This is a report from PR Newswire of the 11th January, 1999:
A woman drives up to her apartment in her late-model car. As she settles into her comfortable couch, she puts her feet up on her coffee table and fishes for the remote to turn on her large-screen television. After watching the news, she goes to her home office and sits down at her computer to check e-mail. What is the common thread to all of this activity?
Today, more than ever before, consumers can lease just about anything. Besides the traditional lease of an apartment or car, many people have discovered the convenience of leasing furniture, appliances, electronics, computers and more. Why Buy?
As the millennium approaches, many people are asking themselves, "Why buy?" Consumer trend forecasters say that many of us will be leasing more and buying less for reasons that range from cost and convenience to the desire to have the latest technology. Leasing, which has long been an accepted practice in the corporate arena, is becoming an integral part of the average person's life.
"People are leasing convenience," said Bill Keese, executive director of the Association of Progressive Rental Organizations (APRO), a trade association that represents roughly 4,000 rental-purchase stores nationwide. The industry is comprised of dealers who lease furniture, electronics, major appliances, computers and other products with an option to buy. "It's the number one reason why our customers lease. Whether a customer is in a temporary situation or they simply want to upgrade their existing home decor, our customers like the freedom of change without the hassles or the cost."
The Future
Forecasters predict that by 2005 leasing will be more prevalent than owning. By then, Americans will be leasing because the price of ownership will be prohibitive in many cases due to the high price tag associated with innovation. We will lease our digital televisions, our cars and trucks, our homes, our furniture, our washers and dryers, even our heating, ventilation and air conditioning systems.
By leasing products, people no longer pay for the item itself, they pay for the item's function. In a society where people's lives are more transient and jobs are constantly in a state of flux, there is little time for waste and people no longer want to sink money into items that cannot be easily moved.
"Today, everybody wants to have a more hassle-free lifestyle," said Keese. "If you own something and it breaks, you have to fix it. If you lease something and it breaks, it is someone else's problem. That's why the rental- purchase industry today stresses convenience and service."
As reported by Bloomberg Business News in November 1996, Noel Capon, a marketing professor at Columbia University's business school, explains that people "don't want to own because owning is a real pain in the neck."
Leasing's popularity has been growing in the United States since Congress passed the 1986 Tax Reform Act, Capon said. The law eliminated many of the tax benefits of buying goods on credit by rendering interest payments on all items except homes non-deductible. As a result of this legislation, the appeal of leasing has broadened beyond its traditional low- to middle-income market to include more affluent customers who are trying to preserve wealth, Capon added.
"In 1994, APRO conducted a consumer survey and found that 22 percent of all leasing was being done by households with annual incomes of more than $50,000," said Keese. "We were not too surprised to learn that more and more higher-income households are turning to the leasing option."
For some items, such as cars, leasing has become a well-established trend. Consumers lease roughly 25 percent of all new cars and trucks on the road today, up from about 10 percent a decade ago. But, for other items, the concept of leasing is brand new.
For example, in 1997, Dell Computer Corp. became the first major computer manufacturer to offer leasing of its PCs to individuals. Since then, other computer companies, including Micron Electronics, have followed suit.
"Technology is changing so rapidly today that people do not want to buy a computer and then be stuck with an obsolete piece of machinery in a few years," said Keese. "With a leased computer, individuals can keep pace with technology." Industry Growth
"The rental-purchase industry shows no signs of falling back," said Keese. "Everything is looking up. People are leasing everything from cell phones to refrigerators."
If the industry's growth is an indicator, then Keese is right. The 1998 Rental-Purchase Industry Survey, conducted by Industry Insights, Inc. for APRO, shows that the annual industry revenue has grown more than $300 million in just one year and more than half a billion dollars since 1995.
According to the study, the top five products rented in the typical rental-purchase store are bedroom furniture, upholstered furniture, stereos, televisions and washers.