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The Sharing Economy

Examining the possibility of the consumer becoming the retailer

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Spending the past week restoring order to my attic in the aftermath of a central air conditioning retrofit to my 80-plus-year-old home, I unearthed decades-old boxes, wondering if I really needed all this “stuff.”

Most of it was holiday decor that spans the entire calendar, but it dawned on me that I had enough to decorate three homes simultaneously. As I pondered trash-disposal alternatives and donation pick-up services, I came across a stash of clothes I no longer fit into, but couldn’t bear to donate. One suit, in particular – a grey flannel Anne Klein suit I bought at Neiman Marcus about 12 years ago – gave me pause. I remembered buying it; it was so well made, and I loved wearing it. But it was a relic from my post-baby days; I shed that weight over a decade ago and resolved never to go back there again. So why save the suit, or those keeping it company, for that matter?

I know why: They’re valuable. These are well-made garments that came at a commensurate price, and I couldn’t just give them away, nor destroy them. But there hasn’t has been an available alternative, other than the hassle of finding a quality consignment store … until now.

I recently read an article in Women’s Wear Daily about VillageLux.com, an invite-only online vehicle for renting the contents of one’s closet. The site creates a community whose members expand upon the notion of borrowing from your older sister’s closet. The idea is an intriguing one: suddenly having the ability to rent outfits and accessories that you seldom wear, but don’t wish to part with permanently. Definitely food for thought.

A week or so later, I read about a luxury consignment website called The Real Real. In a brilliant move, Neiman Marcus has paired up with this website to enhance their consignor commission payment method by creating a Neiman Marcus gift card-compensation program that adds 10 percent to the value of the commission. To supplement the partnership, Neiman Marcus has introduced the consignment program in their stores, adding signage and enlisting sales associates to collaborate with The Real Real’s “Luxury Managers” for facilitation of personalized consignment services, and white-glove product pickup and delivery to its customers.

Interestingly, The Real Real site not only showcases clients’ articles of clothing and accessories, but also artwork. Of course, they have their quality assurance criteria, which is a master list of luxury brands and a Sotheby’s-worthy roster of artists and photographers. Looking at other sharing economy trends, like Airbnb and Uber, it seems like this trend may be boundless.

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Back in 2014, the Super Bowl was being held at MetLife Stadium, just three miles our home. All my neighbors were considering renting their homes via Airbnb during that week. The rumored going-rate was $3000 for the week, which made it very tempting. 

Looking through the decor stored in my attic, in conjunction with this new awareness, the wheels started turning in my brain. Extra dining room chairs in the basement, a surplus of wall art that I’ve changed out as my tastes have evolved, and the aforementioned holiday decor – it all suddenly represented a revenue stream as opposed to a space burden.

Where will all this lead? I see two trends at work here:

First, the current consumer preference to purchase experiences over products. The world has become over-inventoried – both in stores and in our lives – and the younger generations are less inclined than their baby boomer predecessors to collect stuff and the “hoarding” phenomenon that goes along with it. 

Second, the baby boomers are taking cues from their millennial counterparts, shedding the burden of their collected things for a lighter lifestyle as they downsize their empty nests.

So the cumulative effect of both movements presents an interesting situation where the everyday consumer may actually have more compelling goods for sale or rent than some specialty retailers or department stores. Access, distance and currencies have been taken out of the equation for the most part, thanks to the internet, and marketing is made easy and affordable via social media.

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So as the sharing economy expands, I foresee global consumerism becoming an even blend of the commercial and private supply sources, where quality goods become available for all economic levels, and potentially elevating the lifestyles of almost all classes. It feels like a whole new world is breaking open, and the potential of the Internet is now really starting to be tapped for the betterment of the masses, facilitating true open trade and unlimited competition.

What will all this do to retail as a whole and traditional retailers, in particular? Merchants must become smarter in their utilization of social media, and crowdsourcing will no longer be optional in order to zero-in on real-time product demand. The potential advantage that independent sellers have over corporate retailers is a distinct and individual point of view.

Independent retailers, while disadvantaged by limited product supply, have a consumer expectation of quality and personal style, which will develop a like-minded following if marketed correctly by partner bloggers. This might become serious competition for commercial retailers, and it’s another reason big brands must develop the experience component of their business, strengthen their point of view and reimagine their stores to incorporate tightly curated product. It’s a “David and Goliath” battle and, retailers be warned, movies are most popular when the underdog wins.

Kathleen Jordan, AIA, CID, LEED AP, is a principal in Gensler’s New York office, and a leader of its retail practice with over 24 years of experience across the United States and internationally. Jordan has led a broad range of retail design projects as both an outside consultant and as an in-house designer. She has led projects from merchandising and design development all the way through construction documentation and administration, and many of her projects have earned national and international design awards. Contact her at kathleen_jordan@gensler.com.

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