Rent vs buy: Why startups failed to shake up the furniture rental market
Mint. The growing popularity of equated monthly instalments (EMIs), or the fixed sum that a borrower must pay every month towards a loan, has further dented the prospects of rental companies. “Today, we have affordable EMIs to buy furniture across all price points," he said.
Nonetheless, India still has startups with rental as their core business model. According to Tracxn, there are 157 companies in the segment across the world. Prominent names in India include Rentomojo, Furlenco, Cityfurnish and Rentickle.
How are they doing? Turns out, they have been grappling with the complexity of the market. And yes, like Pepperfry, they also had overestimated the market. Not just these companies, but even market researchers were rather optimistic at one point.
In a report, ‘India’s furniture rental industry on the upswing’, published in 2021, consulting firm Grant Thornton stated that the estimated size of the Indian furniture rental industry in 2020 was around $4.1 billion. The firm saw the market growing to $13 billion by 2025. Nonetheless, Grant Thornton had a wider definition of the Indian furniture rental market.
Its estimate included all revenue received annually through the renting of furniture in homes, offices and hotels as well as electrical appliances. And apart from the organized players, there is a huge unorganized market in every nook and corner of India. While furniture rental companies are growing, they have remained small.
Take the case of Wakefit Innovations, which started in 2016 as a mattress company. It diversified into selling furniture later and generated revenue of ₹813 crore in 2022-23. The furniture seller nearly doubled its revenue in two years.
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