Increasing subscribers have encouraged rental firms to expand their scope. Changing cities frequently have pushed young professionals to opt. for rental furniture and appliances.
Sekhar Chaudhary was excited to see two things on Sept. 10, 1999. One – his wife had delivered a baby girl. Two – the television set he ordered was delivered to his home. But 20 years down the lane, his daughter replaced the old Television set with a new rented one from an online platform.
Rental appliances and furniture are highly demanded in Bengaluru. According to Grant Thornton’s report, the Indian furniture rental industry grew to USD 5 billion in 2021 from USD 4.1 billion in 2020. The report also stated that subscribers of rental furniture and appliances have increased significantly. Rental appliances and furniture providers like Furlenco, RentoMojo, Rentickle, and CityFurnish had over 9,66,000 subscribers in 2021.
Amit Sharma, head of marketing of Guaranteed Rentals Private Limited said, “In 2017 there were hardly 2,000 subscribers but now there are over 40,000 subscribers.”
It’s impossible for young professionals who move around a lot to invest in house furnishings every time they move. Their only hope is to rent appliances and furniture.
Pravash Seth, an IT professional in Bengaluru said, “I have been working for the past seven years, shifting my locations many times. And buying home furnishing material every time is not feasible. Moreover, while shifting it from one place to another, the chances of the furniture’s wrecking are high. Rental home furnishing is really helpful to me as it’s hassle-free, cheap, and convenient to use.”
Increasing subscribers have encouraged rental firms to expand their scope. Sharma said, “Now Guaranteed Rentals is a Bengaluru-based company, we are planning to expand our business to Pune, Delhi, and Mumbai. Our investment partners are Kstart and Mumbai Angels.” Kstart and Mumbai Angels are investors who fund start-ups in India.
Expenditure on home furnishing material:
On the other hand, customer spending on furnishing and home appliances has increased by 38 percent from 2020 to 2021. On average, every Indian spends Rs. 14,262 to buy furniture every year.
It’s not limited to tier-1 cities; it has covered tier-2 cities as well. According to maps of India report, the tier-1 cities are Hyderabad, Delhi, Bangalore, Mumbai, Chennai and, Kolkata. And tier-2 cities are Patna, Asansol, Dehradun, Ahmedabad, Pune,etc.
The market size of the renting industry:
According to the Redseer report, 20 cities contribute Rs 18,200 crore of the total rental market. Out of which appliances contribute Rs. 9,700 crore and furniture contribute Rs. 8,600 crore. The total rental industry is Rs 33,500 crore markets in India.
Furlenco, a rental company in Bangalore that is spread across 15 cities in India raised USD 218 million till 2021. They had an annual revenue rate of USD 23 million by August 2021 and their revenue is expected to reach around USD 72-75 million by end of Financial Year 2021-22.
Vaibhav, a business expert said, “Rental industry is going to contribute in a small amount to the GDP. Everything is rented now-a-days, even the JCB used in mining is rented.”
Peer-to-peer rental is the process of renting where individuals or organisations rent out their private appliances for a short period of time. According to a research article, Peer-to-peer (P2P) rentals act as a hindrance, by not allowing the original equipment manufacturer (OEM) to know their customers and produce for their needs and thereby get a better market. The article states that the increase of P2P rental may disturb OEM’s sales.OEM refers to a firm that manufactures parts of new appliances or materials.
Suppose a household rents a refrigerator and use it for two years and then they return it to the rental company, it can be used by other people in the coming years. This way one refrigerator is replacing three refrigerators and hence reduces the manufacturing of it. The manufacturer who provides the compressor for the refrigerator would just get one order in the place of three.
The sharing economy is small as compared to the manufacturing industry. But it might affect the equipment manufacturers. Vaibhav, Assistant Professor at BHU said, “If we say that using rental appliances and furniture that companies refurbish it and give it for rent toa second household then it that context it’s going to affect the manufacturing industry. But even though the manufacturing industry is too big, it not might get affected in the coming days, but later it might.”