In the third part of our series on how furniture brands can ensure continued relevance and revenue, we discuss why shifting from a product-orientated to service-orientated model will help manufacturers play a more central role in consumers’ lifestyles.

 

JOIN THE RENTAL REVOLUTION

As the global economy prepares for a collective belt tightening, consumers will likely loosen their fixation with ownership even further. Making an outright purchase for many high-value items has long been anathema to most under 35, and it’s liable that the furniture sector will increasingly be impacted by this change in mindset.

The last 18 months have seen significant developments in the B2C furniture rental market, particularly with regards to Ikea, who kicked off 2019 by adding some hard details to its long-mooted move into the rental game. Trials based on office furniture have taken place in Switzerland and the brand is offering students in the Netherlands the chance to rent a bed, desk, table and chairs for a monthly fee of up to €30. Ikea had plans to test leasing in 30 territories throughout 2020. For the Swedish giant this shift is driven by a desire to create a deeper relationship with its customers. ‘When this circular model is up and running, we have a much bigger interest in not just selling a product but seeing what happens with it and that the consumer takes care of it,’ explains Torbjorn Lööf, the chief executive of Inter Ikea. Alongside leasing strategies, Ikea is increasingly providing parts for repair and introducing buy-back/sell-on schemes, moves that suggest not only the end of its association with obsolescence-focused design but also provide an array of interesting formal challenges. How do you create products that will also appeal to secondary and tertiary users at unspecified points in the future?

Header and top: Harth enables its consumers to rent art and furniture. Photos: Courtesy of Harth | Bottom: Kamarq's rentable Kube storage boxes come in six different sizes and a variety of colours. Photo: Courtesy of Kamarq

UK startup Harth, which launched last summer, targets the opposite end of the market, enabling customers to access objects from leading name designers and galleries such as Tom Dixon, Lee Broom and Established & Sons, for a fraction of the outlay. While the advantage to consumers is clear, there are also several advantages from the designer’s point of view. Items that would otherwise be occupying expensive warehouse space instead generate revenue, whilst still remaining a saleable asset.

Both initiatives help in lowering the price barriers that often prevent furniture brands in gaining access to younger demographics. More than this, however, they establish a reciprocal relationship that embeds them more centrally within how users make a home. As consumer behaviours evolve at an increasingly rapid rate – not least due to crises such as the current pandemic – offering to be a partner, rather than just provider of product, will be key to retaining customers.

 

DON'T SHOWROOM, MAKE ROOM

The key to effective brand stretch is in finding sectors that offer a coherent extension of your core business. For several forward-looking furniture manufacturers, this has involved diversifying into hospitality ventures. These provide an opportunity to not only add additional revenues streams, but also offer more immersive forms of retail and, critically, generate new moments to play a meaningful part in consumer’s increasingly experience-orientated lifestyles.

West Elm, who has opened several hotels in mid-tier American cities over the last few years, saw hospitality as a chance to extend their reach without opening another bricks-and-mortar retail space. ‘Where many retail brands have put the nail in their coffins is by opening too many stores,’ West Elm president Jim Brett told the Wall Street Journal. But a hotel can serve as a subtle way to foster relationships with customers without saturating the market, blending product tactility with memory-making travel. And for a homeware brand known for its design aesthetic, it’s an easily translated experience from product to space.

Vipp Chimney House by Studio David Thulstrup, Copenhagen. Photos: Irina Boersma

Danish home brand Vipp now has three hotels in operation. Its proposition is one-room hotels in unusual locations – the latest is an abandoned water pumping station in Copenhagen. Kitted out with Vipp kitchens, tubs and furniture, the company makes it clear that these spaces are both a novel retreat and an opportunity for guests to try before they buy. ‘We believe it shows honesty, authenticity and builds trust,’ says Kasper Egelund, CEO of Vipp. ‘You cannot fool the consumer. Our (potential) customers can touch, feel and test our products like they would in everyday life, and the verdict comes straight afterwards.’

‘[Hotels] are an invitation to the consumer to enter into a branded lifestyle ecosystem that reinforces their sense of engagement and loyalty to the brand at every touchpoint,’ says Doug Stephens, founder of Retail Prophet. ‘The deeper and more multifaceted the relationship, the more merchandise you’re likely to sell that consumer over their lifetime.’

Frame has decades of experience in helping businesses within the design sector course correct, from strategic repositioning to product development, marketing activation and cultural programming. If you would like us to help you adapt during times of uncertainty, start the conversation here.