Consumer Product Rental

The US consumer product rental industry includes about 15,000 companies with combined annual revenue of $22 billion. Major companies include Blockbuster, Movie Gallery, Aaron Rents, and Rent-A-Center. The industry is concentrated: the largest 50 companies account for about 60 percent of industry revenue.

The industry includes companies that rent personal and household goods for short periods.

COMPETITIVE LANDSCAPE

Demand is driven by personal income and the timing and popularity of new movie releases. The profitability of individual companies depends on the right merchandise mix and inventory financing costs. Large companies have advantages in economies of scale in purchasing, distribution, and advertising. Small companies compete effectively by providing superior customer service and catering to local demographics. The industry is labor intensive: average revenue per worker for a typical company is less than $100,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services include renting video discs and tapes (50 percent of revenue); home health equipment (15 percent); and consumer electronics and appliances (12 percent). Other services include renting furniture, formal wear and costumes, and party supplies.

Most video rental companies are small, although close to half are franchises of large retail chains. Videos are the most important revenue source for the movie industry. Movie studios generally release a movie as a video during an exclusive "distribution window" of 30 to 60 days, during which the film isn't available on TV, cable, or pay-per-view. Some movies are released as "sell-through" where consumers can buy ...