- Youngsters are renting items instead of purchasing them
- Why is there this shift in consumer patterns?
- Experts from renting businesses share their thoughts
Dubai: You don’t have to be rich anymore! Okay, let’s clarify that. You don’t need a massive bank balance to arrive somewhere in style - in a branded outfit, shoes, and driving a luxury car.
Everything is up for hire. Literally everything, from luxury cars to designer handbags, you can rent almost everything for a few hours and sometimes for a whole month. Apparently you can even hire a pet!
The renting culture has gained popularity among millennials. They don’t want the hassle of owning something.
Rented-wardrobe services provide the thrill of wearing new clothes without the hefty price tag, the guilt of spending or the cluttered wardrobes. Rented homes fall in the budget, give youngsters the freedom to leave as they please and the landlord can handle maintenance and repairs. The same story with cars.
According to recent data from the US-based Pew Research Center, young people today are “more likely to rent than ever before”. And it’s happening in the UAE. Gulf News investigates the trend....
Why the shift from ownership to renting?
According to Kassim Dakhlallah, an economist based in the UAE: “The economy is overproducing and the psychology of consumers is not keeping up with the new trend. That is why consumers are shifting toward renting personal items. The decision to rent a house is attributed mainly to lack of stability and in many instances to strong requirements that many buyers do not qualify for.”
The economy is overproducing and the psychology of consumers is not keeping up with the new trend. That is why consumers are shifting toward renting personal items.
Vimal Kaim, economist based in Abu Dhabi added: “Should we buy or rent items of our interests, be it a house, a car or fancy clothes is a persistent question we all face very often. An economist’s view on renting versus buying is based on the assumption of rational consumer behaviour whenever confronted with such decisions.
“People always make rational choices aligned with their personal circumstances and thereby achieving the maximum benefit or satisfaction. People weigh cost elements associated with each option and decide according to their own personal situations. Some may have the financial capacity to bear the upfront cost to buy instead of renting whilst others may prefer to kick the can down the road with comparatively lower rent payments.”
Is the renting culture better?
According to Kaim: “A sound economic decision depends on an overall economic cost analysis with consideration to all components of costs under either option. One of the most important factors though that one must base the decision on, is that of the time horizon over which the individual is going to use the goods be it a house, a vehicle or fancy clothes.”
So, to put it simply, when you buy a new house, a large expensive wardrobe, a costly car and so on, but decide to relocate soon after, you may end up selling them for a much lower cost. Thus, losing most of the amount you spent without being able to use the item for too long.
Kaim explained that this sort of purchase does not make much sense.
He added: “If you are in a country temporarily, then the idea of renting makes better sense. Especially at a time when the cost of living is high. In a country where you can live permanently and make long-term plans, there it makes sense to consider buying.”
In a country where you can live permanently and make long-term plans, there it makes sense to consider buying.
Should everyone adopt the renting culture?
So should everyone follow millennials and consider renting?
According to Kaim: “Your age or which generation you belong to cannot determine whether you should rent or not. That decision can only be made on the basis of your financial situation and on how long you decide to stay in a place.”
However, if you take the environment and pollution into consideration, concepts like car sharing and rented wardrobes seem to be a smart idea.
Fashion is deemed to be one of the world’s most polluting industries – from toxic chemical use to water pollution and waste.
According to the World Economic Forum (WEF) website, fashion is a major contributor to pollution: “The last 15 years the industry has doubled production, while the time clothing is worn before it is thrown away has fallen by around 40 per cent. When it is thrown away, 73 per cent will be burned or buried in landfills.”
The environmental impact of ownership
While fashion brands work to limit their polluting practices through the creation of organic, environmentally conscious collections, there is still a need to limit the sheer volume of waste that fashion creates. While recycling could be considered one method, it is still problematic environmentally.
According to WEF: “Recycling is energy intensive and may require the use of further virgin materials. Additionally, while it resolves some of fashion’s sustainability issues, it does not adequately address the problem that consumers buy too much and that the average number of times a garment is worn has declined by 36% since 2000”.
“For the fashion industry to thrive in the future it needs a fundamental redesign. It has the opportunity to shift from the take-make-waste model that characterises it today by embracing circular economy principles.”
Fashion leader Stella McCartney is a big advocate of rental schemes. She even filmed her winter 2017 campaign video in a Scottish landfill site to highlight our waste issue.
Clothing rental has the potential to reduce waste and increase the lifespan of garments, it could perhaps be the key to sustainable fashion.
What do the people and companies that rent out have to say?
An Indian expatriate based in Dubai who rents out her shoes and dresses spoke about the market potential.
“People prefer to rent stuff just because it is not so much about ownership than having access to luxurious items. Millennials don’t mind using stuff that is not necessarily theirs as long as they get access to the temporary luxury,” the Dubai resident, who did not wish to be named, said.
When she started getting requests from some of her peers on borrowing her designer handbags and dresses, she realised that it had the potential to become a good business. However, she has not invested in a marketing budget, because of which she said the business hasn’t really taken off. Despite no advertising, she still gets requests every month from people asking to rent items for weddings, parties and events, looking to make a statement with their outfits and accessories.
“When you have big parties to go to and big weddings all the time, you need such items,” she added.
Ranya Khalil is the cofounder of Designer 24 and started the business four years ago. It is a designer clothing rental platform currently operating in the UAE, Lebanon and Jordan.
Khalil regards social media as one of the reasons why clothing rental is getting increasingly popular. “We work with a lot of fashionistas who wouldn’t want to wear an outfit more than once. Renting those clothes is much easier,” she said.
Changing trends are another reason why people are choosing to rent Khalil believes. She said: “The trends are moving so quickly it’s not a priority for women to own, rather get an experience is what they want,” she said.
The 32-year-old Dubai-based entrepreneur said that ownership trends are changing. “People want the access to ownership without owning things and now they are able to.”
People want the access to ownership without owning things and now they are able to.
Ikea, the international furniture store also announced that it would expand its rent-out service last week, citing environmental concerns as a trigger.
The rental service, which is already available in five countries, will be tested In 30 markets.
“The idea is to respond to customers who have different lifestyles today. People have more temporary living solutions. It can be students and temporary situations like when you have the first kid you have special needs. It all comes with the knowledge from our side that people sometimes simply don’t have the money to afford a new home,” a representative from Ikea said in an interview with the Reuters news agency.
In the UAE, Dubai’s Road and Transport Authority has doubled the fleet of cars that people can rent to 400.
Speaking to Gulf News last year, Haseeb Khan, CEO and founder of Udrive, had said: “The response is amazing. By now, we have over 43,000 registrations and around 1,000 people using our service on a daily basis. We have improved the fleet recently and are going to add more cars in all emirates that we operate in. These will also include high-end cars, such as Mercedes-Benz.”
The Wedding Shop, Dubai, rents out tuxedos and most of their clients are in the mid-thirties.
“Renting tuxedos is good for those employees who usually don't need one but need it for company functions. Also, men rent for weddings or formal events or students for graduation functions and prom,” Shweta Uppal, co-owner of the company told Gulf News.
The demand has been consistently increasing, according to Uppal, with a 30 per cent increase in this year alone. “Renting is good as they have a choice, investment is less and no dry cleaning expenses either,” she added.
Is the trend here to stay in the UAE? Millennials answer
Looks like it. Kassim Dakhlallah, the economist, said: “I believe this trend will continue unless the quantity produced is reduced.”
According to the latest research from Thred Up, a US-based fashion resale website: “The rental and subscription market, which includes luxury items and casual wear – not just occasionwear – is now making up for lost time. By 2027 it is expected to make up a third of our wardrobes.”
Today’s youngsters are one of the groups that are feeding into renting culture and think that the trend is here to stay. Many of them stated that it is simply a matter of convenience.
“Life is too quick and we move around too much,” said 22-year-old Syrian Rasha Tillo, a university student based in Dubai.
Life is too quick and we move around too much.
Some of them regarded poor economic conditions and globalisation as one of the factors promoting the concept of renting instead of purchasing.
“I made a move because of university from my family’s house, and I knew it was temporary. It made sense to rent some furniture that I knew I wouldn’t need in the long term,” Tillo added.
Hassan Ahmad, a 29-year-old Pakistani business consultant based in Sharjah had similar thoughts. He said: “I moved to work abroad, and I rented a house through a mobile application for a while. It was so convenient because I wasn’t certain about my future."
“I also rented some electronic appliances that I would use for a while and wouldn’t have to commit to buying.”
Many youngsters want the trend to grow and be able to rent more things in the future. “I hope that I can rent out even more things in the coming years and do it from the ease of my home, I definitely think that’s where we are moving towards,” Ahmad said.
I hope that I can rent out even more things in the coming years.
Renting items allows you the luxury of having many things, without spending too much money on one particular item. It also allows an individual the power of choice and variety.
Dubai-based 24-year-old Pakistani analyst Mohammad Haris is not in the habit of renting but agrees that the culture is picking up in the UAE.
“Historically, the sense of ownership of a possession has prevailed over the experience of its temporary usage, however, it seems to be changing now. It’s more prevalent in larger assets such as cars or homes rather than accessories such as watches and bags, due to the liquidity constraints with the former.
“However, consumers now have more of a defined purpose as to why they are purchasing something, like for a specific event, rather than just for owning it, which is leading to a rent culture.
Consumers now have more of a defined purpose as to why they are purchasing something, like for a specific event, rather than just for owning it, which is leading to a rent culture.
“But, it would depend on factors such as liquidity requirements and the item itself. If it is a possession for which personalisation is key to the consumer, then owning it would be more beneficial. If it is a depreciating asset or a generally uniform product, then renting would be the safer option.”
Haris said that he personally does not prefer renting items because of the hygiene concerns they bring.
Dubai-based 26-year-old Canadian national Rahul Anand, has only ever rented cars and apartments. However, the chemical engineer is leaning towards renting more things. “Due to quicker changing lifestyles, it’s beginning to seem more convenient to rent items that are currently in trend, until the next big thing comes along.”
Anand believes that renting could be more economically viable on an individual level. “There are many cities around the world where renting is cheaper and thus, makes more money sense. This would typically be surprising for an average UAE resident as rentals have been relatively higher when compared to that of similar metropolitan cities.”
He has not jumped on the rent-culture trend but said he “definitely sees following the trend and joining the rent generation”.
He added: “If it makes economic sense to rent then of course that would result in improved cash flow for my generation; whose salaries aren’t keeping up with inflationary costs. Also, the liquidity generated by renting items only for short periods of time reduces the need to hold on to depreciating assets, which could be extremely inconvenient.”
If it makes economic sense to rent then of course that would result in improved cash flow for my generation; whose salaries aren’t keeping up with inflationary costs
In the UAE, there are many social media accounts and platforms that allow users to rent designer clothes, bags and household items for a minimal cost.
While people are not in the habit of leasing items, is it a lifestyle we should adopt?
Dubai-based mental health coach, 29-year-old Shreya Maheshwari says the concept of renting is good, because “it helps the person change things around when they get it without the added cost of depreciation of the item”. However, while Maheshwari understood that renting “adds convenience” she felt that the “ownership of things is grounding”.
“The decision to invest in things I truly want to have in the long term is the challenge, commitment is hard in an era of perfect abundant choices. Ownership adds permanence. But our generation does not need more things to chase. Finding that balance between what’s financially and mentally affordable is key.”
Commitment is hard in an era of perfect abundant choices