The Leased Lifestyle

American Express really had our number when they said that “membership has its privileges.” We love to belong, to feel like we’re part of something. Maybe it’s the association that membership has with being cared for (as by a parent) or with the security of the crowd (as with a… herd. Sorry, folks, sometimes the analogies aren’t flattering.). Whatever the reason, as a culture we’ve demonstrated time and time again that consumer goods and experiences are part of how we define who we are to ourselves and each other.

What does it mean to live in a society that uses material goods to make abstract concepts like “identity” and “membership” more tangible? Well first of all, it seems to involve selecting, buying, and displaying a whole lot of stuff. A tremendous amount of energy and attention goes into keeping up with those pesky Joneses, who seem to always be one step ahead of us in getting the latest aspirational hoo-ha.

If this sometimes feels exhausting, stressful, and over-stimulating that’s because it is. It’s tough to keep up with the consumer treadmill. When “new” and “latest model” become the most attractive product attributes, then actual ownership becomes more tedious and the Leased Lifestyle takes on a whole new appeal.

When you own something you are responsible for its care and eventually for its sale or disposal. Depending on the item, ownership has a semi-permanence that comes from the value of that item becoming part of your own net worth.

When items have little or no long-term value, the benefits of ownership are decreased. This is why many financial advisors do not recommend buying new cars or expensive computers, because these items traditionally lose most of their value soon after they are purchased.

Leasing, on the other hand, offers a couple of interesting alternatives to the ownership experience. When you lease something – be it an apartment or a car – you are able to walk away from the item when the term of the lease is over. You are not committed to the item for perpetuity or until you find another buyer. The item will also usually come with some sort of additional service, such as yearly maintenance for a leased car or the on-call superintendent who will fix the pipes when they break. That’s because the owner is the one who has a vested interest in keeping the item in good condition. As the leasor, you’re just there for the use of the item – and isn’t the using the best part?

In some cases, leasing even allows you to procure a more expensive item than you would be able to buy outright. This was certainly the case in the 1990’s when a leasing boom in the luxury vehicle market took hold. Someone who found it prohibitive to pay $60,000 to buy a Lexus might be more than willing to pay no money down and $500 a month for five years to drive one.

Nowadays we’re seeing consumers’ desire to lease as opposed to own creep into some very interesting sectors. Bag, Borrow, or Steal allows members to pay a monthly fee and in effect rent a different designer handbag whenever they are ready to trade in their current selection. With bags in the Couture category starting at $175 a month this is not cheap. But it’s certainly less than paying $2,000 to actually buy a Chloe Paddington bag – especially when what you really want is the bag’s very time-sensitive It Status rather than its last-a-lifetime quality construction.

For the Leased Lifestyle to be profitable and therefore worthwhile, sellers and service provider must make a profit. And in fact, some industries have shaped their entire business model around the consumer’s preference for low-commitment, high-novelty products. In the United States wireless carriers offer cell phones at far below their manufacturing cost in order to sell lengthy service contracts that more than make up for the loss they take on the device.

This can lead to some confusion and therefore disempowerment on the consumer’s part. “Service” is abstract and difficult for consumers to value. For example, I have no idea what it costs Verizon for me to call my mother, and therefore would be hard pressed to know if I’m being gouged.

When we try to apply what we know about product pricing to this Brave New Leased Lifestyle it gets even more convoluted. Debt Hater writes:

I just bought a new cell phone. I bought it because I had a $150 rebate that expires in March. Then the MotoRazr Red was half off with another credit for a new two-year contract. Then, Radio Shack had an additional couple bucks off. So a phone listed as $309.99 became $19.99 and I bought it.

What does this do to the consumer’s idea about the product’s value? She believes any item that sells for $20 must “really be worth about $10.” Her attention is on trying to assess the value of the product rather than the value of the service. (By the way, this kind of scenario just about makes a blood vessel burst in my husband’s head.)

The Leased Lifestyle is growing, moving from traditional areas like vacation time-shares and into whole other facets of our daily lives. Zone Diet meals that are delivered to your home so you don’t have to cook or think about calories. Tie-of-the-Month gift clubs so that your “gift” is, in fact, the ongoing experience of newness and novelty.

So is the Leased Lifestyle bad or good? Well, it’s certainly a useful adaptation to the stresses of an ownership lifestyle that moves too fast. With our love of trends and the continued growth of the service economy, it does seem that the Leased Lifestyle is going to continue to evolve and expand. I think we’re at the beginning of something and time will tell if both consumers and retailers continue to favor it.