Rental and Circular Economy: What Connection?

Each year, we consume nearly 93 billion tons of raw materials, including minerals, fossil fuels, metals, and biomass.

But only 9% of these raw materials are reused. The European Union produces 2.5 billion tons of waste each year.

Half of total greenhouse gas emissions and more than 90% of biodiversity loss and water stress result from resource extraction and processing.

Moreover, up to 80% of products' environmental impacts are determined during the design phase. Traditional or linear models are no longer sustainable.

Driven by consumers who are increasingly aware of their consumption's environmental impact, as well as legislation, companies are strongly incentivized to change their business models.

From a Linear to a Circular Model

Resources and raw materials are not inexhaustible — consumers are now aware of this.

National legislation is also evolving to encourage companies to adopt circular approaches.

French Regulatory Framework

In France, the "anti-waste law for a circular economy" of February 10, 2020, notably provides for the creation of dedicated funds to finance reuse in favor of structures like resource centers.

Thus, sectors producing electrical and electronic products, furniture, or DIY and gardening items will have to contribute 5% of their eco-contribution.

European Initiative

For its part, the European Union intends to encourage states to go further in the circular economy.

In March 2020, the European Commission adopted a new "circular economy action plan for a cleaner and more competitive Europe" emphasizing:

• Sustainable product design
• Waste reduction
• Empowering citizen-consumers through the "right to repair"

Contrary to the traditional linear economic model (extraction-production-consumption of resources-disposal), the circular economy presents a closed cycle and production flow, where products must be used efficiently and recycled at the end of their lifecycle.

From Consumer to User

Can we still talk about consuming non-food goods?

Other consumer goods, such as household appliances, furniture, or computer equipment are no longer "consumed" but used.

The very model of ownership is being questioned.

The reflection also applies to thousands of other products, such as:

• Sports equipment
• Household appliances
• Cars
• Furniture

Evolution of Consumer Behavior

The new consumer is well aware of this: they increasingly choose healthy and responsible alternatives, guided by ethical values that influence their purchasing decisions.

They pay attention to origin and the entire supply chain.

Thanks to the rental business model, the circular economy acknowledges this transformation: it replaces the concept of consumer with that of user.

Why buy (and own) if you can simply use?

It's access to the service provided by a product that matters, rather than the product itself.

From Product to Service

Some companies have understood this well, putting rental and circular economy at the heart of their business model.

It's no longer about selling products, but responding to customer needs by offering the service they need, for specific and time-limited use.

The product thus becomes a service.

Use Case: Kazoo

Kazoo for example allows its customers to rent household appliances without commitment and return them at any time.

Thus, appliances can serve someone else.

Appliances returned by customers are refurbished in a professional reintegration workshop.

Kazoo's ambition is to:

• Limit overconsumption
• Extend appliance lifespan
• Limit new product production

Use Case: Bocage

Some traditional brands are beginning to adopt the circular model.

This is the case of French shoe manufacturer Bocage, which launched a new shoe rental offer in January 2019.

Thus, customers can get a pair of shoes every two months.

At the end of the rental, the customer can either:

• Buy the shoes at a preferential price
• Return them

The shoes are then refurbished in a French workshop and offered for sale on the "Like New" platform to give them a new life.

Rental Accelerates the Transition to Circular Economy

The rental model therefore enables a faster transition to the circular economy.

This model promotes a sustainability-focused approach that aims to strengthen long-term emphasis on responsible product use by customers and on innovative transportation, logistics, and supply methods.

Indeed, responsible resource sourcing is at the heart of conscious rental activity, enabling:

• More efficient equipment use
• Reduced demand for non-renewable resources

The lifespan of rented products is thus extended and optimized.

Indeed, rental increases the number of life cycles for each product, which goes through multiple stages of:

• Reuse
• Remanufacturing
• Recycling

What Advantages for Companies Adopting the Circular Rental Model?

The circular rental model is accessible to all companies in all sectors, as long as they market physical products.

This model has many advantages for companies:

Advantage	Description	Business Impact
Capture new customers	Enable new customers to access expensive, high-quality products at an affordable price	Accessible market expansion
Increase product lifespan	Optimize product utilization rate	Resource preservation
Develop long-term customer relationships	Multiply touchpoints throughout product lifecycle	Enhanced loyalty
Better understand customers	Obtain valuable information via new technologies	Continuous improvement
Generate recurring revenue	Create long-term relationships with predictable revenue	Financial stability
Implement flexible pricing	Structure prices adaptively	Market responsiveness
Create exceptional customer experience	Increase value through improved customer journey	Competitive differentiation
Optimize logistics	Reduce logistics costs and environmental footprint	Operational efficiency

Key Advantage Details

Capture new customers: This model particularly attracts customers who prioritize using goods over purchasing them and don't want to worry about product maintenance.

Better understand customers: Thanks to new technologies and recurring consumption practices, companies obtain valuable information to improve their products, services, and customer satisfaction.

Generate recurring and predictable revenue: By definition, rental is a long-term relationship, where it's easier to forecast and generate recurring revenue, unlike one-time sales.

Implement flexible pricing: The rental model allows flexible pricing structure for products or services, enabling companies to quickly adapt to demand fluctuations and avoid resource waste.

Create exceptional customer experience: Product or service value is increased through an improved customer journey. Thus, sustainable and circular products help shape an exceptional customer experience to stimulate demand and differentiate from competition.

Optimize logistics: Logistics management requires mobilizing enormous resources. Choosing quality products and having greater demand visibility dramatically reduces logistics costs while reducing environmental footprint.