The global appliance rental industry is expected to exceed the US$8.2 billion mark by the end of 2025, owing to the rising millennial population around the globe. The millennial population is highly inclined towards renting appliances, as they frequently change their employment locations. Moreover, the concept of renting appliances is gaining popularity among working professionals and single individuals, as it offers flexibility and convenience.
Miele, a German manufacturer of high-end home appliances known for its outstanding quality and long-lasting products, launched a subscription pilot in 2021. They are offering home appliances on a subscription basis under the name Miele The Upgreat, which came from their in-house digital innovation laboratory.
“In current times most people have a Spotify subscription or a car rental subscriptions. In our case (The Upgreat), we charge a fixed monthly fee, a rental fee, for household appliances.
You can rent your oven or your coffee machine etc., on a monthly basis and, you don't have to pay for it upfront, that is the difference between buying it outright. You have the advantage that you can use it how much you want, how long you want and if you decide to move to a different city but don't want to keep the appliances, then you can say the rental period is done and, you can return the products.”
“Yes, we started with our first rough sketch a bit over and an year ago.
We were thinking what we could do with Miele in terms of Sharing Economy or Subscription Economy.
The first step was to talk to customers or first potential people who might be interested and we came across the idea that moving from one apartment to another is always a struggle as you have to do so many things.
One big part of moving is figuring out your kitchen. You either have an existing kitchen you don't like but have to buy it otherwise, you can't get the apartment, or there is a no kitchen already installed, and then you have to buy a new kitchen even if its a rental apartment.
We found out that that’s a pain, and we tried to iterate our idea towards an offering that could help solve that. And at the end came up with the idea of renting household appliances to lower the burden if you move into a new apartment with kitchen appliances.”
“This specific case is a speciality in Germany, and other countries find it strange. But we’ve talked to people in Switzerland and the Netherlands, and they are also interested in a subscription service for home appliances. But then it's more like an offering for landlords who want to stock their apartments with appliances and other furnishing.”
“You don't have to pay upfront and don't have to spend a couple of thousand euros for new appliances. Instead, you can pay monthly in instalments, and dont need to decide if you really want to keep this device for 5 Years or 10 years or maybe even shorter.
You dont have to worry about questions like is it worth it to buy it if I want to keep it for a shorter duration. You have increased flexibility if you start to rent.
The other plus is that If you are the renter, you don't have to worry about damages or repair. If something is broken, if something is not working properly, it's my responsibility as the owner (Miele) to fix the appliance quickly, and that’s a big plus from the consumer perspective that you dont have to worry about repairs and stuff like that.”
“You could compare us to leasing or buy now pay later. We’re still in the early stages right now - we have tiers of one, two and three years for renting, but in the future, we want to be even more flexible and give our customers the possibility to decide on the length of the subscription.
Plus, if you go inside the subscription model, you can do value-added things, so it’s then not only about hardware but bundling with additional products like consumables or in terms of kitchen appliances, maybe cooking lessons which you can offer only with a subscription and not with financing options like leasing.”
“From a technical perspective, yes, it can be done.
From a manufacturer’s perspective, I would say no.
Every single process you are used to doing when selling on a transaction basis is still there and is driving 99.95% of your revenue and your daily business. So it’s quite challenging to change the processes to fit with subscription models and is a big undertaking.
The biggest challenge part is convening and educating or telling stakeholders internally, that trying the rental/subscription thing is actually a good idea and now and long term - is the biggest challenge.”
“Miele, from the start, has put a great deal of emphasis on quality and long-lasting products.
The basics are already there with our products; they last a long time, they are build with quality, they are tested quite extensively.
But if you really try to move to subscriptions or long-term use of the product, you start to think about ease of repair, that is repairability of products.
If we see huge success in the subscription model, then the incentive increases to think in terms of production and ease of repairability.”
"Lot's of people said that they like the idea of second-hand products or used products because for new products you have to dog resources out of the earth and create new products from scratch.
“You can't really bridge the ROI because you cant compare one-off sales with a subscription sale. But what you can do is do partnerships with banks and leasing for financing. I read recently that Grover has a very interesting model. They have a special-purpose vehicle where they put all their devices and fund it with external investors. The financing part is outside their own organisation with investors that like their risk profile.”
"We are pretty lucky in terms of timing right now because it is always about trends. Earlier, people used to say “who is going to buy books online?” - then amazon started selling book on the internet.
Then same happened with shoes. People said “nobody would buy shoes online because you have to try it out, you have to look at it” - now everybody buys shoes online.
And the same with higher value good like mattresses - now you even buy your mattress online which peoples said will never happen.
The same is true for subscriptions. Back in the days everyone bought CDs and VHS tapes and now you have Spotify and Netflix. "