This post originally appeared in the August 2015 issue of Hardware + Building Supply Dealer.
As much as I hate shoveling snow, I can’t possibly justify spending upwards of $500 on a snow blower that I might use five days a year and would take up space in my garage for the remaining 360.
According to a recent PwC study, 43% of consumers agree that “owning feels like a burden.” When you consider the cost, maintenance and storage requirements, buying things is kind of a pain. It’s no wonder, then, that the “sharing economy” is estimated to be $110 billion (and growing fast), according to a November 2014 Leo Burnett study. Whether it’s Netflix, Spotify, Zipcar, TaskRabbit, Uber or Rent the Runway, there’s another, arguably better, alternative to ownership for virtually every aspect of our lives.
In a world where people don’t aspire to own their own homes or even openly despise the idea of owning a car, where does that leave the tool, yard care and appliance markets?
Brands in the home category have responded to this seismic shift the same way media companies responded to the shift in digital music – slowly and badly. The most established brands merely did what they know best – build a better mousetrap. In truth, rethinking one’s relationship to one’s customers might be what’s needed to avoid becoming the Tower Records of the home category.
People don’t want a snow blower; they want their driveway clear of snow. People don’t want a car; they want a reliable way to get from Point A to Point B.
BMW, the ultimate driving machine, is now trying to become the ultimate carsharing service. As Richard Steinberg, CEO of DriveNow at BMW said, “we used to be the provider of premium cars, and now we’re the provider of premium mobility as well as premium cars.”
For the home category, too, there are ways to create an ecosystem around your product versus creating a product that has to earn its place in some other network.
- Implement a program where customers can trade in used products toward the purchase of a new one. Milwaukee Tools has a program where you can trade in old tools and get $100 off new ones. This not only helps customers who are looking to declutter, but also gets them to buy a new product as well.
- Give customers the ability to rent your products directly. Sites like RentMyItems allow people to rent recreational equipment, tools and appliances from other people. What if you were able to keep that customer within your branded ecosystem by facilitating those rentals directly?
- Give life to used or recycled tools by creating a branded tool library. Tool libraries are popping up all over the country and will only become more popular as the trends of urbanization, sharing and downsizing continue. A branded tool library would minimize waste, introduce more people to your brand and extend the life of your products.
- Create a platform for customers to connect and share with each other. Think about what the NFL did with its Ticket Exchange. Recognizing that people were buying and selling tickets outside of the official properties, the NFL created a safe and secure platform that engaged its customers and gave the League a cut of the profit too. What if a tool brand created a branded online community where customers were able to buy, sell and share their tools with a very targeted and engaged group of people?
Far be it from the smaller players to help usher in a seachange of this magnitude. In another PwC survey of 1,322 global CEOs, half of the U.S. CEOs surveyed believe a significant competitor is emerging, or could emerge, from the technology sector. Take one look at what Tesla is doing to the automobile market, or what AirBnB is doing to the hotel market. Small technology startups are coming in and revolutionizing entire industries of big, established brands. Ford or Hilton could have just as easily assumed these roles, but now they’re all playing catchup to the smaller guys. Viewed through that lens, these ideas not only become more realistic for brands in the home category — they’re mandatory for survival.