When the COVID-19 pandemic changed the way Americans work and live, the founders of Fernish, a three-year-old furniture rental startup, had to make some quick and critical decisions.
Overnight, the brand saw a dramatic spike in demand for desks, chairs, bookshelves, lamps and other home office furniture, as well as for decorative items to make living spaces more comfortable and attractive.
Would this be a short-term trend over in a few weeks, or should Fernish bank on it being a long-term shift, and invest in reconfiguring its supply chain and expanding its mix of desks and other work-from-home essentials?
The brand bet on the long-term, doubling its product offerings in office furniture, and began seeing immediate returns.
Since mid-March, office furniture rentals have surged 315%, and rentals of pillows, wall art and other decorative items are up 100%.
Fernish has also pivoted to add new product categories, including televisions and plants, to respond to the new relationship its millennial customers now have with their apartments and rented homes.
“It’s not just your home anymore. It’s your office, it’s your gym, it’s your entertaining space, it’s your restaurant,” Fernish co-founder and CEO Michael Barlow told CO—.
The pandemic also caused Fernish to put plans for store rollouts into new geographic markets on pause, and to instead focus on broadening its product offerings in the two markets where it currently operates, Los Angeles, Orange County, Calif., and Seattle.
It’s not just your home anymore. It’s your office, it’s your gym, it’s your entertaining space, it’s your restaurant.
Michael Barlow, co-founder and CEO, Fernish
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Business model plays to work-from-anywhere trend
Fernish was founded by Barlow and Lucas Dickey in late 2017 to be a “furniture-as-a-service” business that would meet the needs of millennial urban professionals who were moving frequently, sharing spaces with roommates and who wanted nice sofas, dining room tables and bedroom sets, but didn’t want to buy furniture they would have to move when they moved, or that would end up on the curb or in a landfill.
Now, Barlow said, Fernish is well-positioned to meet a pandemic-driven trend he doesn’t see disappearing any time soon: work from home, and work from anywhere in the country. That means more millennials will be moving, and that means more demand for Fernish, he said.
“When you remove that core pillar of working in an office, there’s less tying you to a specific market,” Barlow said.
“Our thesis is that young people are going to be trying out many more of these cities for shorter stints of time,” he said. “And Fernish is built for that.”
The pandemic was declared a national emergency just days after Fernish had unveiled a brand refresh and announced plans to expand into additional markets, with a goal of being in 20 urban markets within a few years.
Now the crisis has put new markets on hold until next year.
The good news for Fernish, Barlow said, is that it has lots of room to grow in Los Angeles and Seattle.
“Los Angeles is a $2-billion-plus market in itself just for furniture and décor [sales] every year,” Barlow said. “We can build a sizable business just in LA, getting it right and nailing the customer experience.”
Seizing the home advantage
Furniture has been one of the strongest segments of the retail industry during the pandemic, with online furniture sellers like Wayfair and other furniture rental companies akin to Fernish also reporting strong increases.
Other parts of the sharing economy have been hit hard, however. Ride-sharing services Uber and Lyft reported in spring earnings reports that their sales evaporated when the pandemic began. Vacation-rental service Airbnb laid off 1,900 people in May, about one-fourth of its staff, and cut its 2020 revenue forecast in half.
Clothing rental service Rent the Runway shuttered its five stores and laid off its retail staff.
But Massachusetts-based research firm BCC Research called the sharing economy a “megatrend” that is too big to fail, still poised to grow to $1.5 trillion globally by 2024, despite the pandemic, according to a June report.
Pandemic-informed product expansion
Barlow said Fernish is seeing demand for new rental categories since the pandemic.
For one, requests by customers for televisions and plants led Fernish to add those items.
This fall it began selling plants through a partnership with Bloomscape, the Detroit-based online plant seller.
Fernish had considered renting artificial plants that could be returned, but heard from customers that they preferred to purchase live plants. “It fits in with that zeitgeist of people wanting to have a more positive energy to comfort them in their homes,” he said.
At the end of May, Fernish announced it has raised $15 million in a Series A funding round led by Khosla Ventures, bringing its total financing to $45 million.
Fernish also has the support of investors with backgrounds in real estate, e-commerce and tech, including Spencer Rascoff, co-founder of Zillow, and Tapas Capital, the investment fund headed by current and former Amazon executives.
Fernish does not reveal sales figures, but Barlow said it has thousands of customers currently using its service, and tens of thousands of items being rented. The company is not yet profitable, but Barlow said it has a clear path to profitability.
Kerry Cooper, a former chief marketing officer and global e-commerce vice president at Walmart.com, former president of Rothy’s, and chief operating officer at Modcloth joined the Fernish board of directors this summer, a move that Barlow says reflects the company’s desire to add depth to its board to prepare for future growth.
Barlow said he remains bullish on the rental economy and Fernish’s prospects. “The service-oriented economy — anything from on-demand pickup, on-demand delivery, anything that prioritizes the service and convenience of customers — is growing, and we definitely put ourselves in that category,” he said.
“We recognize how fortunate we are to be in a category, furniture and home, that is so top of mind and needed for consumers right now,” Barlow said.
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Published November 11, 2020