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22.10.2019

Borrow. Me. Off. Rent instead of buy

What has happened since the introduction of rental offers at MediaMarkt and Saturn? Sustainability News spoke to Johannes Brancke, Sales Manager at MediaMarktSaturn Germany.

The so-called "Sharing Economy" has been turning familiar economic concepts upside down for some years now. In principle, this is a business model based on sharing resources. This is exactly what more and more people are enthusiastic about. The model isn’t that new. In agriculture, small farms that could not afford every expensive machine had already organised themselves in the 1950s in the form of machinery rings and jointly financed necessary purchases or lent agricultural machines to each other.

Digitalization is constantly creating new opportunities for sharing and renting goods and services - for the benefit of consumers and the environment. The sharing economy is increasingly becoming a business model. Start-ups and established players compete to earn money by renting instead of selling.

Less is more

The trend is from owning to using. According to a Statista survey conducted in 2017, one third of Germans surveyed stated that they were open to rental offers - 38 percent in the electronics sector. And the relatively young sharing industry is continuing to develop. There is now hardly anything that cannot be rented. New apps and the widespread use of smartphones are making borrowing child's play for customers. And it's also not quite insignificant, because the user-friendliness of online rental is no less important for consumers.

One thing is clear: anyone who rents a product automatically ensures that it is better utilized and therefore cheaper to use. In addition, valuable resources that arise during new production are conserved. And there is another very human argument in favor of renting: Nobody has to do without a product that is in great demand or that is required by the situation!

MediaMarktSaturn recognized the trend towards borrowing as early as 2017 and put it into practice. In 2017, the "Miet-mich" rental service was launched at MediaMarkt - initially online and in selected test stores. Since the beginning of 2018, Saturn has also been offering its own rental service, "Einfach mieten", which has been available nationwide in all stores since the beginning of 2019 - and of course also online.

Rent. Try it out. Decide.

he service that MediaMarkt and Saturn offer with their partner Grover is very simple: the products in the store are marked with additional signs so that the customer can easily see which products can be rented. In the online shop, customers can choose between "Buy" and "Rent" for the corresponding products. If the product is rented in the market, it can be taken directly home. If the order is placed online, the product is delivered free of charge to your home and can be returned free of charge at the end of the term.

MediaMarkt and Saturn also offer companies a special rental service for office equipment. The processing partner Grover ensures that the products reach the customer and are picked up again at the end of the rental period. Rentals can be made online and directly in the stores.

Time for a short check: We wanted to know how the rental offer from MediaMarkt and Saturn has proven itself in practice.

Mr. Brancke, the nationwide rollout of product rental at MediaMarkt and Saturn indicates that the test phase was a success.

Can you confirm this and give us some current figures on rentals?

After a pleasing online test phase, the rental offer is also gaining acceptance in the markets. We quantify the success on the basis of the rental period. When we entered the rental business, the product was a kind of innovation meadow: We wanted to connect the customer with technologies such as VR glasses, new mobile phones and similar products. We were aware that the rental period would be relatively short. In this phase, we wanted to familiarize ourselves with the product. This has changed radically in the last two years. 

We can see that customers are now really renting the equipment on a permanent basis. The average rental period for smartphones, for example, is 12 months. So the customers rent for use and accept the rental as a further payment option in addition to financing, purchase or a normal contract. Even more important: today we are talking about rental in combination with service. Customers do not just rent the product. They are increasingly also renting the delivery and installation of television sets, for example, in the markets. Rental packages for smartphones come with a protective film that informs about an ongoing campaign - for example, service offers. We are convinced that we can bring the two products, rental and service, together in the long term.

What are the differences between the rental offers at MediaMarkt and Saturn?

Basically, there is no difference between the two brands in terms of rental offers. Apart from individual single promotions, the range of products offered for rent and the prices are identical. However, we differentiate between rental offers for private and business customers. Private rentals clearly predominate, but B2B rentals already account for 10%. This concerns different requirements, different types of equipment, for example notebooks, and completely different quantities. We are particularly experiencing the rental of equipment as part of projects. A typical example: 20 employees are hired at short notice for an IT project and the customer rents the technical equipment for the duration of the project - usually six months. In the next step, we want to expand our B2B rental offer to include not only the hardware, but also the appropriate office package and additional equipment for the demand timeframe.

In which product groups are devices offered for rent?

Smartphones continue to be the strongest rental product group, followed by tablets and notebooks. This is followed by Smartwatches, the entire Smart-Home segment and then VR - these are currently our main users. In addition, there is the coffee machine sector, where the range is even smaller. At the end of 2019, we will start with a new area from which we expect a lot: the rental of electric scooters. MediaMarkt and Saturn are going their own way here: the customer can rent the scooter, including insurance, directly in the store and roll it out of the market straight away. Compared to the expensive short-term rental of the already active providers, this offer is highly interesting for the customer: he has the rented scooter at a fixed monthly price and always has it available - it is "his" and cannot be occupied by anyone else.

How many products are there in total?

Our rental portfolio is growing steadily and will soon include more than 2,000 products. The portfolio is being greatly expanded once again in the markets: by more and more rentable TV sets, but also by products that are only available on the market - such as the electric scooter as a new range block.

Can you tell us how long a product is rented on average?

The rental period per area varies greatly. Smartphones are rented the longest with an average of 12 months. With digital cameras, we have the shortest average rental period of four to eight weeks. This indicates that customers rent according to the situation: The action camera has to be taken on holiday or to an event. In the case of smartphones, the focus is on the chance of getting the brand new device: it is changed when a new device comes onto the market, usually on an annual basis. For other devices, the rental period is approximately three to six months.

Will the prices be adjusted accordingly for the different rental periods?

Here it is quite clear: The service life determines the price! Our incentive system is a variable monthly rental price structure, which we use to guide customers towards longer rents. The longer a customer rents, the cheaper it becomes.

Mr. Brancke, modern customers expect companies to have experiences that they pick up in their life situation and focus on their needs. These - not only digital - customer experiences are also provided by rental offers that take these requirements into account. Not everyone wants to put a new TV set in their home right away. And in the fast-moving technology sector, rental devices are often the financially cheaper option, especially since MediaMarkt and Saturn cover 90% of the costs for damage to rental devices, for example.

Therefore, in conclusion, we would like to know how MediaMarkt and Saturn customers react to the rental offer and take a look into the future.

Have you already received concrete feedback on this service - online or in the market? Do rental customers have special wishes, for example do they ask for further products?

Yes, we get very direct customer feedback through our social media channels. If, for example, a certain rental product is not available in the local market or if a certain product cannot yet be rented, the customers give us direct and critical feedback. If the rental has worked out well - for example, with B2B customers, who thus have quick and easy access to the required hardware - the positive experience is also announced. In general, the feedback shows us that our customers would like to see our rental portfolio expanded further. We are responding to this: We will include even more products and also expand our product range.

And how do you think the market for electronic rental equipment will develop in the future? Do you already dare an initial forecast for us?

I am convinced that the subject of rent will become an integral part of our portfolio as a fixed option. In addition to purchase and financing, rent will play a fixed role. I also believe that the range that we will make rentable will expand significantly. By expanding our rental offering, we will also make an indirect contribution to sustainability in the future if products are rented more than once, thereby extending their useful life.

Thank you very much for the interview!