News: Furniture Leasing May Be the Next Big Subscription Service
You pay a subscription for the radio now, so why not subscribe to a new coffee table?
Contributing Writer at Tally
February 11, 2022
When you move into a new place, furniture is usually one of the most significant expenses. This often leads to tight-budgeted buyers piecing together their furniture instead of buying matching sets that can make their house look like a model home.
This may soon be an issue of the past, as several companies, including one big-name furniture brand, are experimenting with subscription-based furniture.
Find out how this model works and its potential impact on the market.
Furniture leasing is nothing new
Furniture leasing is nothing new, as offices have leased furniture for many years. First, it reduces upfront expense, making deducting the furniture cost for tax purposes easier.
In the retail space, furniture leasing has also been around for some time. Stores like Aaron’s, Rent-A-Center and Buddy’s have long allowed buyers to lease their furniture. Shoppers can lease the furniture for just a week or month, or they can lease it for a specific term and own the furniture at the end.
New age of furniture leasing brews
Leasing from the aforementioned retail stores is sometimes seen as an alternative for folks with bad or no credit. The retailers often have huge markups that quickly turn a $1,000 television into a $3,000 payment plan. However, they served the purpose for someone who couldn’t afford to pay cash but wouldn’t get approved for a credit card.
There's now a new age in the world of furniture leasing, where people can pay monthly to lease quality furniture and return it when they move or want to upgrade. Two recent startups, Feather and Fernish, offer such services.
For example, you can buy a sofa at Feather for $750 or rent it on at least a 12-month term for $37 per month. You can select one- and three-month terms, but the monthly payment jumps to $176 and $127, respectively.
At the end of the 12-month term, you can choose to apply your rental payments to the purchase price and buy the item outright or exchange it if you want to change things up.
Furniture subscriptions are the next step
Furniture rental isn’t the only change coming. Fernish is leading the charge in furniture subscriptions in the U.S. Yes; just like your Netflix service, you can subscribe to furniture in select markets.
For example, you can furnish a studio apartment on this program for as little as $105 per month. The minimum subscription is $75 per month, and you must commit to at least two months and a maximum of 12 months.
This subscription allows customers to swap furniture at any time (for a fee) or buy it at the end of the term. Lease payments apply toward the purchase price.
A big name enters the leasing market
Even furniture goliath IKEA is testing the leasing model, albeit in Europe, not the U.S. IKEA’s goal is to create a circular furniture market, where people rent their furniture and return it to the vendor for recycling instead of throwing it out.
IKEA rolled out this plan in 2019, but the COVID-19 pandemic threw cold water on it. Despite the slowdown in its grander rollout, the furniture giant plans to transition to the circular furniture market by 2030. Furniture renting will be a large part of this plan.
How this may impact consumers
The thought of renting furniture may seem too novel and unsustainable for some people. But remember, two decades ago, could you have imagined paying a monthly fee to listen to music or stream unlimited movies? Of course not, but Netflix, Disney+, Pandora and SiriusXM are now staples in the average young person’s budget.
With remote working becoming the norm, freeing young workers to move around, renting furniture and returning it when you move may become a more convenient option. Plus, it allows these mobile workers to remove one more tether attaching them to an area.
The big question is how it’ll impact budget. Let’s break it down by looking at the sofa example above. That $750 loveseat is a pretty average cost for a quality piece of furniture.
At $37 per month on a 12-month contract, that will cost you $444 throughout the contract. You would have to keep the loveseat for about 20 months until you’d reach the $750 cost.
Most people keep a sofa for 7 to 15 years, so it wouldn’t make sense to lease it for that long. What does make sense is to try the item for 12 months, then apply the lease payments toward the purchase.
This model lets you test a piece of furniture at home. Plus, you’ve paid off over half of the cost interest-free. And if you don’t like it, you can swap it out and likely lose less than you would trying to sell it on the open market after using it for a year.
This makes sense for those digital nomads trodding across the country on a whim. They can balance their budget with easy monthly payments and simply return the furniture when it’s time to move. When they reach their new destination, they can rent more new furniture without a big upfront investment. That could beat the cost of renting a truck, packing the furniture and driving it to a new location.
Furniture rental could be the next big subscription
Could furniture rental be a big deal? With more workers untethered to a geographical area, it’s looking more likely. With a huge company like IKEA trying it out, it certainly bodes well for its potential. However, we’ve seen other subscriptions come and go, so only time will tell if this will be a hit or a miss.