High-end furniture rental could become a billion-dollar business

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The time of dreams


As any college student who buys futons knows, furniture is expensive. It’s no wonder, then, that low-income consumers have long rented home furnishings rather than buying them outright.

Yet Jefferies argues that in the age of subscription services, this trend is poised to go upmarket, creating a billion-dollar opportunity.

Analyst Jonathan Matuszewski says spending on furniture subscriptions on direct-to-consumer platforms will approach $1 billion in five years, from around $150 million today. “We are at the start of a revolution in the way consumers furnish their homes,” he says, adding that “access to excess will be a mega-theme for years to come.”

He notes that about two-thirds of the 1,000 consumers his company surveyed were interested in the idea because people move frequently or want to try out designs and styles before buying.

Some companies are already experimenting with the concept, which was previously the domain of lower-end retailers like


Rent-A-Center

(RCII) and


from Aaron

(ANA).


Williams Sonoma
it is

(WSM) West Elm and Pottery Barn are partners of


Rent the track

(RENT) and Feather, and Crate & Barrel and CB2 use Fernish.

Matuszewski argues that “investors should give management teams ‘high marks’ for this strategy because it builds consumer loyalty before first-time homebuyer age.” Potential subscribers gave


Williams Sonoma
it is

scores high marks, which he says could translate to more than $300 million in rental sales for the company in five years.

Matuszewski acknowledges that this could initially pose a threat to markets like


Wayfair

(W), but argues that the company could ultimately “leverage pre-existing infrastructure to get into furniture rental. The business-to-consumer opportunity is the most obvious, but leasing could also strengthen


Wayfair
it is

B2B company.

Still, he maintained Hold ratings on Williams-Sonoma and Wayfair.

Write to Teresa Rivas at [email protected]

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