Rentals: The key to unlock the circular economy?
Let’s face it: the circular economy is not front of mind, or even on the radar, for the majority of the public. But it can be. It should be. Why?
Well, as Michael Cook, CEO of Circular Economies Scotland shared on a recent episode of Happy Porch Radio, according to Zero Waste Scotland, 82% of the carbon footprint in his country comes, directly and indirectly, from consumption of goods and services, much of that happening beyond the borders where it’s happening. So finding ways to reduce that flood are paramount. A primary way is by making what’s normally purchased rentable.
The Circular Economy matters, to us, for a deeper, intersecting set of reasons:
At its best, it sits in the midst of a Venn diagram of social, environmental, and economic factors.
By social we mean fair supply chains, job and skills creation, local economy and so forth. Environmental, in this case, refers to the way we both make and dispose of things, which has a massive impact on everything from carbon to pollution to waste. And in economic terms, the Circular Economy represents an opportunity to be profitable while minding the social and environmental aspects, rather than a disproportionate focus on profit driving negative impacts.
That said, there can be quite a lot of variation across product categories, geography and culture. What’s normal and fits within people’s lives in one part of the world may not make sense or be accepted elsewhere. That means the “rental” can look very different, depending on the cultural context. This may mean that rental, as we define it here, may not always be the best solution for all categories and markets.
In general, rental works best when the product is made to last, is repairable, and is efficient to run. When that’s so, it reduces the need for the customer to buy a new product, and for the company to produce a new one. This in turn can benefit the environment, while making for a financially sustainable company as well, as each product’s value, both in utility to the user and profit to the producer, is maximised.
A two-way benefit of the rental model is that it enables a direct line of communication to the end user - and direct feedback on how the product is being used. The producer can literally see where wear and tear happens, improving subsequent iterations and addressing issues as they arise - something that is really hard with the linear model, when the product is on a one way journey away from the producer.
This opens the door to genuine user driven product design - which we would say is reflective of how society is evolving at the moment.
Successful rental business requires good communication and relationship with the customer, but it opens the door to far higher levels of loyalty and repeat business than your average linear business can hope to achieve.
About the author
Paul Smith
Paul is a self-described communications Swiss Army Knife, having spent the majority of his career supporting beneficially impactful companies across the spectrum effectively tell their story to the world. The circular economy is a long time love of his, so he’s thrilled to now play a part in expanding its impact in the world. When not behind the computer, Paul can usually be found behind a book, on his bike exploring, or out for a walk in the forests of Fontainebleau, getting a closer look at the latest moss…