for a one-bed flat (or £500 for more premium versions). When the rental ends, her company takes everything back.
The furniture rental market has traditionally been about showhomes at property developments. But British department store stalwart John Lewis started experimenting with a service last year, and Wright is finding more and more households ready to lease their interiors.
“We’ve got these younger people coming in who are environmentally sensitive, who are much more used to renting things than the older generation,” says Wright. “I think they’ve got their head around not owning everything.”
In fact, the subscription economy is on the march through almost every aspect of daily life – from long-established businesses such as pay-per-view TV and car rental to energy, food and even clothing. If you can use it, you can rent it. There are attractions for consumers and businesses. The subscriber avoids the hassle of having to sort out purchase payments every time, or even of having to make a choice; for larger items such as cars, they can avoid a substantial upfront cost. Businesses can lock in repeat purchases and guarantee less volatile earnings (albeit sometimes at the cost of a discount). And there are also potential environmental benefits if items are reused.
Here are some subscription models that could be shaping our lives in the years to come.
The installation of home solar panels and battery kits at no upfront cost enjoyed a short-lived heyday in the mid-2010s after the government introduced feed-in tariffs for a household’s excess energy. In exchange for receiving a household’s lucrative monthly payments for sending electricity back to the grid, many companies were happy to install solar systems for nothing.
The schemes dwindled as subsidies were cut, but two key developments could mean similar deals make a return. First the cost of solar technology has plunged. Second, the government launched its smart export guarantee (SEG) last year, which also pays households for the excess renewable electricity they generate but don’t use. Industry experts believe the scheme could encourage a new breed of ultra-low tariff that allows energy companies to offer solar kits which are paid for using the SEG, while households enjoy lower bills.
Electric car charging
A boom in smart technology could soon mean electric cars will help to balance the national grid – and make savings on electricity costs. Already Octopus Energy and Ovo Energy have begun offering half-price tariffs for electric vehicle charging. Cars power up when prices are low, during quiet times on the grid, and in return the companies draw electricity from idle car batteries back into the grid when prices are high.
By aggregating electric cars and other smart energy devices – such as heat pumps – to create “virtual power plants”, energy firms can earn money by helping to balance the grid when supplies are tight and offer significant savings to customers in return. Experts believe it won’t be long before the savings could be used to cover the cost of installing car chargers, heat pumps or other smart devices at no upfront cost.
The UK’s draughty housing stock is among the least energy-efficient in Europe. As climate goals become more pressing, and low-carbon heat pumps are rolled out, homes will need to be as cosy as possible to reduce our energy use.
The upfront cost of home energy efficiency measures – such as properly glazed windows and insulating solid walls and lofts – is often out of reach for the households that could benefit most from warmer homes and lower bills. But in the US new business models – such as one pioneered by Sealed – have met the upfront cost of insulation work, and then been repaid from the savings on a home’s energy bills.
The UK’s Energy Systems Catapult, a research centre, has been running trials on how home heating solutions could be offered to bill payers as a one-stop monthly service.
One of the lasting effects of the pandemic will be the huge numbers of people made comfortable with ordering online – including a wave of sign-ups for meal kit services.
Gousto, HelloFresh and Blue Apron are among the companies in different markets that will deliver meal ingredients in various states of preparation for a weekly or monthly fee. Prices start at about £4 a serving. Oddbox offers the enjoyable, if unpredictable, twist of delivering a weekly box of fruit and vegetables that were rejected from supermarkets for aesthetic reasons. Pret a Manger got in on the subscription act during lockdown to try to drive footfall, offering up to five drinks a day for £20 a month.
Clothing and consumer goods
There is a steep cost to keeping up with the latest trends, so it’s perhaps unsurprising that clothing rental has gained most traction at the designer end of the scale. Rent the Runway pioneered the model in the US, charging $135 (£102) per month for eight rented items which can then be returned by post to be used by someone else.
In the UK, Eshita Kabra-Davies quit her job at an investment firm in late 2019 to set up By Rotation, which allows users to rent designer clothes from others. The company is still a startup, but already eyeing other big-ticket items such as art or high-end sports gear. “Millennials want access to those items and don’t necessarily need ownership,” Kabra-Davies says.
Kabra-Davies said she grew up in Singapore, where leasing more expensive goods like sofas or TVs was common – as it was for decades in the UK, where Radio Rentals became a household name for doing exactly what the name suggests.
That model has almost vanished as technology prices have tumbled, but it is making a return – without the eye-watering mark-ups of rent-to-own retailers who tend to target the least wealthy. Apple, the world’s biggest technology company, has already launched its “upgrade programme” – essentially a subscription service for the iPhone. At £37.45 a month (before adding a mobile network contract) the price stacks up quickly, but customers are eligible for the latest model every year.
Most Britons are subscribers to the content we consume on these devices in one way or another. Audience measurement firm BARB counts 18.8m households who subscribe to a video streaming service such as Netflix, Amazon Prime Video or Disney+, while Spotify has rapidly become the dominant force in the music industry. And of course one business has been relying on the subscription model as long as any: the news industry.
This article was written by Jillian Ambrose and Jasper Jolly from The Guardian and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected]