By Sophy Moffat, Associate Director of Research
Popularized by the likes of Airbnb and Uber, the sharing economy has undergone rapid growth over the last five years. Airbnb is now active in more than 190 countries and valued at more than $20 billion. Uber operates in more than 300 cities and is valued at more than $50 billion. some projections put the sharing sector’s revenues at $335 billion globally by 2025.
In short, the sharing economy is becoming very large, very fast, and businesses need to take notice. The issues to consider include how sharing principles will shape the wider market, and how sharing economy concepts can be applied to existing business models.
There are three industries in particular that have been greatly disrupted by the sharing economy.
Retail: Retailers have been adept ‘disruptees’ when it comes to new concepts, with the onset of e-commerce seeing the creation of an omnichannel experience for shoppers. However, innovative companies have created sharing alternatives. For example, FarFetch, which partners with local and luxury boutiques globally to showcase and sell their inventory online, offers small retailers the opportunity to retain their brick-and-mortar stores, while still granting them an online presence. As retailers adapt and react, they must weave sharing opportunities into the customer experience and facilitate peer-to-peer marketplaces, allowing for rental or resale. This will allow more consumers to experience products ‘first hand’ while promoting sustainability – something that appeals to an increasingly environmentally aware cohort of shoppers. Retailers’ physical footprints will also be under the microscope, as the sharing ethos encourages them to lend space to other vendors in partnership efforts, and leads them to further embrace the pop-up movement.
Hospitality and Media: The sharing economy also presents opportunities for the hospitality, entertainment and media industries. When it comes to hospitality, sharing economy companies like Airbnb certainly make travel more accessible. But entrenched hospitality players can still depend on customers who seek assurances of consistency. This means they can stick to their core competencies, while adopting elements that are simpler, more efficient and enhance the quality of customers’
experience. The sharing business model has had a profound effect on the entertainment and media sector. However, the sharing economy presents untapped opportunities for the sector if, rather than fighting the threat, media providers exploit opportunities by exploring new distribution models to promote higher audience engagement. As the success of music-streaming service Spotify demonstrates, content creators are adopting metrics beyond linear sales and finding ways of monetization via sharing platforms, such as advertising
Automakers: Due to the striking advancement of companies like Uber and Lyft, automakers have been placed under the spotlight. Bike sharing, car-sharing and ride-sharing reflect a huge cultural shift and, as a result, traditional automotive companies are rethinking their positioning. General Motors, one of America’s Big Three automakers, announced a $500 million investment in Lyft in January 2016, and Ford CEO Mark Fields has been talking about what he calls “smart mobility” for some time, or the combination of innovation and data to enhance customers’ mobility, connectivity, and experience. As more entrants compete with more established companies, manufacturers must find ways of adding value to the customer experience and view themselves as providers of mobility, rather than solely manufacturers of vehicles.
The above is an excerpt from Sophy’s larger editorial – Sharing Economy 2.0: Sharing By and For Consumers – which can be read by downloading the Spring 2016 edition of the Occupier Edge.
Sophy is an Associate Director of Research, her team produces studies on the central London economy, capital markets, occupier market, and factors that affect supply-demand fundamentals in commercial real estate. Sophy has produced research for investors including St. Martin’s, Ho Bee and Dekabank as well as authoring various published reports which identify workplace trends. Sophy is regularly featured in the UK national and trade press and frequently speaks about the future of the workplace at industry events.