Ikea, the world’s largest furniture seller, is trying out a new business model: renting.
In an interview with the Financial Times, Ikea’s Torbjorn Loof, who is charge of the company’s brand and concept arm, Inter Ikea, said the company would soon be starting to experiment with furniture rentals.
The program will first be deployed in Sweden as early as February, with desks and chairs available to rent. Ikea plans to eventually roll out “scalable subscription services” for renting furniture in other markets. The company hasn’t shared pricing options yet.
“We will work together with partners so you can actually lease your furniture,” said Loof. “When that leasing period is over, you hand it back and you might lease something else. And instead of throwing those away, we refurbish them a little and we could sell them, prolonging the life cycle of the products.”
Renting will be a big pivot for Ikea. Imagine renting those Billy bookcases or that Hemnes bed, only to hand them back once you’re on to the next apartment instead of figuring out how to sell or dissemble them during the move.
While the global furniture market is huge, earning roughly $472 billion every year, Ikea has been a go-to for customers specifically because its products are typically affordable.
But Ikea has been looking to change its business model over the last few years in order to adapt to the times. It’s also been looking to move its stores to more centralized locations within cities, instead of the outskirts-of-town destinations most stores are currently located in, as it serves more customers without cars. Its first city store will open in Manhattan later this week. And as customers have been turning away from the big-box store concept Ikea is known for, the company has been experimenting with smaller store formats.
Ikea sees rentals as part of a three-year plan to help its business and to make the company more environmentally sustainable. Ikea has 313 stores in 38 countries and makes $4 billion annually. That a company of this size will soon allow shoppers to rent its products speaks to the growth of the sharing economy — that is, the rise of businesses allowing shoppers to pay smaller amounts of money to borrow products instead of owning them. Ikea’s latest moves prove that renting will likely become a pervasive shopping trend fairly soon.
The sharing economy has changed so much of how we move through the world — from Uber and Lyft disrupting transportation to Airbnb changing the way we vacation. Experts believe the space will hit $40.2 billion by 2022, but it’s not just revenue that a company like Ikea is after. The company, per Loof, is looking to rentals as another way to keep up with shopping trends.
Blame it on Instagram, but customers in the home decor space want to be able to change their tastes quickly and cheaply. Ikea, he said, will be applying this idea by letting customers eventually rent different pieces of kitchen merch, like cabinets.
“It’s interesting if you as a consumer say, ‘I can change and adapt and modernize my kitchen,’ if that’s a subscription model,” he said.
Businesses believe the sharing economy is one way to grab shoppers’ dollars because of the so-called “end of ownership,” an idea authors Aaron Perzanowski and Jason Schultz coined to describe how shoppers have been eschewing personal property in the digital era.
Shoppers are inundated with a never-ending array of choices, so there’s freedom in noncommittal spending where they can use something for a bit and then trade it in for something else. There’s also the fact that consumers today are riddled with debt, are extremely debt-conscious, and concerned about spending in general. There’s some research that points out that even though ownership might make sense in the long run, there’s a certain psychology that makes it seem as though it’s better to spend a small amount of money to borrow something instead.
While companies like Uber, Lyft, Airbnb, and TaskRabbit have become giants in the sharing economy, Ikea is not the only non-startup to be jumping into the space. On the heels of the success of Rent the Runway, for example, mall brands like Ann Taylor, Express, and Jones New York have been letting customers rent clothes instead of buying them.
But unlike the clothing rentals, which can easily be fixed and professionally cleaned, Ikea will definitely face some challenges once it starts renting its products. The company does not have a reputation for particularly high-quality furniture, and as Curbed puts it, “not all of the store’s flat-pack offerings are shown to stand the test of time. The store can get a bad rap for pieces that fall apart after a move or lose their shine at the first instance of wear and tear.”
If Ikea wants to become a household name for furniture rentals the way it is for affordable home goods, it will likely have to work on quality and materials, too.
The pricing for the rentals also has to be worth it, too, of course. While shoppers might reasonably pay high fees to avoid assembling Ikea furniture — an experience that is humbling, emotional, and frustrating AF — the cost isn’t all that high to begin with. If the price isn’t right, shoppers are likely to just dump their sad, beat-up Lack tables by the curb on moving day.