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.
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.