The current economic pressures along with a decreasing feature gap could mean that consumers are ready to embrace a subscription model for electronic goods, once popularised by retail outlets such as Rumbelows and Radio Rentals, and still provided by companies such as Martin Dawes.
We all know that fashion is cyclical – the bell-bottomed jeans and baggy tops seen on today’s youth which wouldn’t be out of place back in both the 1970s and 1990s can attest to that. But of course, the re-emergence of trends that we thought we’d seen the back of is by no way limited to what we have in our wardrobes.
Several perennials of the high street have disappeared over the years, notably the likes of Woolworths, Topshop and, less than 18 months ago, Debenhams. Rewind 25 years and it would have been unusual to make a trip to your local town centre and not spot two other brands that, prior to their closures in, respectively, 1995 and 2000, were ubiquitous: Rumbelows and Radio Rentals.
Both were electronic shops that eschewed the conventional transactions of debit and credit (or cheque – if you remember those) and instead offered their goods on a rental basis at an affordable price. Products, not merely radios, but also TVs, VCRs (stop me if this is too many blasts from the past in one article) and white goods, could be hired out in the manner of the video cassettes that were equally part of our lives in the last quarter of the 20th century. Then, when the latest new-fangled model came out, the renter could upgrade, usually with a small increase to their monthly payment.
It’s worth remembering two things at this point. First, products were more expensive back then – even a low-end television was going to be nudging the thousands, as opposed to today where you can pick one up for a couple of hundred pounds (with prices obviously rising for the aficionados who shop at the top end). This is without even adjusting for inflation – quite a hit on the wallet all at once. Secondly, it was much more worthwhile to upgrade, as the technology was closer to being brand new and so on a sharp path of improvement in terms of quality and features.
Today consumer goods are generally more affordable, and there are fewer places that the tech can go – witness how the mobile phone is only really now touted on its ever-sharper camera quality, something only the abovementioned devotees would genuinely notice or care about.
And yet it could be that we are moving towards a place where consumers see renting their electronics as the best option.
The increased cost of living, due to the well-documented external forces that are acting on all of us right now, mean that people aren't able to afford to switch up their appliances and other electronics as frequently as they once could. But if they move to a subscription model, they can have the latest tech for a fixed monthly cost – which also means that the manufacturers break the change cycle.
It’s a trend we’re already seeing in the automotive industry, with fewer outright purchases of cars and far more long-term leasing and renting, not to mention the prevalence among streaming services and many other industries besides. Manufacturers in the motoring sector (such as Volvo) are setting up subscription models direct to consumer (DTC), which ensure they own the customer journey/experience, protect margin and increase exchange cycles.
There’s an increase in the appetite for subscription models, as people become more comfortable with the concept of not owning something outright. Even in terms of housing, young people are willing to rent, or resigned to the fact they may not be able to get on the property ladder; therefore, they accept that renting is a more viable option and are in fact comfortable with the idea.
Looking further afield, could you even say this is a trend seen in young people who are now choosing to use Uber instead of paying huge amounts of money to acquire a driving licence and then buy a car and all the expense that comes with it? Uber itself is almost like a subscription model that provides access to flexible travel by car, without the cost and stress of owning a vehicle and having to drive.
One thing that would be different from the 1980's model is that manufacturers would offer rentals direct to consumer (DTC), ensuring they’re in control of the customer journey/experience, protecting margin and increasing change cycles of products.
Manufacturers’ business models and capabilities are having to change significantly as they move into DTC: firstly, they’ll need to master the retail journeys, and secondly, subscription models could force them to move into financial services, thus needing to develop these capabilities (plus consider the risk associated with financial contracts, in terms of debt, liabilities, customer vulnerability, and so on.)
Admittedly, it’s unlikely that we’re all going to start tie-dyeing our T-shirts again and wearing shiny black bomber jackers. But don’t bet against soon seeing a throwback to a consumer model that was once all the rage – this could be the right economic climate for it to evolve, adjust and makes its comeback.