Gates surveys past, anticipates future rent-to-own industry trends
Gates surveys past, anticipates future rent-to-own industry trends
Former Rent-A-Center CEO Bud Gates spent over an hour with rent-to-own dealers and vendors Monday morning, recalling strides made during the last 20 years that have contributed to the health of the rent-to-own industry today.
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Easyhome, ltd. Master Franchisor Bud Gates |
But Gates warned, big changes are on the way.
"The industry is healthy and it’s growing," Gates told the room of over 100 at the semi-annual RentDirect Nationwide Conference in Dallas. "It is consolidating and the legislative environment is much more defined today. But I think we are facing some dramatic changes ahead."
Gates, who spoke to members of the RentDirect division of Nationwide, which supports the rent-to-own industry, said an aging population would be less likely to rent, but explosive growth in the Hispanic population would present new opportunities.
"Over the next 15 to 20 years, Hispanics are going to be a disproportionate share of our growth," Gates said. "One in every four customers will be HIspanic."
Gates is a Harvard MBA who served as CEO of Rent-A-Center for over a decade, as senior vice president of marketing at Pizza Hut for six years, owned his own Pizza Hut franchises and is currently a master franchisor with Canada-based home merchandise lease company Easyhome, Ltd.
Gates is leading Easyhome’s expansion into the U.S. market.
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| Bud Gates, Jim Brown and David David |
Gates surveyed growth, technology and company organization trends during his talk.
As to the notion the rent-to-own industry tends to thrive in economic down times, Gates disagreed, saying ultimately when the economy impacts disposable income, RTO is not immune.
"I don’t think that’s true," Gates said. "Rent-to-own is non-cyclical but it is very sensitive to abrupt wings that change the disposable income of our customers."
He then used the example of increased gas prices as an expense that could cut into income that may have previously been used to rent new products.
Gates continued to see the electronics and computer industries as providers of new rent-to-own products, but expressed reservations about whether the growing wheel and tire segment of the industry would continue to prosper over the long haul.
"The jury is still out on whether it (wheel and tire) is a long term player," Gates said. "It could be just a fad."
On the legislative front, Gates traced the development of rent-to-own laws across the country from passage of the first rent-to-own state statute in Michigan in 1984 to passage by 47 states that have rent-to-own statutes on the books today, the overwhelming majority of them friendly to the industry.
Still, Gates encouraged vigilance by dealers and vendors and challenged them to stay engaged in both state and and federal legislative issues, "get involved and get involved now," he said.
When asked what he would say to New York Sen. Chuck Schumer — who has introduced a bill into the Senate that would impose price controls on the industry — Gate’s answer was cordial and diplomatic.
"I would encourage him (Schumer) to take the time to get past the sensational headlines," Gates said. "The customer understands what they’re doing and they know that if it were not for the rent-to-own transaction, they would probably go without. This transaction has a tremendous place for certain customers."
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| Bud Gates addresses RentDirect members Monday |
APRO President Larry Carrico then updated the Rent Direct attendees on the recent APRO Dave Egan Legislative Conference in Washington, D.C. So far the lobbying efforts of the 130 dealers and vendors in attendance there have helped add 11 new co-sponsors for the industry supported consumer rental purchase agreement act.
Co-sponsorship for H.R. 1757 now stands at 75. Co-sponsorship for the companion bill in the Senate, S. 1012, stands at 21.
RTO dealer David David, vice president of American Rental, said Gate’s comments on the progress the industry has made in improving its image and in defining the rent-to-own transaction in state statutes is a direct result of the efforts of national trade organization — APRO -- and its politically active membership.
"That’s why it’s important for members of RentDirect to join as members of APRO to help keep our presence strong in the states that have these statutes," David said.
Rent-to-own dealers then moved to the show floor where over 25 RTO specific vendors are displaying their wares on over 180,000 square feet of floor space through March 5.
For more photos of Bud Gate’s RendDirect Nationwide press conference visit the exclusive APRO photo gallery.
Nationwide Marketing Group (NMG), the parent organization of RentDirect-Nationwide and is the nation’s largest buying and marketing organization and has a combined $11 billion in annual sales and approximately 2,800 members throughout the United States with more than 7,500 storefronts.