Falling disposable income forced people to rent appliances instead of buying.
Los Angeles, CA (PRWEB) September 05, 2013
Due to the fundamental difference between buying and renting, the recession affected the Consumer Electronics and Appliances Rental industry differently than traditional retail industries. Although strong declines in disposable income discourage customers from renting at all, negative economic conditions can translate to increased industry revenue, as lower-income consumers may switch from buying to renting, particularly for pricey electronics and appliances. In the five years to 2013, industry revenue is expected to grow at an average annual rate of 0.4%. Revenue dropped 7.5% in 2009 as per capita disposable income fell 3.6%. However, according to IBISWorld industry analyst Jocelyn Phillips, “The economy's sluggish recovery had a positive impact on the industry.” In the five years to 2013, the unemployment rates have stayed high, growing 5.6%, and this trend has led to industry growth.
Expansion and acquisition activity has made the industry more concentrated in the last five years. In the five years to 2013, the number of industry firms declined at an annualized 2.3% to 2,089. Rent-A-Center (RAC) solidified its position as the top player in this industry by opening hundreds of kiosks at traditional retailers, enabling consumers who cannot qualify for retailer-backed financing to take advantage of RAC's rent-to-own model. Aaron's Inc. also added over 500 stores during the past five years through a combination of direct new store investment and franchising. Industry concentration has been good for the major industry players; both RAC and Aaron's have experienced profit growth in the five years to 2013.
In 2013, IBISWorld expects the industry to grow 0.9% to total $4.8 billion. Consumer spending will likely increase in 2013, and while drastic rises in consumer disposable income could hurt the industry, Phillips says that “bitter consumer sentiment is expected to keep many patrons renting.” Tightened credit will likely also aid rental demand, as financially unstable consumers are less likely to purchase goods at industry outlets. IBISWorld expects these trends to continue over the next five years, as the US economy continues to experience weak consumer sentiment, stubborn unemployment and low levels of credit for subprime customers. Since the industry specifically caters to people with poor credit and uncertain employment, such conditions will likely benefit the industry's performance. IBISWorld expects revenue to increase as a result of these conditions.
For more information, visit IBISWorld’s Consumer Electronics & Appliances Rental in the US industry report page.
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IBISWorld industry Report Key Topics
The Consumer Electronics & Appliances Rental industry rents or leases consumer electronics and appliances including DVD players, refrigerators, computers, stoves and televisions. Most industry transactions are through rental-purchase agreements that allow customers to take ownership of merchandise after an agreed-upon rental period. Companies that primarily sell electronics and appliances on a retail basis are excluded from this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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