We have all heard the term, “Generation Rent.” It means, loosely, a large swathe of the current generation of young people who – with ever-rising house prices and a shortage of supply – will never own a house, instead of being forced to rent for all their adult lives.
But could ‘Generation Rent’ apply not just to houses but to everything? Netflix, Spotify, Amazon Prime, Just Eat, Dollar Shave Club… Do we really need to own anything anymore? When you can rent a bed, why not rent everything in your life?
When I was growing up your order of priorities was very simple. You reached 17 and passed your driving test. Then you worked through the summer – I was a bingo caller if you must know – and you bought your first car. After you had finished school or university you got your first job, saved up and – eventually – bought your first house.
Then you gradually progressed through life, acquiring better cars (preferably ones that did not let the water in when it rained) and bigger houses – and everything that went with them: videos, record collections, furniture and a garage full of junk.
Now I look at my own children and see people who may well do exactly the opposite. The eldest two live in Leeds, where house prices will keep them off the housing ladder for some time to come – barring a major cash injection from the Bank of Mum and Dad.
A car? Why would they want to own a car? Public transport is good in the city, and neither of them need a car to get to work. Besides, parking, petrol, the inevitable maintenance – they have better things to do with their money. And if they go out, obviously they simply use Uber.
Videos? They use Netflix. Record collection? That is what Spotify is for – although my son did go through my old vinyl collection and disappear with a few of those.
The question is – does not owning anything matter? As long as the internet does not go down, everything you need is online.
The rise and rise of the subscription economy
According to a recent study done by McKinsey & Company the subscription e-commerce market has grown by more than 100% a year over the last five years. That is quite phenomenal growth – and we are now seeing the subscription model move into more and more traditional industries as well – publishing is a perfect example of that – and long established, ‘traditional’ companies making investments in the sector. In 2016, for example, Unilever acquired Dollar Shave Club for one billion dollar shaves – or just over £750m in real money.
It is not just individuals either. If you work for yourself or run a business, the chances are that you are reliant on subscription services. I use them to automate my tweets, give me data on book sales, distribute sample books to my mailing list and monitor the response to my social media. None of them, individually, amount to very much – around $10 (£7.50) a month would be typical – but like anyone who subscribes to a few services knows, taken together they can soon add up.
The disadvantage of subscription services
The advantage of subscription services are obvious: no big upfront costs, no having to sell something you own on eBay when you no longer want it and – once your subscriptions are paid each month – you know exactly how much you have left to spend or save. And no clutter: moving home becomes much more simple when you don’t have boxes and boxes of CDs, videos and books to move.
Subscription services do, however, come with one significant disadvantage. They are reliant on a continuing income. Lose your job and suddenly you do not have anything. No music, no videos and – quite possibly – no bed.
The future of subscription services
Yes, there is even a company that will rent you a bed. The example I am quoting is called Feather and is based in the US – but there must be, or there soon will be, an equivalent in the UK.
So for $175/month (£130/month) Feather will give you ‘furniture freedom’ and provide you with a bed, a mattress, a bedside table and a crane floor lamp. You may protest that a bedroom also requires somewhere to keep your clothes and a laundry basket to toss your underwear into and I would not disagree – but I am afraid that will be extra.
To a traditionalist like me £130 a month to not own your bed seems a lot of money. But I am not a young professional in New York, San Francisco or London who may only be in his apartment for six months. In that case, Feather makes perfect sense – you would probably be willing to pay the cost of the subscription to be spared the bother of moving everything at the end of your contract.
As the report from McKinsey says, the generation we loosely call ‘Generation Rent’ do not see the essentials for their parents’ generation as essential any longer. “They are putting off purchases,” says the report, “Or avoiding them altogether.”
But even millennials need to eat…
…And to do that it seems that they are ever-more committed to ‘semi-subscription’ services such as Just Eat. We have commented many times in these articles on both the decline of the high street and the increasing number of restaurants that are closing. But companies like Just Eat and Deliveroo continue to go from strength to strength. There may be no monthly subscription, but there is no real need to invest in a wok or a slow cooker when you can have food delivered.
Just Eat recently reported a 45% surge in revenue for 2017, with 10.5m UK customers (roughly 1 in 6 of the population) collectively buying £1.9bn of food from the company’s 28,400 partner restaurants and takeaways. It is not just the UK either – globally, Just Eat attracted 21.5m customers.
A generation that started out renting just one thing – a mobile phone – has now progressed to being prepared to rent just about everything, while their parents stand by and try to understand the fundamental shift in attitude. And wonder who is going to clear out the attic when it is finally time to move…