Hearth & Home November 2017

The Sharing Economy

By Lisa Readie Mayer

The major trend of on-demand sharing services is disrupting traditional retail, hospitality and other industries, but there’s a way to turn that negative into a positive for your business – read on!

Ever longed to take a refreshing swim on a hot summer day, but don’t have a pool? That’s no longer a problem thanks to Pool For U, an online marketplace that connects homeowners who have backyard pools with people looking to rent one. The start-up company aims to help pool owners generate extra income to cover some or all of the maintenance costs of their underutilized pool, while providing affordable access to people who can’t or don’t want to invest in a luxury amenity they may only use a few times a year.

This is just the latest example of the “sharing economy” that’s gaining a foothold in the U.S. and Canada. The trend provides an opportunity for people to utilize and monetize the excess capacity of their privately owned property or goods. For consumers, the thinking is, Why buy a vacation home when I can stay at an Airbnb? Why buy a bridesmaid dress to wear once, when I can rent it through Rent the Runway or Vow To Be Chic? Why buy the CD when I can stream the music on Apple Music, Spotify or Pandora?

These on-demand sharing services and others like them are disrupting traditional retail, hospitality and other industries. The trend is driven in large part by Millennials, who often prefer experiences over material goods, are into de-cluttering, and choose to live more simply and sustainably than their parents’ generation.

There is practical motivation, too. As a result of lingering college debt, and underemployment due to a “gig economy” of cobbled-together part-time jobs, many Millennials don’t have a lot of spare cash to buy things. When they’re not living at home with their parents, they often live with roommates in small apartments with scant space to store stuff.

“Millennials place less emphasis on owning and more on sharing, bartering and trading to access goods,” according to a report by the news agency Reuters. A study in “eMarketer Daily” reveals 50% of 18-to-34-year-old consumers say they use sharing services such as eBay or Craigslist to buy pre-owned goods, compared with 36% of those over age 35. The spread is 32% versus 12% for ridesharing services such as Uber and Lyft, and 30% to 11% for accommodations services such as Airbnb and Vacation Rental by Owner.

Millennials often get their first exposure to the sharing economy as college students, renting textbooks for a fraction of the cost of buying them. But today’s sharing options go well beyond, reaching into all aspects of everyday life. New, unopened and unwanted kids’ toys can be bought and sold through Brian’s Toys. Budding painters, jewelry makers, clothing designers, potters, and other artisans can reach millions of potential customers for their handcrafted creations on Etsy. Websites such as Craigslist, OfferUp, VarageSale, BuySellTrade, and LetGo, are modern-day renditions of the garage sale.

In fact, as consumers use sites such as these more frequently, some municipalities are even designating safe-trading zones at police stations, town halls or other public places where people can safely make transactions and transfer goods.

Airbnb, already a $31 billion company with 3 million listings and 200 million guests worldwide, just announced plans to expand its platform with opportunities to book unique tourist experiences along with accommodations in certain cities. The experiences, offered by individuals for a fee, might be anything from a home-cooked meal, to a cooking class, to a beekeeping session, or even an “unforgettable shoe-shopping experience” with actress Sarah Jessica Parker in New York City.

Hubway.
Uber.

Transportation Disruptors

Uber, valued at $68 billion, is the leading on-demand ridesharing service, but there are countless others, some national and some local, including Lyft, GETT, Via, Juno, and Carpool by Waze. There are now even specialized ride-sharing services like Wingz and One Way, that provide rides to airports; See Jane Go exclusively for women drivers and passengers; and GoKart, Zūm, HopSkipDrive, and Pogo, with vetted drivers to shuttle children to and from school and activities. GoShare connects people who need a truck for a few hours with drivers who own trucks or vans.

It’s not just start-ups getting in on the transportation-sharing economy. In 2013, Avis purchased Zipcar, a by-the-hour car-rental service that operates in cities, airports, train stations, and on college campuses. It lets people who pay a membership fee ($7 a month or $70 a year), reserve a car by app or online for $8 to $10 per hour, and pick it up from a parking spot or lot, using a membership card that unlocks the door (keys are kept inside the car).

General Motors is rolling out Maven, an on-demand car-rental service that operates like Zipcar, but without the membership fee. Maven also is working with luxury apartment buildings in New York City, Chicago and Washington, D.C, to offer the car rental service as an amenity for residents.

If pedal power is more your thing, there are countless bike-sharing programs throughout North America, including Hubway, Nice Ride, B-Cycle, Red Bike, Metro Bikes, and Citi Bike.

Maven.
Sarah Jessica Parker.
Ms. Collection

Fashion Disruptors

Secondhand apparel has become an $18 billion industry, according to a CBS News report, dealing another gut-punch to already- hurting fashion retailers and department stores. ThredUP is the world’s largest online consignment and thrift store, selling more than 30,000 used clothing items daily, at prices up to 90% off retail. Consumers can ship their clean, unwanted, brand-name clothing to the company, to evaluate, photograph, price, and post on its website, returning a portion of the sale price to the original owner.

Poshmark is an online consignment marketplace for clothing, shoes and accessories that allows users to set their own prices and sell directly to other consumers. The company assists buyers and sellers with shipping, facilitates payment transfers, and keeps a percentage of the sale. The RealReal focuses on luxury fashion consignment, authenticating the gently used designer handbags, shoes, watches, jewelry, clothing, and accessories consumers can sell on its website.

Clothing rental is becoming a big business, as well. According to market-research newsletter “YPulse,” 25% of American consumers say they have rented clothing, and 35% say they find the idea appealing. Renting is a pragmatic, time- and money-saving alternative to buying wear-once, fancy clothing for weddings, black-tie dinners, cocktail parties, proms, and other special occasions. Special-event dresses, bridesmaids and wedding gowns, suits, tuxedos and other elegant attire and accessories are available for rent through Rent the Runway, Black Tux, Style Lend, Lending Luxury, Poshare, and Vow To Be Chic.

Clothing subscription services such as Armoire, Le Tote, Gwynnie Bee, The Ms. Collection, and The Mr. Collection, ship subscribers an assortment of clothing each month. Some services allow the subscriber to choose the items; others curate the selection based on the subscriber’s size and style preference. At the end of the month, subscribers return the clothes and get a new shipment, always ensuring a fresh selection of outfits for a fraction of the retail cost, and without accumulating closet clutter.

Socially conscious company Patagonia had sustainability in mind when starting its Worn Wear program that allows customers to trade in old Patagonia clothing and outdoor gear at its retail stores, and get credit to buy other new or used items. The company cleans, repairs and resells the old items, “so they stay in use and out of a landfill.” While the program may have been created with altruistic motives, Patagonia’s sales have increased 16% since implementing it, according to “Business Insider.”

WeLive.
WeWork.

Commercial Office Space

Co-working spaces are vibrant, on-demand, shared office environments, without expensive, long-term lease commitments. They are attracting start-ups, freelancers, independent professionals, and other small businesses around the country, and disrupting the corporate and commercial real estate market.

Depending on the place, members have the option of paying for a daily, 10-day, or monthly lease, which provides an unreserved seat at a shared table or workstation. Some places offer the option of reserving a traditional desk or private office. Members often have access to conference rooms, when needed for meetings; shared support services; communal kitchens, lounges and other spaces; and perks such as unlimited coffee and snacks. Founded in 2010, WeWork, valued at $20 billion, is the largest co-working company today, with 225 buildings in 53 cities and 100,000 members.

Co-working spaces are not just about having a spot to set up your laptop. They are as much a social movement, intended to foster collaboration, a sense of community, continued learning, and sustainability among the participating companies. Some co-working spaces are designed for specific industries or businesses.

For instance, GRIND typically attracts start-up tech companies, while the Center for Social Innovation caters to non-profit groups. “Balanced” attracts businesspeople interested in living mindfully, and offers Tuesday night meditation sessions. BarWorks hosts daily happy-hours, and Alley locations have extensive events calendars with after-work social activities such as guest lectures, yoga classes, and cheese tastings to build camaraderie among members.

Outdoor Room pavilion.
Black Apple Pocket Community.

Housing

Like shared office spaces, residential co-living spaces are catching on as alternatives to traditional housing in cities throughout the U.S. Called a modern and more upscale version of a commune, or a college dormitory for grown-ups, the co-living housing model combines private residences with communal spaces, and amenities that create a sense of community among residents.

Individual apartments at co-living residences such as WeLive, Common, Ollie, Node, and OpenDoor are often fully furnished and typically small, but common areas such as comfy living rooms, yoga studios, large chefs’ kitchens, coffee bars, fire pits, rooftop gardens, barbecue areas, classrooms, and co-working spaces, beckon tenants out of their apartments to gather with fellow residents for socializing and shared experiences.

Some co-living buildings offer weekly or bi-weekly housekeeping services, and most have full-time concierge and event-planning staff to administer a calendar of weekly events such as painting classes, potlucks, movie screenings, bourbon tastings, and happy hours for residents. Some also have “house leaders,” who, like a resident adviser (RA) in a dorm, help bring people together and facilitate making friends.

The trend started as an organic, grass-roots movement in converted, existing houses and apartment buildings, but today developers nationwide are designing buildings from the ground up with co-living in mind. One, Property Markets Group, has created a new division called PMGx dedicated to co-living properties, with plans to develop 3,500 units over the next five years in Chicago, Miami, Brooklyn, Denver and other major markets. Co-living developer Common has a total of nine residences in Brooklyn, Washington, D.C. and San Francisco.

Experts say co-living is particularly popular with young professionals, because it provides a built-in social network and makes it easier to meet people when living in a new city. But the trend is not just taking root in urban areas; it’s spreading into the suburbs as well, as people seek to rekindle the sense of close-knit community that became lost in the McMansion era.

According to the Co-housing Association of the United States, there are 165 established co-housing communities across the country, with another 140 in the works. These communities of modest-sized homes often have front porches that face a shared outdoor green, and are attracting both young families and downsizing Baby Boomers.

Some communities hold weekly neighborhood dinners, with residents taking turns cooking. They gather regularly for social and educational events, and share in maintaining the common areas. Other communities are less organized and cooperative in structure, and simply provide an environment where neighborhood relationships develop organically.

There are now co-living communities in practically every U.S. state. The Black Apple Pocket Community in Bentonville, Arkansas, has homes ranging from 850 to 1,750 sq. ft., all surrounding a central, community courtyard with an Outdoor Room pavilion and a fire-pit seating area. The Backyard Neighborhood Cottage Community in Whidbey Island, Washington, is designed for flexible, multi-generational living. Each 1,200 sq. ft. main home has two bedrooms, a home office, a freestanding wood stove, and a covered Outdoor Room, as well as a 425 sq. ft. backyard cottage that can be used as a home office, art studio, guest suite, or apartment for an elderly parent or adult child. The Akron Cohousing Community, under development in Ohio, will have individually owned homes, commonly owned land, and shared tools, media, transportation, storage, laundry, and co-working facilities.

Boku Supper Club.

Restaurants

A mash-up of private dinner parties and gourmet restaurant dining, pop-up restaurants and underground supper clubs are transforming the way people dine out today. The concept originated in countries such as Cuba where home cooks opened in-home restaurants called Paladars, inviting patrons into their living rooms to eat. The model is the basis for today’s non-traditional dining experiences in which everyone sits at communal tables to share great food, conversation, and culinary adventure.

Culinary adventure it is. Events are announced anywhere from a few days to a few weeks in advance through email blasts, and reservations – which are often snapped up within minutes – are all handled online. While most supper clubs’ menus change for every event, guests do not choose what they eat; everyone is served the same multi-course tasting menu, determined by the chef, without changes or substitutions. Some supper clubs are held in the same place every time, while others rotate locations, often keeping the exact address a surprise until guests are notified via email the day of the event.

Because they are considered clubs, they are mostly able to avoid the regulations of traditional restaurants. But, curiously, rather than being decried as unfair competition, many restaurant chefs are eager to take a guest stint in a supper-club kitchen, embracing the opportunity to experiment with creative ingredients, techniques and dishes outside their wheelhouse, and to build relationships with potential new patrons for their own restaurants.

Supper clubs are a growing phenomenon in small towns and big cities alike, pioneered by trailblazers such as the Blind Pig Supper Club in Asheville, North Carolina, and the Mosquito Supper Club in New Orleans. Some, like the Good Folk Supper Club in Atlantic Highlands, New Jersey, frequently collaborate with other local businesses, such as a craft brewery, winery, or retail store, and donate a portion of the proceeds to a local charity.

Ryan Fitzgerald owner of Boku Supper Club in Philadelphia, hosts multiple events every month, including eight-course, 24-person dinners, intimate chef’s-table dinners, brunches, backyard barbecues, pig roasts, and private events, out of his apartment. Boku is billed as an art gallery and guests theoretically pay for admission to the rotating exhibit of works by new and emerging artists that hangs on the walls and is available for sale.

The food, prepared by Fitzgerald and sometimes a guest chef sitting in from any of Philadelphia’s hottest restaurants, is complementary. But, what the guests on his 2,500-person email list, who each pay up to $100 for the 3-1/2 hour event, are really buying is the experience.

“I talk to them about the origin of the food, how it was raised, the farmer who raised it, what it ate, how we prepared it,” he explains. “That’s important in our culture, where you can go through a drive-through and instantly get a meal in a bag for $5. People are hungry for that kind of transparency, interaction and experience.”

Bottom Line for Barbecue Retailers

So, what does the sharing economy phenomenon mean for specialty barbecue retailers? Susan Yashinsky, of market research firm Sphere Trending, predicts more new housing developments (whether actual co-living communities or not) might incorporate communal sheds for lawn mowers, power tools, grills, patio heaters and other items that can be borrowed or rented as needed.

“As people downsize or otherwise choose smaller homes, there is less and less space to store these items,” she says. “They think, ‘Why should I buy it if I only use it occasionally.’”

This is already happening in Sweden where homeowners can access the Husqvarna Battery Box, a “smart,” unattended container with 30 lockers holding pay-per-use, battery-powered tools and lawn care products, such as chainsaws, hedge trimmers and blowers. (Husqvarna is a leading Swedish producer of outdoor power tools and lawn care products.) Consumers use an app to reserve the tools, get video instructions on how to use the items, pay the rental fee equivalent of about $38 U.S. dollars per day, and open the locker to pick up the tool. The solar-powered Box is serviced by Husqvarna staff daily to make sure the equipment is in good condition and fully charged.

Here’s an example closer to home: When a beach club along the New Jersey shore was rebuilt after being destroyed by Hurricane Sandy, the club installed six natural gas grills for members to share. Previously, members who wanted to cook at the beach purchased their own portable gas or charcoal grills and stored them in their individual, closet-sized lockers. The new shared grills are a convenient perk for members, and have generated a sense of camaraderie as people talk about grilling techniques and show off what they’re cooking. The downside for local retailers is lost sales of hundreds of portable grills, and the charcoal or propane to fuel them.

  • To ward off any future inclination to rent or share grills, work to ensure customers use their grills so frequently that owning one (or more!) is the only option that makes sense. Hold cooking classes, instructional events, and demos to help customers gain confidence at the grill, use it more often, feel more satisfied with their purchase, and consider it an indispensable appliance.
  • Consider adding a rental program as a way to grow revenue. Customers might be interested in renting smokers, pellet grills, kamados, pizza ovens, pig roasters, or other specialty grills that tend to be used less frequently. These rentals are also a good way to take a “try-before-you-buy” test run. Large-size grills and patio heaters are popular rental options for parties and special occasions.

    One specialty hearth and barbecue retailer rents a six-ft., eight-burner commercial gas grill (propane included) for $145 per day, plus a $45 delivery fee. After a few rentals, the fees cover the cost of the grill and become a nice profit center. You can also upsell event rentals with additional options such as sauces, rubs, and accessory products, and even a barbecue chef service to cook at the party, all for additional fees.

  • Follow Patagonia’s model and invite customers to trade in their used-but-still-working grills, fire pits, heaters, or patio furniture in return for store credit to put toward upgrading to a new grill, outdoor kitchen or other product. With a little elbow grease to clean them up and make any repairs, the products could be resold as pre-owned, scratch-and-dent models.

    If this is not feasible to do year-round due to space constraints, consider hosting an annual trade-in event during a designated period with a tent sale for the used models. Not only would this effort keep grills out of the landfill, it drives home the message that you sell quality grills that are built to last. It also might attract younger customers who can’t afford to pay full price for a premium grill. Finding a way to build relationships with Millennial consumers will help ensure they buy their next grill or outdoor kitchen from you when they’re ready to trade up.

  • Tap into the new Airbnb experience offerings by posting your barbecue cooking classes on the site. In an interview on “CBS This Morning,” Airbnb founder and CEO Brian Chesky reported that one experience provider – a wolf conservation expert who arranges hikes and encounters with wolves – makes $200,000 a year through Airbnb experiences.
  • Try holding monthly supper-club-style barbecue dinners in the Outdoor Room display at your store. Send email invitations to your customer list and post on your website and social media pages. If it’s too much to tackle on your own, contact a supper club in your area (search on Google to find them) and offer your location and expertise for their next dinner. According to “Business Insider,” “The sharing economy is here to stay… Traditional retailers (need to) adjust their businesses to acquiesce to this trend.”

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