Millennials Renting Instead Of Buying Has The Retail Industry Freaking Out

[thelakelander]

Millennials' tendency to rent instead of buy is turning the retail industry upside down.
Apparel retailers are threatened by rental startups like Rent the Runway and Bag Borrow or Steal, Grace Ehlers writes on industry website The Robin Report.

The trend has also spread to the music and hospitality industries with companies like Spotify and Airbnb, Ehlers writes.

"Never mind buying a second home when you can rent a chateau in France on Airbnb for $200. Why hire a chauffeur when they don't come with an app that tracks their relative location to yours, like Uber?" she says. "Even owning the latest album of your favorite band feels a lot less appealing when you can stream it immediately on and offline with a Spotify pro membership, without taking up any space on your hard drive."

Full article: http://www.businessinsider.com/millennials-renting-instead-of-buying-2014-8#ixzz3ASRsxhrV

[finehoe]

I don't see why retailers would object to this.  Why sell something once when you can sell it over and over again?

[simms3]

2 vastly different business models.  One is sales and one is operating.  It's like the difference between condos and multifamily apartments.  Often a developer has expertise and cost of capital to do one (i.e. build for-sale condos) and not the other (i.e. build apartments, own, and manage).

Operating implies different accounting treatment and a different business model.  The rapidity with which technology, social media, and Millennial habits are impacting taste and spending habits rightfully has everyone scared that "less bulky" startups can come up from scratch and get the new business model right from the start, growing with time, versus older established companies having to turn their ship a bit to conform and succeed in new markets.

[finehoe]

It's like the difference between condos and multifamily apartments. 

I picture it more like selling DVDs vs. renting them.  Which will have the higher profit margin in the log run?

[simms3]

^^^Another good example.  Although in that case both have suffered!  Just read an article on the decline of video rental stores here; some are holding on by a string are being funded by sentimental rich people who literally donate thousands of dollars so the businesses can pay rent and overhead.

[CityLife]

If millennials are renting in mass and thusly more mobile, it is much more difficult for retailers to figure out where to site brick and mortar locations. Obviously has a lot of implications for commercial real estate.