High-End Furniture Rentals Could Become a $1 Billion Business
Text size Dreamstime As any futon-shopping college student knows, furniture is expensive. It’s no wonder…
As any futon-shopping college student knows, furniture is expensive. It’s no wonder then that lower-income consumers have long rented home furnishings rather than purchasing them outright.
Yet Jefferies argues that in the age of subscription services, this trend is about to move upmarket, creating a billion dollar opportunity.
Analyst Jonathan Matuszewski says that spending on furniture subscriptions on direct-to-consumer platforms will approach $1 billion in five years, up from some $150 million today. “We are at the beginning of a revolution in how consumers furnish their residences,” he says, adding that “access over excess will be a mega-theme in the years ahead.”
He notes that about two-thirds of 1,000 consumers surveyed by his firm were interested in the idea, as people move frequently or want to test designs and styles before purchasing.
Some companies are already experimenting with the concept, which has previously been the domain of more lower-end retailers like
Rent-A-Center (RCII) and
Williams-Sonoma’s (WSM) West Elm and Pottery Barn are partnered with
Rent The Runway (RENT) and Feather, and Crate & Barrel and CB2 use Fernish.
Matuszewski argues that “investors should give management teams ‘high marks’ for this strategy, as it builds loyalty with consumers prior to first-time homebuying age.” Potential subscribers gave
Williams-Sonoma’s brands high marks, which he thinks could translate to rental sales of more than $300 million for the company in five years.
Matuszewski acknowledges it could initially be a threat to marketplaces like
Wayfair (W), but argues that company ultimately “could leverage pre-existing infrastructure to enter furniture rental. The business-to-consumer opportunity is most obvious, but rental could also bolster
Wayfair’s B2B business.”
Still, he maintained Hold ratings on both Williams-Sonoma and Wayfair.
Write to Teresa Rivas at [email protected]