Live

Watch CBSN Live

Ikea to offer furniture rentals in 30 countries

  • Sweden's Ikea will offer customers in 30 countries a chance to rent furniture items that would cost more to own.  
  • Students in the Netherlands already have the option of renting a bed, desk, table and chairs for approximately $30 a month.   
  • One plus for Ikea: Extending the life of its products at a time when many consumers want to reduce consumption to help fight climate change.   

Ikea, known for selling affordable, ready-to-assemble furniture, says it is entering a new business: collecting rent. The Swedish housewares giant on Wednesday announced fleshed-out plans for a rental service that will allow customers in 30 other countries to temporarily use furniture items that would cost more to own. Test programs are underway in the Netherlands, Sweden, Switzerland and Poland -- with the U.S. expected to follow suit. 

Ikea is borrowing from other industries already experimenting with the same approach. In the apparel business, for example, services like Rent the Runway and womenswear brand Ann Taylor have had success renting clothing and accessories. But Ikea's size and influence as a retailer could produce a seismic shift away from owning desks, chairs, kitchen cabinets and a range of other products for the home.

Ikea will roll out its rental program in each of its main markets by 2020, Reuters reported. In the Netherlands, students already have the option of renting a bed, desk, table and chairs for approximately $30 a month, according to the report.

A "circular economy"

For Ikea, whose $40 billion a year in sales makes it the largest furniture retailer in the world, going into the rental business could help it keep up with rapidly changing customer needs. Another potential benefit: Extending the life of the company's products at a time when many consumers -- and increasingly businesses -- are conscious of reducing consumption in the fight against climate change. 

"Ingka Group sees big potential in inspiring and enabling consumers to play an active role in making the circular economy a reality, and we can facilitate that by developing new business models in relation to how they acquire, care for and pass on products," an Ikea spokesperson told CBS MoneyWatch, citing its parent company. 

Torbjorn Loof, chief executive of Inter Ikea, which owns the Ikea brand, explained how the program will work. "We will work together with partners so you can actually lease your furniture. When that leasing period is over, you hand it back and you might lease something else," Loof told the Financial Times.

Ingvar Kamprad, Ikea founder, dead at 91

Once the products are returned, they can be refurbished and sold, he added. 

Questions remain around the rental program, including how furniture will be assembled and delivered. Renters could hire helpers from Ikea-owned Task Rabbit, an online marketplace that matches workers with people who need assistance with household tasks -- like furniture assembly. 

The average American changes residences more than 11 times over their life, according to the U.S. Census Bureau. And with each new residence comes a potential for Ikea to sell or rent them furniture.

"We are going to keep trying on different lives, different looks," said branding consultant Kate Newlin.

Changing customer values

Ikea's low-cost but stylish furniture is especially popular with people furnishing their first homes. But it's seldom associated with higher quality items that will stand the test of time. Renting could change the way its products are designed and attract new customers.

"If they improve the quality of the furniture and you get a secondhand market, it adds additional relevance. They can do a little to make better furniture and give it another life," Newlin said.

Meanwhile, creating a rental marketplace helps retain budget-conscious shoppers. "They are moving up by moving sideways. They are making better furniture, but you don't have to carry the full freight because you don't have to own it," she said.

Ikea's foray into the rental business also may reflect the shift among some younger consumers -- the retailer's core customer base -- away from material consumption.

"There's more focus on living one's life for younger generations especially, rather than creating a home," Chelsea Rustrum, an expert on the so-called sharing economy, told CBS MoneyWatch, adding that "it feels psychologically lighter to be on a rental model in stages where life feels more transient." 

View CBS News In