Are consumers prepared to give up owning stuff and begin renting instead?

In the pilot project Liiteri, we gathered information on consumer attitudes towards renting tools and cleaning equipment. The transfer from the sale of consumer products to the provision of services helps to keep products in circulation in accordance with the circular economy model and to minimise waste.

Have you ever wondered how much time and money you spend on selection, maintenance, repair and storage of, say, a power drill? When you compare your answer to the occasions when you actually need the machine, you may be surprised. Through rational comparison, renting a tool may turn out to be a surprisingly competitive alternative to owning it.

As consumers, our choices tend to be based much more on feelings than on rational decision-making. According to research, consumers lose much of their interest in a matter if adopting a new operating model requires a major shift in their way of thinking and operating.

VTT’s AARRE project was involved in a tool and cleaning equipment renting pilot called Liiteri. Consumers rented equipment from the Liiteri online service and picked them up 24/7 from a smart container located in the Teurastamo area in Helsinki whenever it was convenient for them.

Easy access and an opportunity for risk-free testing make services an attractive alternative

The pilot project gained a lot of media attention, and consumers were really enthusiastic about the service. Consumers were particularly interested in renting steam and pressure washers, window cleaning machines and drills.

The main benefits were related to saving the trouble of buying and maintaining equipment, a possibility to test and use higher-quality tools, and environmental advantages. Consumers also felt that the service allowed them to test equipment they would not buy otherwise. If used occasionally, consumers also considered renting more advantageous than buying.

Liiteri customer experience

Accessibility, price and slowness as service challenges

What created challenges in the renting model was the need to plan ahead, when you could not just grab a tool or a cleaning equipment from the closet, but you had to rent it and pick it up. This became particularly emphasised in case you needed the equipment urgently. It is also possible that the tool is not available when the consumer wants it, as happened in the pilot project with the most popular items. In some cases, consumers also considered the selection of the service laborious. When used often, many people considered the price of the rental service high compared to ownership. Consumers also considered picking up and returning the rented equipment difficult if the pick-up station was located far away. Heavy equipment requires using a car, which some considered a challenge. Even though consumers did appreciate the fact that by renting they had access to higher-quality equipment, they were wondering about the condition of the item when they get it. Could it happen that the machine does not work?

The challenges related to assessing the condition of equipment can be addressed with technological solutions that enable assessment of the condition. Consumers were also scared of breaking the equipment as well as of using strange appliances. On the other hand, consumers can also be provided guidance for using the machines in many ways, such as the machine itself providing user instructions.

People interested in more extensive service entities

Consumers were interested in larger service entities related to renovation, but equally also to other needs, such as repair services in a more extensive sense. Some of the consumers were also interested in buying the whole task as a service. Consumers also suggested expanding the product range to include tools and equipment owned by consumers themselves.

A large offering and tailored customer service play a key role when creating an ecosystem. Another matter of key importance is logistics, to which most of the problems associated with the service model were related. In addition to a functional and flexible logistics, other prerequisites of a successful consumer service are accessibility, ease of use and environmental friendliness. Different digital platforms, enabling a smooth renting process between companies and consumers or between consumers, also play a key role.

A shift to consumer services would significantly increase employment

Shifting to tool and equipment rental would have positive economic and employment impacts for Finland due to growth in the service sector. When we broaden the perspective to include other potential consumer products, we reach a totally new level.

For example, around EUR 2.5 billion is spent on cars each year, and over a billion is spent on other consumer durables. Most of these goods are imports. If even some of these expenses were transferred to the service business, it would have a major employment effect in Finland. Such services could also increase employment among those belonging to less employable groups and bring flexibility to working life. Here, the high price of work constitutes a challenge, rendering creation of profitable circular economy services more difficult. Different functional employment models could be adopted and the price of work could be lowered to support and promote creation of jobs within the circular economy.

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A pocket-sized circular economy – in search of an easy and efficient circular economy

The circular economy discussion often revolves around physical resources and material flows. However, the importance of the social and environmental perspectives must be understood, even if the economy and material flows naturally lie at the heart of the circular economy concept.

For the AARRE project, we drew up three complementary views of emerging circular economy in Finland. The focus was on stressing the importance of social sustainability as well as circular economy business models. What does an effortless, responsible, easy and efficient circular economy look like?[1]

The circular economy in Finland in 2030 – three scenarios

The efficient service experience scenario gives us a circular economy in which consumption habits favour access over ownership. Ease and sustainability are key themes in the everyday lives of both consumers and businesses. Together with the Internet of Things (IoT), digital platforms enable the provision, management and use of comprehensive service packages. New kinds of integrated service platforms serve as multi-purpose service maps, bringing services and needs together. ”The drop off and take away” service concept combines resource flows (services and materials) in and out of homes. ”A pocket-sized circular economy” concept, consumers can purchase most everyday services via a single online platform. One of these could be an Optimisation service, using a single application to monitor well-being and health (food-vending machine, safety bracelet), household energy consumption and air quality.

In the Factory of the future scenario, production processes are resource-efficient and symbiotic within or between different sectors. Processes are designed to ensure that the resulting material flows are used efficiently and very little or no waste occurs. New kinds of logistics services could be the key to a resource-efficient circular economy. Products are designed on the terms of the smart circular economy from the outset and the product lifecycle has markedly lengthened. To function sustainably in the global economy, private-sector strategic management must commit to the principles of a responsible circular economy. A strong focus has been placed on the social sustainability of business. However, more-sustainable consumption has become commonplace, led by major consumer product brands. Shifting to the circular economy has been made easy for consumers, with manufacturers ensuring the easy recycling, re-use, refurbishment and repair of products. The consumer can continue consuming with a clear conscience – circular economy certificates guarantee that products are produced, recycled and renewed sustainably, and increasingly contain renewable and recyclable materials.

In the new tribes scenario, the cooperative economy has become a supportive element of the circular economy. The key issues in this scenario are respect for social capital and neo-communality belonging to peer, sharing and consumer-producer communities. Communities can be physical or virtual tribes which bring people together to interact, while promoting the sharing and exchange of various types of ownership, resources, skills and knowledge. The basis of such activity is trust between citizens. The economy is being spurred on by renewed cooperative activities, so-called platform cooperatives, the sharing economy between consumers, and the firms and small businesses that provide such services. Business is agile, experimental, visual and audible, being based on the re-use, recycling, sharing and exchange of materials and products, in particular, and the supporting services. Business could generated by Cooperative home-based factories, which incentivise social activities and focus on small-scale, fair peer production (such as urban farming), services (care, transportation and repair services) and use.

How to promote transition to the circular economy?

What needs to change in consumers’ daily lives, so that purchasing services becomes more attractive than buying products? Services should generate more value for the customer than that provided by buying a product. Value can emerge around issues such as flexibility, better quality, ease and the experiential aspect. What if, in the future, the janitors and house managers of condominiums were the catalysts of residential circular economy services, bringing together consumer needs and service providers? Let’s turn digital janitors into a new circular economy concept.

Certification of circular economy products could be used to communicate the sustainability of services, and the repairability and recyclability of products. This would help consumers in their everyday choices. However, certification would not in itself guarantee a product’s or service’s compliance with sustainable development. Further reflection is needed on the compliance of the circular economy with sustainable development and on the role of certification.

On a small scale, many of the themes described within the scenarios already exit in modern Finland. What needs to change so that, for example, the cooperative circular economy becomes mainstream? Many current obstacles to change are related to expertise (lack of strategic leadership, product design, innovative public procurements, understanding of how to disengage the economy from resource use), attitudes (forced communality, the desire to ownship), legislation (taxation), profitability (producer responsibility) and sustainability (a fair cooperative economy).

Sustainable change is often based on everyday insights

Even small insights could make the circular economy smoother and more efficient on an everyday level and put change into motion. The scenarios describe such changes. The circular economy should not be viewed solely from the economic perspective. It is a multi-faceted diamond, which combines economic, social and environmental aspects. After a qualitative review of the scenarios, a more detailed review of the circular economy’s macroeconomic impact on employment, regional policy and taxation would be required, alongside a deeper understanding of its social impacts.

Henna Sundqvist-Andberg VTT

Henna Sundqvist-Andberg, Senior Scientist

Johanna Kohl VTT

Johanna Kohl, Principal Scientist
Twitter: @KohlJohanna1

Follow the AARRE project on Twitter: @AarreResearch

[1] See also Terhi-Anna Wilska’s recent column on responsible consumption.

Is the circular economy just a fad or future necessity?

We live an era of different economies: bioeconomy, platform economy, digital economy – and circular economy. Are these only fads or the new reality that will change the way we consume and live our lives?

The circular economy is not a new phenomenon. Throughout history, it has been the way of acting and managing in times of scarcity. Our grandparents and great grandparents lived sparingly and put everything to good use down to the very last thread. People still do this in the developing countries and under severe or exceptional circumstances, such as during war.

The circular economy has become a topical issue again, since the increasingly limited global raw materials, food, and water and energy resources are not sufficient to cover the needs of the still growing population. We must learn to think differently about ownership and consumption.

Technology accelerates the circular economy and business activities

In addition to being a necessity, the circular economy is a great opportunity to create sustainable demand and, consequently, new kind of business activities. Once a product has reached the end of its life cycle, technology makes it possible to recover its raw materials and components, and use them for new purposes. Nothing goes to waste.

Efficient use of resources calls for new operators, distribution networks and systems to make sure that the right shipments are in the right place at the right time. In the textile industry, there are good examples of how used clothes can be recycled into secondary textile fibres for the needs of clothing and technical textile industries. For example, the awarded Ioncell-FTM method, for which VTT developed a pretreatment technique for cotton waste, dissolves cotton waste for reuse without any toxic agents. 3D printing, on the other hand, allows resource-wise use of materials in the manufacturing industry and, best of all, recycling of recovered materials. All this, however, requires that people everywhere in the business environment adopt new ways of thinking.

Current modes of operation will not bring success

Research and development play the key role in ensuring that the circular economy functions efficiently. We need radical innovations that promote resource-wise and sustainable economic growth.

The circular economy is not only a way of thinking, but it is also a business activity that creates value, jobs and tax revenues. We need good ideas, broad-mindedness and bold trials to transform the ideas into business activities. How to minimise the amount of waste and reuse the remaining waste? What used to be regarded as the final point of the process, can nowadays generate new business, of which the side streams from food production serve as a good example. These include the manufacturing method patented by VTT, where the berry press residues from juice processing industry are used as an ingredient for augmenting the fibre content in muffins. Innovations like these are not generated from nothing, but they need to be founded on research and developed further to succeed.

Feathers to the catwalk

Innovations do not happen either if there are no individuals who dare to think big or in novel ways. A good example of this are feathers – a small, light material lending itself to many purposes. After having provided warmth and protection for their owner, feathers can be transformed into protein-rich animal feed or used in packaging materials.

We are familiar with feather-filled pillows, but how could, say, the textile industry make better use of feathers as raw material. When will we see feathers on the catwalks at fashion shows?

Growth for Finland from circular economy

What lies at the core of the circular economy are services: buying and owning are transforming into lending and shared use. This has been the reality in, for example, the housing market for a long time, and now similar way of thinking is also expanding from tools (see the pilot project Liiteri) to vehicles.

Services already account for more than two thirds of the value of Finland’s gross domestic product. When the opportunities offered by the circular economy are understood everywhere in society, this share will grow even more – and the burden on the environment will reduce.

New services will boost growth and employment in Finland. On one hand, digitalisation replaces jobs, but, on the other hand, its use in the circular economy will provide growth opportunities for enterprises: the whole manufacturing and product life cycle needs new solutions that the Internet of Things applications can offer.

Finland is well equipped to become a pioneer in the circular economy. The key issue is the boldness to think things anew. Do I really need a car of my own? Are there any real obstacles for renting a car whenever I need one? We must call our conventional ways of thinking into question.

The way of thinking and acting the former generations used to practice will transform into business activity that helps to build the welfare society. Finland has a highly-educated population, plenty of natural resources, and R&D activity, so this small country can develop global solutions that really save resources and enhance well-being.

Anne-Christine Ritskchoff VTT

Anne-Christine Ritschkoff
Executive Vice President, Strategic Research
Twitter: @AnneRitschkoff 

Hundreds of millions in savings by utilising waste protein

We live in a world whose population; food, water and energy consumption; industrial production; pollution and waste are increasing due to human activity, while natural resources diminish. We Finns participate in this by adding 400 million kilogrammes a year to the food waste mountain. A tenth of such waste is made up of vital proteins. Protein is precisely the nutrient whose scarcity people will suffer from first, if there is not enough food for everyone.

The current volume of waste would meet the protein needs of the entire Finnish population, plus the protein supplement needs of Finland’s livestock, each and every day, if recovered before it entered the waste bin.

Dumped food is a sheer waste of dwindling natural resources and money. It’s Iike throwing hundreds of millions of euros down the drain.

The circular economy needs solutions for minimising food waste and harnessing its value

Waste is a substance, material or item that has come to the end of its lifecycle and is disposed of. Such a concept is alien to the circular economy. Instead, there are only raw materials, which a huge variety of processes continuously transform into products. There are no end points, combustion plants or landfills in the circular economy. This is a highly ambitious goal and every effort is being made to achieve it. We need to, since the waste mountain is growing but natural resources are dwindling faster than they can be renewed.

When will rapeseed and mash proteins appear on the shop shelves?

Side stream and waste protein is generated by agriculture, the food industry, retail and consumption. Industrial sidestream protein is in bran, brewers’ spent grain, oilseed presscake and slughterhouse side-streams. Most of this could be processed into high-quality, delicious foodstuffs, before ending up as feed – or fertilisers generated in compost or biogas plants.

Sidestream protein winds up smoothly on our plates in baked goods and protein-rich dairy products, or as a treat for pigs in the form of rapeseed press cake pellets or brewers’ spent grain. So far, so good.

Innovative, sustainable, protein enrichment technologies and the related skills are in demand in industry. Separating protein from other sidestream components is not enough. Skills in processing vegetable proteins into a form with an attractive texture and taste are particularly needed. Proof of such skills has already appeared on the shop shelves: You can now fill your shopping trolley with vegetarian ‘pulled’ and processed products made from first-class ingredients – oats and horse beans. But ‘rapeseed’ and ‘mash’ protein products have yet to appear.

The progress of waste protein to wiser end-use will get a little harder from now on – or will it?

We have now reached the stage in the food chain where some basic and processed ingredients have been blended together to form food or even meals. We are shopping for groceries.

The retail sector wastes 70 million tonnes of food per year, around ten percent of which is protein. The amount of waste determines whether a shop makes a profit or loss. So waste must either be reduced or made profitable. Reducing waste would be the easiest way to do this, and the retail sector has taken this path in compliance with the waste hierarchy principle of the circular economy: first minimise and only then recycle. Food waste can be halved and the financial results improved when retail waste management programmes dovetail with other systems and logistics.

Viable solutions exist for the effective minimisation of waste, but it will never be completely eliminated. So what will happen to foodstuffs still on the shelf, but with today as their ‘best before’ date? Recycling and use, right?  This is where the circular economy begins. Unfortunately, it’s not that simple.

Most food waste from shops ends up in landfill rather than with those who need it. This is not due to an uncaring, callous or cruel attitude but legislation, which requires that food safety be ensured. The law does not permit food beyond its ‘best before’ date to be given to those in need, no matter how high-quality and edible such food may be. So some healthy common sense and reasoning are needed. A law is entering preparation to enable and require the distribution of food loss. Until the law is enacted, the valuable protein in food loss will reach the end of its lifecycle in supermarket skips.

We throw out 150 million kilogrammes of food each year

The bottomless pit of waste protein lies in households in particular, as well as in communities such as schools and kindergartens. We consumers throw 150 million kilogrammes of food into the bin or biowaste each year.

We Finns are good at recycling paper, cardboard, glass, metal, plastic and clothes. We can only recycle food by eating it, or throwing leftovers into our garden compost or bio-waste containers to become fertiliser. This is just fine, but a much more sustainable and economical solution would be to minimise leftovers, just as shops do in relation to loss and waste. It’s very simple and highly profitable: Eat all of the food you buy and cook.

So let’s go through it one more time: Let’s process sidestream proteins from production and industry into new products, utilise retail food loss efficiently, distribute retail food loss to those in need, make compost from leftovers and, again, eat whatever we buy. That is how we can be save the environment and half a billion euros each year.

Raija Lantto VTT

Raija Lantto is a Principal Scientist in VTT’s Biotechnology and Food Research.

Raw materials a challenge as climate change worsens

Raw materials are needed in every industrial sector and in everyday life. Many of the current technologies and increase of the middle class are having a fundamental effect on the availability of raw materials.

New raw materials, which differ from those used in the traditional energy sector, are needed for new energy technologies – solar power, wind power and energy storage. Our raw material needs are changing by increased use of electronics, mobile phones and electric cars.

These were among the issues discussed at the Minerals Circular Economy Seminar held in the Satakuntatalo in Helsinki on 8 November 2016. The seminar was part of VTT’s Mineral Economy spearhead programme. The R&D work we have done so far felt worthwhile and received positive feedback, however much work has still to be done. A new VTT Research Highlights publication was released at the event: “Added value from responsible use of raw materials”. It is freely downloadable from the internet: http://www.vtt.fi/inf/pdf/researchhighlights/2016/R13.pdf

A product’s environmental impacts are largely determined at the design stage

Resource-efficient product design is not new: its principles were found in design guidelines from the 1930s.

fig2_david_peck

Despite the fact that we know how to take account of reusability and recyclability in theory, products are becoming more and more difficult to recycle in practice, said David Peck (TUDelft, the Netherlands) in his presentation. We are also becoming more dependent on critical raw materials, because almost all functions depend on automatic data transmission and electronics. At the same time, we have become much less able to repair electronic products. This is a situation in which longer-term interruptions in the availability of certain raw materials could lead to serious problems in the basic functions of society.

Many valuable materials are not recycled

Electronics contain many raw materials that are classified as critical or otherwise valuable, some of which are not recycled at all, explained John Bacher in his presentation. The challenge lies in the cost-effective recovery of raw materials that occur in small quantities from heterogeneous and variable material flows. Multiple-stage collection and recycling chains also lead to considerable losses of raw materials, e.g. to dust from material crushing operations.

fig3_john_bacher

Several of the presentations referred to the possibility of more efficient processes for the exploitation of raw materials, more efficient recovery, resource-wiser production, and the utilisation of current waste and side streams throughout the value chain. Side streams and currently landfilled waste could be viewed as by-products; achieving the maximum possible increase in their value would enable their more efficient use.

Renewable energy is increasing the need for critical raw materials

The Minerals in Circular Economy Panel (Ilkka Kojo, Outotec; Raimo Lahtinen, GTK; Olli Salmi, EIT Raw Materials Baltic Sea CLC; Erja Turunen, VTT and Maria Wetterstrand) concluded that metals and mineral raw materials will continue to be important in the future. For example, increasing quantities of critical raw materials will be consumed during the generation and storage of renewable energy.

fig4_paneeli

Because renewable energy devices have long lifespans, the stocks of raw materials in use will grow.  We need to use R&D and seize the opportunities offered by digitalisation to find solutions for the sustainable use of raw materials, to avoid eventually having to seek raw materials beyond our own planet.  But all this will not succeed without the support of political decision-makers and consumers.

Mineral Economy spearhead programme is generating technological innovations  

Technological innovations emerging from VTT’s Mineral Economy programme are creating the basis of the circular economy. This meanssmart product design, reuse and remanufacturing, material recycling, alongside a waste-free approach and the added value use of current side streams and waste.

The programme aims to enhance the national and international visibility of VTT’s raw material and material research. Program also contributes to the activities of EIP Raw materials, PROMETIA (the Mineral Processing and Extractive Metallurgy for Mining and Recycling Innovation Association) and EIT Raw Materials and H2020 projects.

Authors:

paivi_kivikyto-reponen

Päivi Kivikytö-Reponen, DSc (Technology), Senior Scientist, Manager of the Minerals Economy Programme

At VTT, Päivi Kivikytö-Reponen works on lifecycle solutions, materials from secondary sources, design and wear of industrial materials. She has around 20 years of experience of materials-based product development, research and quality assurance within industry, university and research institute.

 

Ulla-Maija_Mroueh

Ulla-Maija Mroueh, Principal Scientist

Ulla-Maija Mroueh is a Principal Scientist at VTT. Her research focuses include recycling and waste utilisation concepts, production and consumption chains for mineral raw materials, raw material cycles and management of the environmental impacts of mines. She has over thirty years of experience of both international and Finnish research projects in this area.

Circular economy services: From owning to leasing, borrowing, sharing and swapping things

Liiteri

Liiteri is an example of circular economy service models.

The circular economy is considered one of the key enablers of economic growth both in Finland and worldwide. Legislative means can be employed to accelerate the transfer to this system, but new, innovative business models are needed for Finnish industry to achieve forerunner status and gain the related advantages.

A good example of new business models is the transfer from the sale of products to the sale of services. This issue has been discussed for a long time and is now more topical than ever. Servitisation could provide a way of closing the material cycle, when service providers steer products towards recycling at the end of their life cycle. Secondly, servitisation would help to lengthen the life cycle of a single product: the materials used tend to be more durable and the products easier to repair when a product is provided as a service. Thirdly, servitisation often enhances resource efficiency, because products have a longer life cycle and overall benefits can be achieved when products are managed by the service provider.

Servitisation also creates growth opportunities for companies, enabling them to transfer towards more holistic service entities. Combined with the efficient use of technology, it provides service providers with the opportunity, for example, to conduct remote monitoring and preventive maintenance resource-efficiently.

Circular economy service models create added value for consumers

To create attractive services, we need to understand how the value of a product or service is created for consumers. The shift from buying and owning things to buying services will generate new kinds of benefits and sacrifices. We have launched the AARRE project in order to study these more closely. In our workshop consumers listed flexibility, higher quality, reduced risk and the desire for change as the benefits of servitisation. In terms of sacrifices, on the other hand, they referred to loss of ownership, particularly in the case of products to which they are emotionally attached. Ownership still evokes feelings of autonomy and power in consumers, for which reason the transfer to services will require an extensive change of mindset.

When transferring from ownership to leasing, consumers need to be somewhat more systematic than they are used to. If they want to order food home, they need to plan their shopping list the day before. Similarly, when renting tools instead of buying them, you cannot just reach for the tool cabinet; obtaining the tools will take more time. On the other hand, consumers are increasingly interested in reducing the number of items in their homes, which supports servitisation.

Practical trials as providers of information

Servitisation is about providing experiences. During the service journey customers are involved in the process of creating value in collaboration with companies. In other words, it is of vital importance to engage consumers in the design of service experiences. Various quick trials and pilots would serve this purpose well.

Coordinated by VTT, the AARRE project is involved in Liiteri, a tool renting pilot by CoReorient Oy, which provides virtual hardware store services to consumers 24/7 in the Teurastamo area in Helsinki. The Liiteri pilot is expected to provide information on many key questions, such as the attractiveness and pricing of, and easy access to, the service model.

Maria Antikainen, Senior Scientist

Anna Aminoff, Senior Scientist

Outi Kettunen, Senior Scientist

Henna Sundqvist-Andberg, Senior Scientist

Headed by VTT, the AARRE project is creating new, user-driven circular economy business activities. This project is a networked research project (2015–2017) being undertaken in partnership with the business sector, with Tekes as the main funder. In addition to VTT, the other research organisations involved include the Finnish Environment Institute (SYKE) and the Consumer Society Research Centre of the University of Helsinki. The partners in the AARRE project are Lassila & Tikanoja, Destaclean, Kierrätysverkko, CoreOrient, Eurokangas, Not Innovated Here, as well as the Chemical Industry Federation of Finland, and the Federation of Finnish Technology Industries.

Twitter: @AarreResearch

 

Services will take us closer to the circular economy – but what kinds of services switch consumers on?

Maria Antikainen

Maria Antikainen

Anna Aminoff and Outi Kettunen

From the perspective of society in general, there is enormous pressure to transfer from a linear economic model to a circular economy. To generate economic growth, or even to maintain the status quo, we need to move towards a closed loop, where materials are recycled and their value is maintained or even increased. The key issue is the more efficient and smarter use of resources. This is possible through innovative business models and the wise use of technology. Since the circular economy places consumers at the centre, the choices they make and the actions they take will be increasingly important. For this reason, understanding consumers and their behaviour will play a key role in how companies can succeed in developing new business models.

Would you rent a sofa, washing machine or clothes?

Offering services rather than owning products an efficient way of ensuring the recycling of materials and the maintenance of their value. However, the transfer from owning things to buying services is a huge step for consumers. In group discussions arranged as part of the AARRE project, we explored the attitudes of consumers towards various service concepts, whereby commodities such as a sofa, washing machine or clothes were provided as a service. When transferring from selling products to providing them as a service, it is critical to understand how consumers feel about ownership. The discussions revealed that, particularly with respect to objects – such as sofas – connected to key events or to which people become emotionally attached, ownership is important. Different life situations may also have an influence on the kinds of choices people make. For a student, renting a washing machine or sofa may be a way of making life easier.

Consumers may have a very personal attachment to certain technical products, such as cars, while being far less emotionally attached to appliances such as washing machines. In addition, providing such products as a service would enable improved technical features and higher quality. For these reasons, the people who participated in the discussions were more interested in a washing machine than a sofa or clothes as a service. Attractive added value can be offered to consumers by using technology to make machines smart, bringing benefits such as proactive maintenance or more efficient use. Leasing instead of owning can also lower the level of risk for consumers, eliminating the costs due to breakages, for example. Consumers were also interested in eliminating the risk associated with clothes purchases, by leasing.

All three models focused on the group discussions – renting/leasing a sofa, a washing machine or clothes – divided consumers into two groups. Some considered the opportunity very interesting, while others did not, which was summed up very well by one consumer: “I’m not an owner type of person.” The clearest obstacles were doubt that a leasing model could be implemented in a cost-effective manner, or the service acquisition model seeming odd and unnecessary. On the other hand, the clearest benefits associated with leasing were related to higher quality, flexibility, the opportunity to change the product, and lower risk and commitment.

Towards innovative business models

The key issue would be to find the right and most suitable solution for each consumer. Research and practice show that new services are adopted more easily if they have features in common with former services or products and do not require a sudden major change. Changing people’s habits is the key factor when seeking a long-term impact. Major changes in behaviour take time and occur gradually, one step at a time. The group discussions we had with consumers revealed that some are ready to adopt solution-centric service business models, such as buying furniture as a service. On the other hand, some still want to own things, in which case adding a service to the core product will help to close the circular economy loop.

To ensure that circular economy business models spread, we need to face certain facts; for example, not all of us are yet ready to buy services instead of things – particularly if they are provided by another consumer. We therefore need new, innovative business models that take various customer preferences and practices into account. In any case, the journey towards the proliferation of result-centric service business models has already begun.

Headed by VTT, the AARRE project is creating new, user-driven circular economy business activities. This project is a networked research project (2015–2017) being undertaken in partnership with the business sector, with Tekes as the main funder. In addition to VTT, the other research organisations involved include the Finnish Environment Institute (SYKE) and the Consumer Society Research Centre of the University of Helsinki.

Twitter: @AarreResearch

Maria Antikainen, Senior Scientist

Anna Aminoff, Senior Scientist

Outi Kettunen, Senior Scientist