One industry that has yet to see much disruption from this area is retail. By 2025, however, it is predicted that the sharing economy will be worth a whopping $335bn.
Will fashion and retail brands see a slice of the pie?
Here’s a closer look at the opportunities (or dangers) the sharing economy presents and how it has already had an impact.
Why is the sharing economy such big business?
Now more than ever, there is a huge demand for services within the sharing economy, with benefits ranging from convenience to social good.
According to PWC research, 86% of US adults who are familiar with the sharing economy agree that it makes life affordable.
Similarly, 76% agree that it’s better for the environment, and 63% say it’s more fun than engaging with traditional companies.
Meanwhile, we’re forever being told that millennials in particular are keen to forgo possessions for a more pared-down lifestyle – with 73% preferring to spend money on experiences rather than material goods.
Altogether, does this mean young people are turning towards non-traditional retail?
A new kind of retail
With just 2% of Americans having engaged in a retail-based transaction in the sharing economy – a much lower percentage compared to entertainment or automotive sectors – it’s not a trend that’s taken off just yet.
However, we have certainly seen some disruption from online marketplaces, with consumer willingness to buy and sell online fuelling the rise of sites like eBay and Etsy.
When it comes to the more specific notion of sharing – i.e. borrowing or renting – we’ve also seen a number of companies find success.
Sites like Rent the Runway and Beg, Borrow or Steal are built on the idea that consumers can’t afford to buy luxury goods or simply don’t want to spend over the odds, so they offer rental as a short-term alternative instead.
— Kayleigh Harrington (@Kayleigh_H) October 1, 2016
Interestingly, it’s not only luxury brands that are capitalising on peer-to-peer demand.
More recently, we’ve seen an influx of new brands appear. The likes of Vigga, a subscription-based service for pre-worn baby clothes, and Poshmark, a way to buy and sell lower-price fashion, demonstrate that it’s not always about getting designer dresses on the cheap.
Whether it’s giving into demand for disposable fashion or offering a way to dress sustainably – retailers are using the sharing economy to provide greater value for consumers.
Opportunities and challenges
Of course, borrowing or recycling consumer goods is a little different than sharing accommodation or music. There is a behavioural mind-set that most people have when it comes to what they wear or items they use on a day to day basis, and it’s very different compared to what they listen to or how they travel.
Perhaps this reflects why just a small percentage of consumers are aware of or currently use sharing economies within retail.
But is it due to less demand, or fewer opportunities for consumers?
That’s not to say that existing brands aren’t beginning to recognise potential value, but many understand that there are far more stumbling blocks for retailers than utility-based companies.
While an Uber, for example, is on-demand, guaranteeing that customer needs are met within the shortest possible time-frame – a product-based company has to deal with additional factors like inventory and delivery.
One solution to this is sharing the supply chain, meaning that retailers will partner with existing companies to help facilitate services.
We’ve already seen examples of this.
Patagonia, the outdoor apparel retailer, has partnered with the freecycle startup Yerdle to encourage the recycling and reusing of its clothing. Similarly, Walgreens has also gone down the partnership route, teaming up with TaskRabbit to deliver its products to customer’s homes.
There are many benefits to this tactic, a couple of which include:
Improved brand perception
By embracing the sharing economy, brands can bring awareness to the wider positive values they uphold. Sustainability, inclusivity, functionality – these are all benefits that this business model evokes, and that consumers increasingly care about.
In turn, the sharing economy helps build trust. By creating a more emotional connection, through both the aforementioned values and sense of community that ‘sharing’ evokes, consumers are more likely to return and remain loyal.
The concept of the sharing economy is certainly not easy for retail brands to implement, with logistical factors and consumer preferences still being big barriers.
However, with the aforementioned benefits, it is a tempting opportunity for existing companies to consider.
With a growing number of startups fulfilling desires for greater connection with brands, sustainable values and a minimal lifestyle – there could be further disruption to come.
For more on the sharing economy, read: