Oct 31 2019

Update: Furniture rental at Otto and IKEA

While start-ups like Roomovo developed their first business models with furniture rental, the major players in the furnishings market are also having a go at the new business segment. We talked with Anne Remy, spokesperson for Otto’s rental shop Otto Now and Kim Steuerwald of Corporate Communications at IKEA Germany. 

Otto Now has been offering rental furniture for a year now

In December, Otto Now will be celebrating its third year. When the rental shop was first launched, customers had a choice of technical, household or sports products. Since the end of last year, the start-up of online retailer Otto has also been offering furniture for rent.

“We started with a selection of 30 home and living products. Included among them were easy chairs, chairs, tables, sofas, shelves and sideboards,” said Otto Now spokesperson Anne Remy. The three styles initially available were Scandinavian, industrial and vintage.

“We wanted to offer our customers a certain selection and also first test how the new range would be received by them,” continued Remy. In addition, we wanted to pinpoint more precisely which target group might be interested in rental furniture.

“We thought of people who might want to first try out a new style before buying a product or students and professionals with a mobile, flexible lifestyle who do not want to make a long-term investment in new home furnishings.” One thing was clear right from the beginning: People who rent furniture are a completely different target group from those who buy.

By the way, the idea to include furniture in Otto Now’s range also came from the customers themselves. “Every so often, customers would contact us about this,” says Remy. Since Otto is the market leader in German online furniture retail, this was also a logical step.

Otto Now started with a selection of 30 home and living products. © OTTO

Offering expanded with the addition of children’s furniture

In the meantime, the range of rental furniture has been extended significantly. The programme now includes children’s furniture such as changing tables, wardrobes and beds. The company’s cooperation partner is Hülsta. According to Remy, children’s bedroom furniture is a completely new use case because kids grow very quickly.  Other recently available products in Otto’s home and living range include lamps, rugs and gaming chairs.

Otto Now’s focus is on circularity. The Hamburg-based company is now working with a professional service provider to restore used furniture to like-new condition. In addition, the range only includes products that can be readily put together and taken apart or easily repaired.  

Remy’s conclusion after around ten months: “Compared to the demand for our top rental products such as fully automatic coffee machines, washing machines and e-bikes, there is still room for improvement with furniture.” All the same, the company wants to continue to offer the range in the future as well as test and optimise the business model further. 

Direct contact with customers

Direct dialogue with the customers helps in this process. In addition to direct customer contact, Otto’s in-house UX lab also carries out customer surveys on their purchasing experience. At “Share”, the first sharing economy meetup hosted by Otto Now in Hamburg at the beginning of September, the company also talked with other market participants in the industry. “We wanted to find out from each other about our experiences and the challenges that we each face.”

Also interesting is the fact that Otto Now did not invest in marketing measures until 2019. “Up to that point, customers mainly became aware of the offering through the media,” concludes Remy. “We are now doing advertising for Otto Now. Also, both the team and budget have been increased and Otto Now’s offering is now integrated in the online shop at otto.de.”

Over the next few years, IKEA wants to develop an offering that will help customers consume in a more sustainable way. © Inter IKEA Systems B.V. 2019

IKEA is also testing the interest in rental furniture

“We at IKEA Germany also find the idea of furniture for rent very exciting,” says Kim Steuerwald of Corporate Communications at IKEA Germany. “We are currently analysing the experiences of other IKEA countries, which have already conducted tests with this offering.” 

The Swedish company is also planning to conduct a market evaluation in order to find out more about which target group or segment is most interested in rental furniture. It is conceivable that the offering will first be developed for a clearly defined target group such as students or for a specific range of products.

“The idea behind this is that we see customer behaviour changing worldwide,” says Steuerwald. “One trend is that people are becoming more interested in the environmental impact of their consumption behaviour.” Another is that the relationship to things is changing: For many, it is no longer important to own everything; it is enough to be able to use something when needed. 

Embracing the circular economy 

All of these insights have prompted IKEA to pursue the development of an offering over the next few years that will help customers to consume in a more sustainable way – and offer them a high level of service through a leasing model.

IKEA’s goal is to become a circular business by 2030 and tackle the major challenges in society such as climate change, unsustainable consumption and the shortage of resources. 

In order to achieve the greatest possible positive impact as well as this goal, IKEA is changing its entire value chain from product development and material procurement to development of the supplier chain and logistics and where the company meets its customers. 

“Furniture for rent supports this direction: Through upkeep, multiple use, the reuse of components and material recycling, resources are utilised to the maximum,” concludes Steuerwald.

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