Equipment rental: go for it! Buying is already old-fashioned

In 2022, the inflation rate in France was 5.2%, compared with an average of 1.6% in previous years. From one year to the next, price rises on some everyday products were multiplied by 10. Put these alarming figures next to the climate figures and the answer is fairly obvious: why buy when you can rent? Soon, every business will be looking at this more responsible, more sober way of consuming. So the real question is: are you going to jump on board?

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Circular economy, impact, carbon footprint, overconsumption… If you have never heard these terms, you must be living in a cave. Unfortunately, this is no time to hibernate. Because as a retailer, you have a role to play. And something to gain from this new paradigm. As surfers might say, better to ride the wave than get wiped out (not sure surfers actually say that, but it sounds good, right?).

Equipment rental: why get started?

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But why rent, you might ask, when you are already tearing your hair out over what to sell, where to buy it at the best quality and price, and how to sell it well? Quite simply because renting is now a new consumer need, for shoppers who want to consume more responsibly. For economic and environmental reasons (falling purchasing power, inflation, the wish to reduce the carbon footprint of industrial production), the act of buying has been seriously questioned for about ten years:

• Where and how products are made
• The cost of raw materials for production
• The environmental impact of the product life cycle
• Who the suppliers are

To see this, just look at the second-hand market, estimated at €105 billion in 2022, “which has already won over more than 85% of Europeans”, according to a study by the fintech Tripartie published in January. In France alone, the second-hand market was worth €9 billion in 2021, 21% more than in 2020, according to a study by the research firm Xerfi.‍

9 out of 10 French people buy refurbished, vintage or upcycled products. According to a PollFish survey carried out for Site-annonce.fr, the most popular products are:

• Furniture and home furnishings
• Cars
• Clothing
• Books
• Games and toys

Second-hand is also no longer limited to peer-to-peer marketplaces. Aware of this need for circularity and keen to adapt to new consumption habits, many brands, including luxury brands, have created their own platforms for pre-owned products, giving vintage pieces a welcome boost along the way.

Rental, a solution with many faces

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Rental is interesting because it addresses all the issues mentioned above (household budgets, lower greenhouse gas emissions, circularity). And because it takes consumer needs into account as a whole. Rental can:

1. Meet a one-off or seasonal need: this is what is known as the usage economy.
2. Avoid storage problems (hello, Parisians!),
3. Give everyone equal access to leisure and enjoyment such as sport, but also the organisation of one-off events.
4. Let those who want them use high-end products without paying for them outright, just as some new cars are acquired via long-term rental plans (also known as “leasing”),
5. Provide consumer goods that are often expensive but necessary for a limited time, such as baby equipment,
6. Improve quality of life with cutting-edge technology and quality home medical equipment for elderly or disabled people (wheelchairs, breathing equipment, etc.), whose adjustment and maintenance require specific skills.
7. Let people try a product to check they really need it, will actually use it and that it truly suits them, before possibly buying it.

For retailers, rental makes it possible to:

1. Optimise the life cycle of their products.
2. Improve their brand image in line with what consumers are asking for
3. Build a community of customers, prospects and consumers
4. Reach new consumers who are not interested in buying

Equipment rental: all durable goods qualify

“Wedding outfits, drills, canoes, works of art… today you can rent anything”, notes the Institut National de la Propriété Industrielle (INPI, the French intellectual property office), an independent public body. The only condition, the site adds, is that the goods are durable, in other words “usable several times” with a fairly long lifespan.

Among the most sought-after items, the INPI lists:

• sports and leisure equipment;
• furniture for all kinds of events (seminars, receptions, weddings, etc.);
• audiovisual and IT equipment;
• DIY and gardening tools;
• household appliances;
• motorised and non-motorised vehicles;
• works of art;
• luxury clothing and accessories.

But equipment rental for businesses is also booming, in particular:

• For construction and building
• For appliances and IT equipment
• And even… for plants!

Equipment rental: what business plan?

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In early 2020, INSEE (the French national statistics institute) reported that the revenue of businesses that had moved into rental had risen by more than 10% in 2019. In France, no training, certificate or diploma is required to run a durable goods rental business, which is considered a service activity. That is why equipment rental is even possible as a micro-entrepreneur (France's simplified sole-trader status), subject to a few conditions listed by the INPI here.

That said, there is no point jumping into the deep end if you cannot swim. Remember to go through the preliminary steps before launching your equipment rental service:

• Market research
• Industry analysis
• Commercial potential of your location
• Competitor analysis
• Study of business concepts

Once all these steps are done, you can move on to the long-awaited moment: the business plan. This document lets you check the financial viability of your project and convince financial partners to back you. It should have at least two parts:

• A written presentation of the project, detailing what makes it special, in particular its strengths compared with the competition and the market you are targeting
• A financial section, called the “financial forecast”, to support your funding needs and your company's profitability potential

If these words leave you as stumped as we are by the Hodge conjecture, you can find a standard template here to help you get started. If it really brings you out in a rash, use professional software: there are several very effective tools to calculate your forecast financial statements and guide you through the writing, or even hire a professional, if talking to a human reassures you!

Equipment rental: how profitable is it?

To analyse your profitability, you need to take into account every expense this service will involve:

• Buying equipment, if needed,
• Renting or buying premises,
• Hiring needs (sales staff, technicians, customer service)
• Outsourcing certain costs to service providers (maintenance, accounting…)
• Recurring or one-off additional costs such as professional insurance for your business, the services of a communication and marketing agency, etc.

To improve your profitability, remember to ask for quotes from several suppliers so you can compare offers and make them compete. Pay close attention to your pricing: it should be in line with the market while covering all the expenses listed above. Also look into the support available to people starting or taking over a business. You may be able to get financial help (zero-interest loans, reduced social charges) or strategic support (mentoring, free legal advice, etc.).

Which software for equipment rental?

By its very nature, rental is a service that requires support, since the product does not belong to the customer but to you, and you have to take care of its maintenance, storage and setup. And if you want to deliver a high-quality rental experience, you can consider:

• Offering delivery
• Showing reliable delivery dates
• Sharing available rental slots, with new slots synced automatically as soon as a rented item is returned
• Offering online rental, even if you are not purely an online retailer.

To manage your schedules and available stock as well as possible, rely on rental management software that cuts down on complex operations and the costs that go with them, and also handles your stock management. You can, of course, track everything in Excel if you prefer. That works if you are organised and your rental fleet is small. But if you are planning a large fleet of equipment, invest in management software that will make your life easier.

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