Millennials Are Major Drivers of Sharing Economy

In Brief

Situation: The sharing economy involves shared use of assets and services. This means that users do not need to purchase or own them outright. Assets can be exchanged, borrowed or leased. But not everyone is ready for this model. What factors determine whether or not someone is willing to participate in the sharing economy?

People: It turns out that age is the critical factor. Or rather, belonging to a certain generation. If you are part of Generation X, then owning property, having social status and avoiding hassle are essential for you. If you are a Zoomer, then perhaps you care for the environment but find shared consumption uncomfortable and have concerns about being cheated. But if you are a millennial, the sharing economy may be the best solution for you!

Some Details

Researchers of the HSE's Faculty of Business and Management explored generational differences in the use of collaborative consumption services (CCS) such as urban and long-distance carsharing (Delimobil or BlaBlaCar), vacation rental (Airbnb), and others. Generation Y (millennials) appear to like and trust CCS more than the other groups, as opposed to Generation X—people born between 1965 to 1982—who find the sharing economy particularly hard to accept. Teenage Zoomers have been found to be more sceptical than others towards collaborative consumption. The paper was published in the Bulletin of Moscow University, Series 6: Economy.

What Is It All About?

A major recent trend is the sharing economy that does not rely on ownership of assets but focuses instead on collaborative consumption and peer to peer (consumer to consumer, or C2C) economic transactions. The idea of shared use of goods and services is far from new: thrift stores, public libraries, rental of sports equipment, clothing swaps and carpooling were around long before the internet with its collaborative consumption platforms and marketplaces which enable the sharing economy today. 

The term ‘collaborative consumption’ first appeared in academic discourse in 1978 in a paper by Marcus Felson and Joe L. Spaet that focused on car rentals. In 2010, Rachel Botsman and Roo Rogers defined collaborative consumption as a specific economic model, and a year later, Time Magazine mentioned it as one of the top ten ideas that would change the world.

Rachel Botsman's TED talk on collaborative consumption

In the past decade, the sharing economy has grown into a multi-billion-dollar business. Compared to 2013, the sector companies' sales revenue will have risen 22-fold to 335 billion dollars by 2025. In 2019 in Russia, collaborative consumption services exceeded 769 billion roubles in transaction volume, showing a 50% growth from 2018.

However, data on market growth dynamics and segments cannot wholly explain what motivates people to participate in collaborative consumption. Why do some people opt for temporary ownership instead of buying the items they need, while some others have an aversion to using second-hand things? Does it have anything to do with their age and generation?

Generations of 'parents' and 'children' are believed to behave differently as consumers, having been raised in different socioeconomic contexts. In order to find out whether or not this is true, the HSE researchers surveyed members of Generations X, Y and Z, three out of the six demographic cohorts described by playwright William Strauss and business consultant Neil Howe. The age brackets used by the researchers, namely 36 to 55 for Gen X, 26 to 35 for Gen Y, and 18 to 25 for Gen Z, are somewhat different from those originally discussed in Strauss and Howe's book Generations: the History of America's Future, 1584 to 2069.

What Was the Method?

The researchers conducted an online survey of more than 3,400 Russian users of sharing services. The survey questionnaire was posted on SurveyMonkey and also sent out to participants of the Marketing course offered on the National Open Education Platform. The questionnaire covered 23 indicators describing various attitudes towards participation in the CCS and eight questions about the respondents' sociodemographic characteristics.

Exploratory factor analysis was applied to the survey results, so that all the numerous variables could be combined under a few categories representing potentially important considerations for different age groups. 

What Was Discovered?

It turns out that Generation X, the oldest and most conservative group in the sample, prefer to own things and use tried-and-tested products and services. Even if they do use collaborative consumption platforms, they perceive it as something outside the norm.

In contrast, Generation Y are more flexible and accepting of the sharing economy. Less attached to owning 'stuff', they readily borrow things they cannot afford from friends or via social media. They seem to have an aversion to major investment, such as real estate property, and refuse to purchase items they may only use once.

Generation Z, or Zoomers, go even further. Introduced to IT literally from birth and having limited means, they are fine with collaborative consumption and derive maximum benefit from it at minimum cost.

Collaborative consumption drivers and barriers also differ across generations, but there are four main considerations, according to the researchers:

 complexity of use: how much time and knowledge it takes to get started;

 fear of fraud: concerns that unscrupulous people may share low-quality items and steal the high-quality ones offered by others;

 property as a status symbol: the belief that those who own more enjoy a higher status in society;

 reference group influence: whether one's family, friends and acquaintances endorse collaborative consumption.

Generations Y and Z prioritise intangible benefits, such as keeping up with the times and trusting others, as well as responsible use of resources, such as reducing financial costs and caring for the environment, e.g. by sharing a car or renting rather than purchasing things. Concerns about hygiene are another significant deterrent to sharing used items.

In choosing whether or not to participate in collaborative consumption, Generation X are mindful of the opinion of their immediate circle. They also find it more difficult to use sharing services; according to the study authors, this may be due to lower levels of digital literacy.

While Generation X usually care less about being on top of the current trends, they find other things important which younger generations might not worry about: 'It really is an inconvenience for me to make my possessions available for other people to use'.

In addition to this, Generation X do not agree that collaborative consumption is a time-saver or an emerging trend; while generally distrustful of sharing, they are however less concerned about fraudsters than Generations Y and Z.

However, underestimating the risk of fraud may be due to lack of experience. Generation Z are more advanced, making them more demanding and cautious in digital spaces. Zoomers are believed to be more sceptical about collaborative consumption than other generations: they agree that it has its benefits but are generally less enthusiastic about it than Millennials.

Zoomers in Russia grew up in a relatively prosperous economic period during the early 2000s, so they did not have to, for example, wear hand-me-downs from older siblings, and are now more squeamish about renting used items. In contrast, Generation Y who grew up in in the challenging economic times of the 1990s, and are okay with hand-me-downs, attach less value to owning things and are therefore prepared to share personal possessions.

In fact, the property-respecting Generation X have the greatest potential to contribute something of value to the sharing economy. Owning substantial assets (such as real estate), they could use them to earn additional income and 'satisfy their desire for rationality' through collaborative consumption.

Why Should We Care?

The generation-specific characteristics discovered by the researchers can be relevant to both science and business. Research on the topic is still scarce worldwide: most studies focus on just one collaborative consumption platform and use non-representative sampling, resulting in findings which cannot be extrapolated out to the wider population.

Understanding the needs of different age groups can have practical value by reducing the risks involved in launching and maintaining new platforms. Advertising can be targeted more precisely, using marketing tools and messages appropriate for particular consumer groups. Everyone will benefit as a result: users will have access to new opportunities to earn or save, since life is getting more expensive, and sharing economy platforms and marketplaces will capitalise on attracting broader audiences, while social scientists will develop a better understanding of the values and consumer habits of different generations of Russians.
IQ
 

Study authors:

Vera Rebiazina, Associate Professor, HSE Faculty of Business and Management; Senior Research Fellow, HSE Laboratory of Network Organisational Forms

Nadezhda Zbandut, Doctoral student, HSE Faculty of Business and Management

Pyotr Dvoryankin, Doctoral student, HSE Faculty of Business and Management

Eduard Tunkevichus, third-year undergraduate student, HSE Bachelor's Programme in Marketing and Market Analytics

August 20, 2020