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NEW YORK, April 14, 2015 -- Fifty-seven percent of American adults declare that access is the new ownership when it comes to the sharing economy, with four in five consumers agreeing that there are sometimes real advantages to renting versus owning. This is according to a new PwC US Consumer Intelligence Series report and research project, The Sharing Economy, which surveyed 1,000 consumers, held conversations with influencers and business executives, and monitored social media chatter to evaluate the new business model's impact on society and business. PwC spent the past four months examining socio-economic and cultural conditions that have enabled the arrival of new sharing companies and analyzed opportunities for established companies looking to grow under this model, particularly in the technology, entertainment, media and communications (EMC), automotive, retail and consumer goods, and hospitality industries. PwC has also illustrated the top findings in a short video, link to animated video.

PwC defines sharing economy as an emergent ecosystem that monetizes underutilized assets or forgoes the purchase of those assets altogether, in favor of borrowing, renting or serving up micro-skills in exchange for access or money. It is a system of opportunism built around trust, collaboration, and on-demand goods and services. The rise of social, mobile, analytics and cloud computing have contributed to lowering the entry barriers to the sharing business model, with 19 percent of the total U.S. adult population having tried the sharing economy firsthand. According to findings, 18-24 year olds are among the most excited adopters of the sharing economy.

Thus far, its impact has been significant. Of the 44 percent of American adults already familiar with the sharing economy, 72 percent can see themselves becoming a consumer in this ecosystem in the next two years. Among the top three potential benefits are: To fuel expansion, players in the sharing economy will need to find ways to authenticate the identity of consumers and reassure consumers on their credibility – both in terms of secure transactions and durable, high-quality products. Eighty-nine percent of U.S. adults believe that the sharing economy model is based on trust between providers and users – this will be the foundation to a frictionless sharing transaction.

  1. Attractive costs: Eighty-six percent of consumers agree that the sharing economy makes life more affordable.
  2. Sense of community: Seventy-eight percent of U.S. adults believe that the sharing economy builds a stronger community.
  3. Alleviates burden & increases convenience: Forty-three percent of consumers expressed that owning today feels like a burden, and 83 percent agree that sharing makes life more convenient and efficient.

"Gaining insights into consumer preferences and securing trust will be crucial to increasing revenue potential," said Deborah Bothun, PwC's U.S. entertainment, media & communications leader. "Discerning consumers are factoring friction into the value equation so creating a seamless experience will be an imperative for success. Flawless digital tools, elegantly simple search and smooth transactions are not merely a nice-to-have for companies today – they are a requirement for all players in the sharing economy."

Industry Implications The sharing economy is disrupting business models and consumption patterns in both consumer markets and business-to-business (B2B) markets. The report outlines the challenges and opportunities for new entrants and incumbents across the following industries:

Technology The technology industry is shaping other industries in significant ways, particularly in terms of how the use of technology enables the shifting of business models. Specifically, the Internet has formed the backbone of the sharing economy by providing the connection that allows providers and consumers to interact in the sharing marketplace. Transactions are shifting to real time with the use of mobile and cloud technologies, and social feedback is now playing a huge role in driving increased trust in commerce. Technology companies must understand how their products and services change their customers' value delivery frameworks and mechanisms specifically within the sharing economy.

For example, in car sharing, the Internet provides mobile connectivity into a market place, an elegant user experience in which consumers can make a purchase, and all of the requirements to continue the transaction in a digitally seamless way.

"Smart partnerships are key to the future of the sharing economy, and there are untapped opportunities to create provider and technology partnerships across categories," said Matt Hobbs, PwC Software & Internet industry partner. "A keen focus on experience design is critical to fostering emotional connections. By providing consumers with ease of use and confidence in decision-making, a company moves beyond a purely transaction based relationship to become a platform for an experience. That change is extremely important to the success of the sharing economy."

Entertainment, Media and Communications The EMC industry has been the most disrupted by the sharing movement. By the same token, this industry also has the highest consumer engagement, compared to the other industries in PwC's study. The intangible nature of many of these goods lends itself well to the sharing of accounts, content streaming and other options that are more suitable for today's mobile consumer. However, legal and contractual obligations have the potential to create barriers to access, discourage trial and slow innovation, making it difficult to establish formal sharing models at the same speed as other industries. "The shareables model is changing the way consumers think about value. And it's no surprise that the sharing economy is also dubbed the 'access economy' or the 'on-demand economy,'" said David Clarke, PwC EMC digital services principal. "We're operating in a society that wants what it wants, at the exact moment it wants it. So, if consumers are willing to pay more to see something earlier and these costs can be mitigated by sharing it with others, then there are potentially large untapped opportunities for a collective bargaining model to benefit both consumers and providers across all EMC categories."

  • Digital assets, such as movies, music and games, inherently feel less like possessions than physical ones, so companies should offer relationships and rewards that create greater perceived value.
  • Piracy and copyright violation are huge concerns for both consumers and producers, with 59 percent of survey respondents confirming they will not trust sharing economy businesses until they are properly regulated.
  • The sharing economy has subverted traditional distribution models with the rise of on-demand. Consumers may be willing to pay more for early or immediate access to something, opening the door to a potential collective bargaining model to benefit both consumers and providers.

Automotive Increased public interest in waste reduction and shifting cultural attitudes have created an environment ripe for the sharing economy to be widely adopted in the automotive industry. Car ownership has declined over the past decade, particularly among millennials, who are less likely to get driver's licenses and view cars as simply modes of transportation instead of status symbols. Despite lingering concerns over reliability, brands are building trust and customer loyalty among those who appreciate the convenience in automotive sharing. "Automotive companies are increasingly reframing themselves as providers of mobility instead of merely manufacturers of vehicles," said Brian Decker, PwC's U.S. automotive advisory leader. "In this context, legacy manufacturers must find new ways to add value for their consumers, such as selling cars for purchase to facilitating ride-sharing, or even partnering with public transit in cities where systems are poorly run or underused."

  • According to PwC's survey, 8.2 percent of all adults have participated in some form of automotive sharing. Market penetration may grow as automotive sharing is the category survey respondents indicated they would most like to see succeed.
  • The proliferation of car-sharing, ride-sharing and bike-sharing systems is attractive to consumers as 32 percent of respondents indicated that "more choice in the marketplace" is a strong selling point for the automotive sharing economy.
  • Quality is at a new premium, with consumers placing heavier consideration on vehicle durability and resale value before making purchases. Even so, consumers see the value in automotive sharing, with 56 percent of consumers believing that it offers better pricing.

Retail and Consumer Goods In this new environment of sharing, borrowing and renting, a "new retail" has emerged that consumers say offers better pricing, more convenient access and more marketplace choice. To satisfy the growing appetite for minimalist lifestyles, retailers have adopted an omni-channel approach to streamline retail experiences. Though sharing models threaten an already struggling retail industry, there are opportunities to innovate on both physical and digital platforms. "Identifying and leveraging untapped resources are key to expanding and diversifying into new channels," said Steve Barr, PwC US retail and consumer practice leader. "Retailers should consider investing in digital innovation in the form of streamlined apps, user-friendly interfaces and intuitive design to provide a seamless experience for consumers. As distribution continues to diversify to non-traditional channels, a differentiator for successful organizations will be who arrives first and who delivers it best."

  • Forty-eight percent of consumers surveyed are concerned about uncertain quality in the new retail sharing model, so quality control has gained greater importance in earning trust.
  • Social responsibility is top-of-mind for a growing number of consumers, with 76 percent of respondents familiar with the sharing economy saying that it is better for the environment. Retailers that promote sustainability messaging are attractive to consumers.
  • As consumers move away from conspicuous consumption, organizations have the opportunity to develop unique retail experiences, via social media and creative physical storefronts. Sixty-three percent of consumers find participating in the sharing economy to be more fun than engaging with traditional companies – the pop-up movement has been one successful outcome in the effort to push experiences as an extension of product.

Hospitality Several sharing platforms have emerged in recent years for travel and dining – along with ancillary services, such as cleaning and maintenance – offering consumers greater flexibility and choice, threatening traditional hospitality players. The allure of customization and better prices is high, but new entrants to this space must work to assuage fears surrounding safety and privacy in order to effectively compete with industry stalwarts. "Hospitality players must address the bifurcation of consumer types – those who are more prone to seek unique experiences and those who see the reassurance of consistency. The leisure traveller may become even more different from the business traveller, so hotels have the opportunity to tailor even more amenities to appeal to specific segments," said Jennie Blumenthal, PwC U.S. entertainment, media & communications strategy director.

  • Today's consumers prefer bespoke and authentic offerings with local flavor, listing a "more unique experience" as second only to price in what attracts them to the sharing economy in hospitality.
  • Social communities will be pivotal in reputation management, as 69 percent of survey respondents will not trust sharing economy companies until they are recommended by someone they trust.
  • Thirty-four percent of consumers familiar with the sharing economy are more likely to trust a leading hotel brand than a top hospitality sharing company, placing more faith in the security, hygiene and quality standards of more established and mature lodging companies.

What's next? The sharing economy is growing at a rapid rate. Young start-ups in the space compete with traditional companies and, in some cases, outpace their legacy counterparts in revenue. Among the considerations for organizations seeking relevance and dominance in the sharing economy:

Create Marketplaces: Company strategy should assess whether it's more advantageous to create new peer networks for widely distributed goods and services or enable existing marketplaces in the role of mediator.

Develop a Mitigation Strategy: Partnerships and other teaming efforts can help companies share risk while maximizing reward.

Engage In Sharing Your Own Asset Base: Monetizing spare capacity and leveraging tangible and intangible assets should be top of mind for businesses.

Effectively Tap Talent: Employment trends are shifting toward more short-term, contract-based engagements on multiple fronts, so new incentives are needed to attract talent.

Speak Up In Shaping Regulatory and Policy Frameworks: Businesses must develop and comply with regulatory, legal and tax frameworks to legitimize their offerings to consumers.

Expand the Brand Through Shared Economy Experiences: Tried-and-true marketing metrics need to adapt to the changing landscape and the a new rubric for success needs to be incorporated into traditional brand strategy.

Never Settle For Stable: Regardless of industry, business models must constantly be evaluated to optimize their value propositions for maximum consumer benefit and competitive advantage. Flexibility and foresight are necessary traits.

About PwC US

PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms, which has firms in 157 countries with more than 195,000 people. We're committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com/US.

© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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