Innovative brands are finding new ways to make money
At the start of 2016, Ikea’s head of sustainability Steve Howard said that we have reached “peak stuff”. What this means is the way we consume goods and services has changed. No longer are products used and appreciated through the lens of ownership and disposability. Instead, consumers are more conscious of how products fit into the bigger picture of community, accessibility and larger environmental shifts. The sharing economy has evolved and brands and retailers are adapting to suit this new movement.
There is a street in Sao Paulo, Brazil, where new ideas of value and conscientiousness of consumption is best exemplified: The House of All is a network of businesses whose products and services are offered on a time-rental basis. Whether it’s renting a workspace, paying for time at a coffee table rather than the coffee itself, or borrowing a designer outfit for an evening party, this network cultivates a community around sharing and lending. Money changes hands for intrinsic values and things used for the moment, rather than large sums being paid for long-term access to goods and services, as we see in traditional models.
This doesn’t mean that consumers are shunning brands and retailers, it just means that their perception of the value of products and services has changed. This desire of accessibility over ownership is interesting because it means that retailers and brands can differentiate themselves beyond price and quality.
Take Hotel Cappuccino in South Korea, a new hotel concept dedicated to sustainability and conscientious consumption. The hotel experience prioritises the reduction of waste and the notion of sharing wherever possible. The hotel rewards guests that don’t excessively use their amenities, such as extra towels and shampoo, and the hotel also collaborates with charities, ridesharing schemes and recycling initiatives to facilitate and propagate a more holistic lifestyle.
Similarly, UmbraCity promotes the idea of product experience and contextual usage over ownership. Trialling on a university campus, the umbrella-sharing scheme enables registered users to collect and borrow umbrellas from strategically-located kiosks. The umbrellas are free to hang onto for 48 hours, but the longer the user keeps the umbrella, the more they are charged until they return it to a kiosk. After a few weeks, the borrowed umbrella is considered bought and owned by the user, and the charge caps at $20.
With the rise in borrowing and lending schemes, subscription services and initiatives that put emotional values at the heart of the proposition, traditional brands and retailers are pressed to find new ways to generate income and reframe products as more service- and lifestyle-driven to fit in with this new paradigm shift.