You're likely to have heard it time and time again: Millennials are reshaping consumer behaviour, redefining buying habits, changing the way we think about the workplace and the way that businesses and marketers need to operate. Millennials make up 13.9% of the total UK population and spend more than $600 billion annually in the US alone (Accenture).
'This is a generation that’s really grown up connected… So companies understand that they really need to be present and connect with their consumers... in ways that they hadn’t before,' says Lindsay Drucker Mann. (Goldman Sachs)
A key area in which millennials are leading the change is by choosing access over ownership.
But, traditional retailers and business owners are often puzzled by what exactly this means. It's undeniable that the preference to have less and experience more is disrupting retail business, thus it is crucial for companies to remain nimble adapt to these changes. To do this, one must understand why millennials want access over ownership and how businesses can leverage this trend.
Impaired by student loan debt and the Great Recession, Millennials place less emphasis on owning and more on sharing, bartering and renting goods. These behaviours have helped propel a whole range of businesses - shared car rides offered by companies like BlaBlaCar, to sharing accommodation on holiday via the likes of Airbnb.
However, for millennials, the appeal of 'no ownership' is moving beyond not owning houses or cars. It is extending to virtually every aspect of their lives.
A whole new industry based on sharing or renting everything from household essentials, clothing, electronics and even furniture, is springing up in the UK, posing a disruptive force to traditional retailers.
PwC notes that the definition of the sharing economy is still vague and uncertain. In its latest report, PwC defines the sharing economy as 'an emergent ecosystem that monetizes underutilized assets or forgoes the purchase of those assets altogether, in favour of borrowing, renting or serving up microskills in exchange for access or money.'
As ownership loses its value—many view it as an expensive burden—this new business model presents consumers with cost-effective, convenient options that inspire a sense of trust and community. (eMarketer)
The one thing that millennials do buy, and keep, is their smartphones. Digital devices are the ultimate gateway to the sharing economy.
But despite persistent myths, the sharing economy is not merely the result of millennial demand for immediacy and urgency. The new type of consumer values eco-friendliness (championing reusing, reducing, and recycling), and their freedom to embrace a more nomadic lifestyle.
So how are traditional, big retailers adapting to the new consumer landscape?
Let's take a look at three case studies.
1. Patagonia - a clothing brand renowned for its quality and environmental reputation has been offering free repairs since the 70's. In recent years, however, it launched a program called Worn Wear, which encourages customers to trade in used clothing in good condition. They are then resold at its Portland, Oregon store.
"We found that it encourages new customers to come to our brand," said Nellie Cohen, 32, environmental marketing manager at Patagonia. (Today)
2. BMW - in 2011, BMW and luxury rental car company Sixt joined forces to create a car-sharing service in Berlin called DriveNow.
Crowd Companies founder Jeremiah Owyang said that, “Instead of selling a thousand BMWs, they want to sell one BMW a thousand times. They know that in urban cores, people don’t want to own cars. It doesn’t make any sense, so they’re trying to generate more value-added services, whether it’s transportation services, parking solutions as you borrow that car, charging services, offering insurance.”
DriveNow is particularly successful in Berlin, where its more than 1000 cars are driven five to six times a day.
Richard Steinberg, the CEO of DriveNow, admitted that millennials propelled the idea. “Millennials are not so much interested in spending their hard-earned money on buying a car. They’re not interested in parking, insurance, vehicle acquisition. But they still have mobility needs. Public transit, Uber, all the various sharing tools are at their disposal—but there’s not personal mobility. So that’s where we fit in.” (PwC)
3. Hyatt Hotels - has invested in Onefinestay, a company that rents owners' upscale vacation homes. The move was seen by many as a decisive step to tackle the threat posed by Airbnb, and will help enhance Hyatt's understanding of the guest experience. (Skift)
'While many hoteliers are dismissive of the sharing economy, Hyatt and Hilton Worldwide are either learning from it or at least taking a balanced view about the trend,' says Dennis Schaal, editor of Skift.
There is no shortage of examples of big companies making the most of the sharing economy: US giant General Motors recently announced a $500m partnership with Lyft, having already teamed up with RelayRides.
If you want your company to be a winner in the sharing economy, focus on effectively matching people and resources, rather than simply focusing on selling the most goods.