The rental service market in South Korea is rapidly expanding into every corner of South Koreans’ life with items ranging from fashion accessories to digital cameras and furniture, as a growing number of consumers are willing to borrow products at affordable prices.
According to the KT Economy and Research Lab, the rental business in the country has increased over 30 percent in the last five years, with businesses that rent personal and household goods seeing a 50-percent jump.
Last year’s market size for rental services is estimated at 25.9 trillion won (US$23.1 billion), sharply up from 19.5 trillion won posted in 2011. The local rental market is expected to further grow to reach 28.7 trillion won this year, 32 trillion won in 2016 and 40 trillion won in 2020, the think tank predicted.
“Consumers are getting increasingly smart by reducing unnecessary spending while meeting their need to consume,” said Kim Jae-pil, a researcher at KT Economy & Research. “They are also not adverse to sharing goods with others to reduce their financial burden.”
The researcher says that renting goods has emerged as a lucrative business here, as people, especially the younger generation, are increasingly open to the idea of borrowing items for everyday use and less inclined towards ownership, which was the case with their parents.
In the past, the country’s rental service sector has been largely led by the auto rental business, as a growing number of young consumers on tight budgets want to experience a wide range of vehicles, with some players nimbly moving to capitalize on such subtle changes.
Cars registered to rental services are estimated at some 624,000 units in 2016, a more than twofold increase from 280,000 units in 2011, according to data compiled by the Korea Rental Car Association.
Retail giant Lotte Group and energy conglomerate SK Group are among those who have entered a car rental business.
Market leader Lotte Rental has some 25 percent market share, with a customer base of some 2.3 million, followed by AJ Rent-a-car with a 12 percent share and SK Networks, which has an 11 percent market share.
Recently, however, the rental business has further expanded its territory. People nowadays have started renting miscellaneous goods that can be considered rather unusual to borrow.
SK Planet Co., the operator of leading e-commerce site 11Street, opened up a fashion rental service within the online shopping site named Project Anne last September, joining the rental business race.
Over 30,000 apparel, handbag and accessory items from some 150 brands are available, with total subscribers standing at 95,000 as of end-February this year, according to the company. A subscriber can rent Gucci or Ferragamo handbags for a minimum fee of 80,000 won per month, with no laundering required, and can later purchase the item.
SK Planet has partnered up with 17 companies that sell household goods to offer rental services to its users, diversifying the lineups to high-end wedding suits, kids items and beauty equipment, while retaining the existing lineup of air and water purifiers and massage chairs.
Since its launch on November 2016, transactions in the rental shop have spiked 146 percent as of February.
“Consumers are becoming more interested in rational or reasonable consumption, opting to borrow goods rather than to own something,” said Kim Min-seok, a manager at 11st. “Consumers can save on the cost by paying reasonable prices (to rental services), and they can trust such rental services.”
Lotte Department Store, the country’s largest department store chain, operates a premium rental boutique named Salon de Charlotte, which mainly caters to those wanting to borrow party dresses, fancy suits and jewelry.
Rare or less-sought-after items ready for rental services include suitcases, adjustable beds and golf clubs.
“The rental business has seen rapid growth in the past few years as consumption was not backed by a rise in income,” said an analyst at SK Securities. “Without a sharp rise in disposable income, rental business in the country will continue to grow.”