We can credit Faith Popcorn, an early marketing futurist www.faithpopcorn.com with coming up with the term “cocooning” and applying it to an evolving American cultural shift back in the early 80s. Nearly 40 years ago, Ms. Popcorn foresaw a changing world in which people stayed home instead of going out. According to her, the trend saw people beginning to nest in gated communities, eating in, and watching movies on cable TV. Popcorn attributed the trend to natural human behavior and technological advances, rather than the result of government diktat. She built a business advising companies how to exploit this development. Her business is still active and successful today predicting life in America in 2025 and 2030. Popcorn has parsed cocooning in the current era: armored cocooning, regenerative cocooning, mobile cocooning, and other branches of the trend. Cocooning is perhaps a natural response to human beings’ desire for safety, comfort, and privacy.
RTO was born out of uncertainty. It exists because of and in the service of uncertainty, and life has never been more uncertain than today.
When the COVID-19 pandemic struck in the first quarter of 2020, RTO dealers were rightly worried about its effect on the business as local and state governments across the country demanded an economic shutdown to slow the growth curve of the disease. Originally touted as a brief two-week shutdown, it endures in many parts of the country many months later. When the lockdowns and shelter-in-place orders first occurred, not everything was shut down, as exceptions had to be made for “essential businesses.” No sooner were the lockdowns announced than the RTO industry came out quickly and forcefully asserting that RTO qualified as an essential business, that stores had to keep their doors open, and that customers had to be served. RTO stores, for the most part, have stayed open in some fashion through the spring, summer, and fall – some with the BOPIS model (buy online and pick up in store); some with the BOPAC model (buy online, pick up at the curb); and some open for business as usual, with extra cleanliness protocols in place for employees and customers. At this point, it is safe to conclude that RTO is indeed essential, as most dealers report that their business has flourished during the shutdown. Beyond being pleased and grateful, dealers might well wonder why, exactly, have they done so well for the most part, and how long will the relatively good times (masks and social distancing notwithstanding) last?
The stimulus money certainly helped RTO, an extra $600 per week for unemployed workers, many of whom are RTO customers, which funds ran out in late summer. While Congress has considered additional stimulus funding, and economists are generally in favor of another bump in spite of the increase in the federal deficit, most observers soon realized no deal would get struck before the election. And there remain, of course, questions as to when the votes will finally be counted.
But stimulus money in the pockets of RTO customers is not the only reason for the uptick in business. Another reason is surely how Americans have been forced to cocoon by their governments. Pre-pandemic, all families spent money in the general category of “entertainment.” They went to the movies and bought $15 popcorn; they went to concerts and bought overpriced t-shirts; they went to sporting events and bought overpriced beer; they went to bars on the weekends and hung out with their friends and bought rounds of drinks; they took family vacations, and spent money on hotels and restaurants and rides and sights; teens wandered the malls for days on end, hanging out with friends and spending allowances on whatever caught their eye; people attended weddings, birthdays, anniversary parties, backyard barbeques, and funerals – though the latter does not really qualify as entertainment, usually. But all of that is gone and has been gone in many parts of the country for the bulk of 2020.
All the money that was being spent by folks and their energies being out and about with friends and family was suddenly available to be aimed in another direction. The two-week shutdown, easily survivable with nary a bump, has turned into a months-long marathon, and for all anyone knows, may ultimately turn into years. Some are arguing that masks and social distancing will become standards in American life, at least until vaccines are fully distributed and herd immunity achieved.
Americans have adapted, albeit reluctantly, to the new reality for the most part. If citizens cannot go out, then they will, of necessity, “bloom where they are planted” and make their dwellings – be they gated McMansions or cold-water, third-floor walkups – as good as they can be, since that is where they are stuck. That is where RTO comes in. If all people can do is sit on the sofa, 6-feet away from everybody else, and watch TV, then they want the most comfortable sofa available and the biggest and best TV they can afford. In other words, they want the stuff that RTO offers. (The RTO backyard shed businesses are doing very well as people are adapting the new affordable space either to store their old crap, newly replaced with nice new stuff, or else for “man caves” or “she sheds.”)
If citizens cannot go out, then they will, of necessity, “bloom where they are planted” and make their dwellings as good as they can be… That is where RTO comes in.
If schools are closed and kids have to endure distanced learning via Zoom, then parents want a good reliable computer and peripherals for those kids, plus a good desk and chair at home where the kids can perch and, one hopes, learn a little something. If the office is closed and people are told to work from home – as many are, perhaps permanently – those at-home employees need the equipment for a home office – once again the very stuff that populates RTO stores.
Of course, all of these “necessities in the time of COVID-19” are available from multiple sources. Why choose RTO? The answer is because of the uncertainty of life that has engulfed the country this year.
RTO was born out of uncertainty. It exists because of and in the service of uncertainty, and life has never been more uncertain than today [except perhaps during wartime]. Governors and mayors allow restaurants to open up, partially, carryout only, then 25% capacity seating, then 50% capacity, and then, order them shut again. It has been worse for bars. Day-to-day, businesses do not know whether the government will let them open or not, and if they can open, what the rules are, as they seem to change without rhyme or reason. As of this week, it looks like the movie theaters are closing for good. But what is going to happen next week with those theaters? It’s anyone’s guess.
RTO has always been the most flexible transaction in the marketplace. Need it for a week? Rent it. Want to own it? Rent it with a purchase option. Not sure whether you really want it or need it? Rent it and try it out to see. Customers get to use RTO stuff without being obligated to keep using it or to buy it. If the schools were to open up tomorrow along with the bars, Daddy can – whether or not he should – return the kids’ computers and desks he had been renting with no obligation and use the money he had been spending on rent to treat his buddies to a few rounds at the bar or the ball game. That scenario does not look likely at the moment. It may depend upon where people live, what kinds of rules the local government has imposed, and biologic and other factors to date unknown.
It’s a fair concern of some dealers whether customers really just spent their fourth-quarter holiday money during the second and third quarters while being forced to cocoon, and whether the holidays portend lackluster results because that money has already been spent. No one can accurately predict the future, save, perhaps, Ms. Popcorn, but to the extent that families are being coerced into being together at home, chances are good they will want to celebrate the holidays with one another [that or suffocate their obnoxious relatives in their sleep]. A big holiday season is all the more likely if there is additional stimulus money coming after the election. People will want to spend that money somewhere and Disneyland, the movie theaters, and the bars are still going to be closed.
Ed Winn III serves as APRO General Counsel. For legal advice, members in good standing can email legal@rtohq.org
