Two growing consumer groups have the potential to prop up the rent-to-own market for decades.
Rent-to-own companies are targeting Hispanics and millennials for their growth potential, according to RTOHQ magazine, but are discovering that they need to dispel negative perceptions about their business model before they can win them over.
Focus groups conducted by the Association of Progressive Rental Organizations (APRO) uncovered several beliefs that were a bit unnerving to rent-to-own company executives looking to cater to new consumer groups.
Participants believed that rent-to-own is expensive and that the merchandise rented is neither new nor brand-name. Other perceptions include credit concerns that rent-to-own agreements that aren’t completed can hurt credit and that rent-to-own retailers lack posh and professionalism.
Because the rent-to-own industry’s traditional customer isn’t the highest-potential prospect for the future, according to APRO’s lead researcher and marketing analyst Kelly McDonald, the industry is banking on buy-in from both Hispanics and millennials.
Rent-to-own companies have identified a target customer. These customers share three characteristics: They have an annual household income of less than $60,000, they believe their credit is not “excellent,” and they prefer to pay in installments.
When focus groups were educated on the consumer benefits of rent-to-own, positive reactions among Hispanics and millennials improved. The groups wanted a comprehensive definition of rent-to-own and detailed information on payment options. They were most swayed by a chart that described how the rent-to-own experience compares to credit, retail, and Craigslist.
Rent-to-own businesses want millennials on board, not only for the generation’s size and earning potential, but because many of these young adults lack credit.
Interestingly, image-conscious millennials who were part of the survey suggested the industry rebrand itself “ready to own.”
A strong Internet presence — fueled by a heavy investment in SEO — is also important to this group, along with appearance in Google searches when they research products. Millennials value authenticity and transparency. In response, the APRO developed the ShopRTO.com website. The site’s most popular page is the store locator.
Non-Americanized, or unacculturated, Hispanics were most enthusiastic about rent-to-own, especially if store staff understand and support their culture.
Industry Impact — Rent-to-own companies must address negative industry perceptions before they can win over coveted consumer groups such as Hispanics and millennials.
Tracking the moves of consumer products makers since 2003, Catherine Colbert is an industry researcher, writer, and blogger. Previously, she spent ample time in magazine publishing, technical writing, ad copywriting, medical writing, and marketing. Follow her on Twitter.