Rental Economy

Megatrend of the Quarter

By Rob Anderson


In each issue of Innovation Quarterly we will be showcasing a key megatrend that is likely to have wide-ranging implications for many of our readers’ industries and organisations. This quarter we focus on ‘The Rental Economy’.

What is it?

In the rental model, you pay for usage and rent the service when required, saving significant capital costs and generally paying considerably less than for the ownership alternative. We have increasingly seen the rise of rental business models through the likes of Streetcar (transport), Spotify (music) and Amazon (server space).

Whilst some in the industry believe that this kind of model will be largely restricted to the media and data space, there are many factors that indicate that it could become a much wider trend. Markets for physical items, such as clothes (see ‘Quarter of Innovation’), are already showing signs of developing rental models and the same innovation could also be rolled out for a diverse range of industries, from toys to office managers. We could even see home ownership falling in many economies around the world.
So what makes the rental economy a megatrend? There are a number of reasons behind its prominence but some of the key drivers include:

Whilst many have overlooked the rental economy as something that is not likely to have a long term, sustained impact, the above factors establish it firmly within the realm of the megatrend. 
Although it may be perceived as a threat by many slower moving traditional businesses, it is also a huge opportunity for many companies to fundamentally serve certain customer segments differently and more effectively. 
Consequently, if you currently believe that the rental business model won’t enter your industry, it may be worth challenging this assumption and considering which aspects of your sector could change as a result and how your business can benefit. Just look at the innovative business models of the likes of Wish Want Wear; could this be you in your industry?


Rob Anderson

Rob was a founding director of Edengene in 2000, having previously been head of the business growth practice at PA Consulting Group. A chartered accountant with strong finance skills, he has 20+ years’ consulting experience working with blue chip companies, designing and directing multi-year growth and innovation programmes. Rob is the author of Edengene's customer-led innovation methodology, which provides a structured approach to innovation to deliver revenue growth.