Choosing to rent white goods or a TV rather than spending up front to buy the appliances used to be the route to furnishing a house for cash-constrained, often young families. But the market is changing, reflecting the tastes and lifestyle of the younger generation with cash, Generation Y.

The trends

While the core demographic remains young families, there is a growing trend for single, increasingly aspirational individuals to rent appliances, technology or furniture, says Alan Payne, general manager of Mr Rental, a franchised business set up in Queensland 19 years ago and now across Australia and New Zealand with nearly 80 outlets.

“The renters now are young socialites, very mobile, maybe professional or in shared accommodation. They donÕt want to commit, thereÕs no nest building, no family home,” Payne believes. Instead, todayÕs younger consumers want to move into a three or four bedroom brick home and furnish it with the latest items without waiting.

Instant gratification is favouring the rental market. As consumers weÕre no longer expected to keep a TV for 20 years, nor our fridges or sofas; add to this the so-called early adopters looking for the newest technology and there is the perfect equation for a rental goods business.

Going high tech

Customers understand an updated version of the latest computer will be on the shelves probably within months and some consumers simply donÕt want to be bound to a product if technology and fashion are going to change, suggests Payne. Renting now is about obsolescence, not absence of income. ItÕs about getting the latest and the greatest, he says.

The message is that customers can rent the latest technology and get the benefits without the sinking feeling that theyÕve just bought an outdated item. “ItÕs convenient to upgrade, flexible, and thereÕs no commitment. And itÕs not more expensive to rent than to buy: just $10 to $20 a week to rent a computer,” explains Payne.

And he points out that even if it is cheaper to buy the customer may get the purchase wrong, or discover a new model has just come out; then the savings donÕt seem worthwhile.

So itÕs no surprise the items most in demand at Mr Rental are computers, high end audio, and furniture.

The portfolio even includes Apple technology. According to Payne, “WeÕre the first rental company in the world to have Apple, they are still very protective of their brand. People would love to try Apple and can rent and try, then they can hand it back. ItÕs a low risk.”

While this does not appeal to the traditional rental customer, he adds, there is a small but steady Apple fan club for whom this is the perfect option.

Moving on

The Mr Rental model also allows customers the opportunity to buy the rented item at any time. Rental payments are made month by month for an indefinite term or a rental period that can be altered to suit, with costings reconfigured at any time. The key word here is flexibility.

As technology advances so the rental menu needs to change to reflect developments and the business is considering adding mobile phones to the list. This is one area, though, where the constant upgrading is proving a real challenge for the rental market to embrace, admits Payne.

So what does the rental menu include? A product committee recommends approved products to keep the range balanced (franchisees are free to source the approved brands from their choice of supplier). Franchisees are a logical part of this committee because they can provide a direct link to the customer and their needs, he says.

Two or three brand choices of one product is usual, giving the customers options and limiting the risk for the franchisee who bears the cost of rental equipment; they buy, finance and maintain the equipment, and provide a liability waiver. What the franchisee gains from the franchisor is a preferential buying program, e-commerce, and admin back up such as tracking and invoicing.

And because the business needs to keep up with the customer demands, not just in terms of product but the manner of purchase, so the franchise model is evolving. Although phone orders still account for the bulk of the business, customers are increasingly keen to view and choose their items and so a showroom is becoming a more popular option for incoming franchisees.