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In Between the Numbers: Renting Prosperity – A New Value Proposition

June 25, 2012
at 8:37 am PST

Have been thinking about the retail implications of an early May article in the Wall Street Journal.

“Renting Prosperity” (by Daniel Gross, May 5) spoke to the growing trend of rental – and not just in the traditional housing or automotive markets.  Numerous other rental business have emerged in recent years, from the Zipcar car-sharing plan to the Chegg.com college textbook service to the one million customers who have used Rent the Runway’s frock-and-accessory services.

The obvious implication for retail is all about new business models.  A number of traditional brick-and-mortar players are now testing the waters.  We’re aware of initiatives in which purveyors of hard goods are renting clothes washing machines by the load and high-end consumers of electronics are leasing home theatre set-ups and even iPads – along with monthly subscriptions, say, to Netflix. 

But the lessons of the rental trend go deeper than simply a new business model. 

 Inherent in the leasing of washing machines by the load is the understanding that what the consumer really wants is clean clothes.  Not a machine. What the consumer of an electronics leasing program wants is the latest digital content with the latest device functionality – not a piece of hardware.

It’s Consumer Marketing 101, but it’s been all too often forgotten.  It rewrites the value proposition:  Smart retailers are no longer simply the purveyors of physical SKUs, but the multi-pronged (usage expertise +  product + services) providers of desired end results. 

Which is a significant strategic step forward from product-price-promotion-and-place.

Next month Cisco will release new thought leadership on the role and value of “orchestration services” in the retail industry.  These are the aggregation, assembly, and educational offerings that shoppers in all industry segments consistently demand and value, that can (and should, these days) be delivered in a multi-channel manner, and which will ultimately differentiate a brand in the market.

Stay tuned.

 

 

 

 

 

 

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