Published August 31, 2021
Purchasing a house? That’s a major commitment. Financing a new car? Sounds pricey. Paying full retail price for clothes every time you need a wardrobe refresh? There must be a savvier way to shop. Millennials—currently the most powerful consumer generation—are faced with questions like these often. They’ve adopted the sharing economy with open arms as a solution.
Brands like Airbnb, Uber and Swap Society have made the option to rent, borrow and trade assets or products mainstream. These digital platforms make sharing cheaper, easier and accessible on a large scale—all driving forces behind the sharing economy’s projected growth from $15 billion (USD) to $335 billion by 2025.
Millennials value access over ownership because it better aligns with their financial circumstances and flexible lifestyles. Soaring house prices, digital-first behaviors and values-driven purchasing all play major roles in why the most formidable consumer generation is choosing to dive headfirst into the sharing economy.
Homes are perhaps the largest investment most people make in their lives, and they’re often out of reach financially for millennials. Instead, many millennials are looking for rental options to serve as their permanent home base.
Fluctuations in housing prices are the least of millennials’ worries. Instead, it’s the enormous down payments combined with stricter lending terms, lack of inventory in desirable markets and burdens of student debt blanketing wages that haven’t kept pace with inflation.
U.S. housing prices have risen 16% from the median $327,100 in Q1 2020, leaving many millennials feeling dejected. The double-digit increases we’re seeing in North America aren’t unique, either, with steady hikes in Europe and Asia making it seem like there’s nowhere to run. Optimistic analysts offer reassurance that we aren’t witnessing another bubble in the making. But if there’s one predictable element of the housing market, it’s how unpredictable it can be.
Aside from prohibitive financial factors, millennials’ lifestyles also play a role in their decisions to rent rather than buy. Their preference for urban hotspots is another factor that makes millennials the first generation to trend heavily toward renting.
Take New York City as an example. As Erin Lowry, author of “Broke Millennial,” writes anecdotally for Bloomberg, her one-bedroom apartment in NYC would cost around $800,000 to purchase. Add to that a 20% down payment, monthly co-op maintenance fees, utilities, repairs and taxes, and it becomes clear why her story echoes the sentiments of many millennials in similar situations.
Businesses in the housing industry are adapting to millennial choices—whether those choices are influenced more by unaffordability or unwillingness—by developing built-to-rent communities. These homes, which offer affordable luxury without the big investment and commitment of buying, signal a shift in how millennial consumers want to live.
Digitization has brought forth new ways of accessing assets that expand the sharing economy exponentially. Millennials, alongside Gen Z, lead the charge in digital technology use. This makes them an ideal audience for sharing-economy platforms.
The so-called “digital sharing economy” was born of the internet’s accessibility and reach, contributing immensely to how products and resources can be accessed and shared. As digital natives, millennials embrace the internet-fueled technical and social aspects of sharing.
Millennials’ digital-first behaviors also make this generation a perfect fit for online housing and ridesharing platforms. Both have enhanced and reinvented the definition of the sharing economy in the last decade or so. Airbnb and Uber, each a global proponent of the sharing economy, have demonstrated the enormous potential of digital sharing.
Millennials make up approximately 60% of anyone who has ever booked shared living space through Airbnb, thanks to their passion for travel and digital adoption combined with their aversion to hotels and home purchasing. Millennials also spend upwards of $100 monthly on ridesharing apps like Uber and Lyft.
Regardless of the product or service, millennials favor online access. Brands looking to capture this generation’s attention within the sharing economy must prioritize digital channels first.
Related: From baby boomers to Gen Z: generational marketing insights to win with every consumer generation
Millennials advocate responsible and sustainable business practices, and that influences what they spend money on. The sharing economy aligns with this, as it’s built on maximizing efficiency and minimizing waste of assets (housing and vehicles) and products (clothing, furniture, etc.).
The millennial generation is steadfastly committed to achieving the U.N.’s Sustainable Development Goals, including responsible consumption and climate action. Their values and behaviors make these goals more realistic, especially since they choose to spend money on brands that practice sustainable business practices.
The sharing economy is an excellent backdrop for sustainable retail models. Aside from clothing swaps (where they’re a close second), millennials top the lists for P2P marketplaces, renting, resales and subscriptions, according to a 2019 “Most popular sustainable retail models used by U.S. consumers” Statista study.
Brands like Swap Society and Pivot Subscriptions are outstanding examples of how to apply sharing-economy innovations to how retail products are consumed.
Swap Society is a massive clothing-swap network that lets members swap their ill-fitting or pre-loved clothing items for fresh apparel—and they know their audience well. Nicole Roberston, founder and CEO of Swap Society, says sustainability is a driving force behind the brand. She knows that young consumers want their clothes to reflect their values. “The overconsumption of clothing has created an environmental catastrophe, and millennials and Gen Z want to wear a better story,” Robinson says.
Pivot Subscriptions is a Canadian furniture brand that shakes up the conventional retail furniture model. It allows customers to “rent” furniture for a monthly fee that cumulatively never reaches the retail value of the product. Subscribers can also swap any amount of furniture for free after two years (or sooner, for a fee). This aligns with millennials’ desire for flexibility and their support of no-waste retail.
Related: Are subscription services the future of digital retail?
If businesses take anything from these brands, it’s that the sharing economy can apply outside of asset sharing. It might take some imagination and restructuring, but retailers can resonate with millennials in big ways by applying sharing-economy concepts to the way they do business.
From an outside perspective, it might seem like businesses have to go all in or that their business models need to be tailor-made in order to make it in the sharing economy. But just as brands had to rapidly adapt to digital-first strategies during the pandemic, businesses need to continue thinking creatively about how they offer their products and services. For millennials, unforgettable experiences are born when a brand aligns with their personal values and lifestyles.
Millennials are a discerning generation and their expectations are continuously evolving. The best way to win their loyalty is to understand their needs deeply and make changes to your business that will appeal to their preferences. The sharing economy could offer just that. Share the love!
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